Darwon's Theory | Lessons from Sydney and Melbourne Booms

Nearly three-quarters of Brisbane suburbs surged in house prices last year. But does that mean there's no room for more growth? Of course it doesn't. Now that our city is finally stepping into the limelight, I want to talk about lessons we can learn from Sydney and Melbourne's property booms.

Both cities are years ahead of Brisbane and, although we've been closing the price gap with increasing speed in recent months, there's much to learn from those markets. Now that Brisbane has officially outstripped Melbourne for property values, the question is: what happens next?

The first learning hinges on demand dynamics. In the decade before the pandemic, the number of people living in Melbourne grew by about 2 per cent year on year, making it one of the fastest-growing cities in the developed world. In the 50 years leading up to the pandemic, Sydney grew by 2.2 million people. Those figures don't even account for foreign investment, which has certainly played a part in driving prices up.

In Brisbane, we are uniquely positioned to capitalise on our growing population. Thanks to the Olympics, all of its related infrastructure, and the lifestyle benefits drawing internal migration, forecasts for population growth are robust and - most importantly - long-tailed. This is exactly the type of capital growth driver property buyers look for.

Secondly, supply considerations and urban sprawl. Both Sydney and Melbourne have experienced their fair share of supply issues, and Melbourne has tackled this by proactively expanding its urban growth boundary. The result? Property prices in the outer ring soared by 16 per cent in the five years preceding the pandemic.

They may not be making land anymore, but they're certainly building houses - and the infrastructure to support them. As Domain's Chief of Research and Economics has pointed out, "If done right, south-east Queensland could become the best-connected city in Australia if we look at the Sunshine Coast, Brisbane, the Gold Coast as one designated chunk of land." If you're looking farther afield, consider that hybrid offices and streamlined city commutes are likely to increase demand and push prices up in well-connected hubs outside of Brisbane.

Thirdly, let's talk affordability. We've seen what can happen when property prices skyrocket. The average of first home buyers rises and there's an increased demand on the rental market - which in turn pushes rental prices up, and makes property all of the more attractive to investors with deeper pockets. First home buyers will no doubt be watching for the anticipated rate drops in the second half of the year, but I'd wager a guess that the window of opportunity is small. You'll need to have all your ducks in a row if you want to make a move.

It's clear that Brisbane is going through a significant period of change, but the good news is we're not flying blind. We have access to a wealth of data that highlights projected hotspots and puts you in a position to make a well-informed property move. As always, get in touch if you want to take advantage of it.

Cheers,

S.D.