According to the most recent CoreLogic hedonic home value index, dwelling values have been steady in Brisbane with 1.3 per cent annual growth, compared to Sydney which was down -2.1 per cent. 

However, with its strong population growth, improving jobs sector and relative affordability, the Brisbane housing market, in my view, is well positioned for further growth in the short to median term. Here are a couple of trends that I believe have been driving the Brisbane market.  

Downsizers buying up luxury apartments
 
Despite the reported oversupply in Brisbane’s inner-city apartment market, we are seeing great strength in the prestige apartment sector. The luxury apartment market ($1M+) is driven by owner-occupiers, particularly baby boomers and empty nesters.  

We’ve all heard about Australia’s growing ‘baby boomer’ market and it’s this demographic that’s dominating this space. Baby boomers are selling their larger homes in affluent suburbs 5km - 15km from the CBD for $1M - $3M and buying luxury inner-city apartments at a similar price point, but with less maintenance and better accessibility.  

Popular suburbs include New Farm, Newstead, Teneriffe, Kangaroo Point, South Brisbane, St Lucia, Paddington and the Brisbane CBD. These areas offer a desirable lifestyle with an abundance of shopping, dining and entertaining precincts at their doorstep. Smaller, boutique complexes are often preferred, with an elevated outlook offering privacy and river views being the most highly prized.

As the quality of apartments in Australia continues to improve with developers focusing on style, design and in-house facilities and services, I expect this to be a strong ongoing trend. 

Selling in the southside and buying in the inner west
 
A clear and growing trend in Brisbane is families moving from the southside and upsizing to the city’s inner west, a trend that’s being driven by local Chinese buyers.  This is particularly strong in the southside suburbs with strong Asian communities such as Sunnybank, Runcorn, Rochedale, Stretton, Wishart and Eight Mile Plains. 

We’ve seen a steady increase in Chinese families relocating from these suburbs to the inner west, with Indooroopilly, Toowong, Taringa and St Lucia particularly popular. The key driver for this demographic is their children’s education, as the inner west offers the best choice of primary, secondary and tertiary education (both public and private). 

Anecdotally our team is reporting that over 60 per cent of the buyers coming through open houses in inner west suburbs like Indooroopilly are of Asian background and most are coming from the southside of Brisbane. The percentage of Chinese buyers increases in the prestige end of the market, particularly in the $2M+ price range.

The rise of splitter blocks 

Splitter blocks is another interesting trend we are seeing that’s in increasingly high demand. What this means essentially is a buyer purchases a large block (800m² plus) and subdivides it into two blocks of approximately 400m² each.  

The potential profit margin is what’s driving this trend and it isn’t just builders and developers who are the active players. Investors and everyday people are getting involved as vacant land is becoming more difficult to find in Brisbane’s inner city. 

Let’s have a closer look at the numbers for a suburb like Indooroopilly:
 
Purchase price: $1.1M - $1.4M (we will use $1.2M for this example)
Stamp duty: $50K
Cost of demolition of existing dwelling: $20K
Cost of subdivision and new title: $80K
Total land cost: $1.35M (Cost of each 400m² block is $675K)

In this scenario we have 2 x 400m² blocks, typically with a frontage of 10m for each lot. On average, the size of house required to fit in all the necessary elements with the appropriate proportions such as five beds, three plus baths, two or more separate living areas, two car garage, etc, is approximately 380m² – 420m² under roof. 

The cost of construction will vary depending on the quality of finishes. It is recommended you budget approximately $1,800 - $2,200 per square metre for the new build. For each 400m² home this would total approximately $800K. Add pool and landscaping costs to this at around $100K which brings the total investment into each build at $900K. As each block of land has cost $675K, the total project cost for each home would be approximately $1.575M. The finished home will typically fetch $1.8M+ in today’s market, a potential profit of $200K+.

There are of course a number of variables to consider before embarking on such a project, so I recommend buyers seek expert advice before pursuing.  

See also:

Sales soften in Brisbane's new unit market

Brisbane to be major city within decade

Brisbane apartment market at more sustainable levels