Brisbane at the top of its game as migration spurs investment opportunities

With its infrastructure build-up to the 2032 Olympics, Brisbane, of all our capital cities, looks like winning the biggest share of gold medals for investors.

With record capital growth for both houses and apartments, an eye-watering rental vacancy rate of 0.8 per cent and a 9.1 per cent year-on-year rise in rents for houses, and 16.7 per cent for units, on Domain figures, the stage continues to be set for excellent residential investment returns.

“Even looking at the population growth in Brisbane shows what a good market it is,” says Jordan Navybox, managing director of buyer’s agency Cohen Handler’s Queensland division.

“The Australian Bureau of Statistics put Brisbane’s population growth rate at 2.3 per cent, over double that of Melbourne and more than three times the growth in Sydney, yet with only around half the population of those bigger cities.

“And migration into Brisbane is still happening, from both interstate and overseas.”

At valuers Herron Todd White, Brisbane director David Notley also believes the city is at the top of its game.

He sees the surging population, with past increases and forecasts of continued growth, as key to its position on the winners’ podium.

“Probably it’s one of the most active markets I’ve seen for quite some time,” Notley says. “I guess what’s underpinning it is the limited supply at the moment, with demand pushing up capital values, and replacement costs proving quite challenging as well.

“But one difficulty is that we’re seeing owner-occupiers outbidding investors.

“They need somewhere to live and some are getting out of rentals because they’re becoming too costly, so we’re seeing tenants buying the properties they’re currently residing in.”

Changing tenancy laws and higher land taxes are also proving challenging for investors, although the other market fundamentals remain strong, with few big projects to build substantially more apartments or houses on the table to swell supply, he says.

“[However,] if interest rates start to fall, and as the Olympics approach, we might see more investors decide to get into the market,” Notley adds.

The latest Domain House Price Report certainly shows the market favours investors.

Annual house price gains in Brisbane are at their steepest since September 2022 – 9.7 per cent – and they stand at a record median high of $888,285. Units have also hit a record high, at $524,202.

“Brisbane unit prices continue to break records by achieving another price peak,” says Domain chief of research and economics Dr Nicola Powell.

“Annual gains are the steepest of all the capitals, topping the city’s fastest increase in almost 16 years at 14.2 per cent.”

Navybox further points to the falling number of building approvals in Brisbane, down from a historic average of 18,000 to 20,000 dwellings a year to 10,000 in the past 12 months.

“[They are] now at a 15-year low and, because of high building costs, building approval conversions – seeing those homes actually built – are at an all-time low,” he says.

“We’re creating a massive housing bottleneck at the moment, and that will continue for at least three years, with high rents and price growth.”