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Over Under
Australia’s third largest city faces some tough questions for the future
| Text : Elizabeth Kerr |
It sits near one of the most spectacular Pacific coastlines on the globe and is only one hour away from The Gold Coast — two from the Sunshine Coast. It’s a beacon for environmental, urban and developmental sustainability. It’s a bustling urban centre without the nightmare traffic of other cities like it, and has a distinct character that sets it apart from Sydney and Melbourne. The Economist ranked it as the 16th most liveable city in the world in 2009. A day can easily be spent wandering the boutiques, cafés and galleries of the South Bank, many of which have been set up in old colonial buildings. It’s no wonder that for a time Brisbane was Australia’s fastest growing city.
But, for all its appeal, that’s not the case any more. “Melbourne and even Sydney grow faster in actual numbers than Brisbane does these days,” explains Michael Matusik, director of Matusik Property Insights, one of the city’s leading property analysts and advisors. “Brisbane and Queensland are on the wane — economically and financially. [Because of] too many government charges, lack of decision-making and until recently little provision of new infrastructure, such as road and rail. The state is now playing catch up.”
Affectionately referred to as “Brisneyland” or “Brissy” by locals, Brisbane has been growing at a rate of about 2 percent per year since the early-1990s, a trend that started following the massive public development expenditures the Queensland government made in the city for the Commonwealth Games in 1982 and Expo ’88. It’s a young city with a high rate of immigration from all parts of Australia, New Zealand, the South Pacific and Asia. The city now comprises an affluent, service industry business core and a sprawling network of suburbs, each with its own localised amenities.
In March of last year, the Australian government relaxed rules on foreign investment, essentially eliminating regulations that stated foreign buyers could only acquire up to 50 percent of a property off-plan and a maximum AU$300,000 second hand home. That would suggest overseas buyers were in for a bonanza in Australia’s major centres and the fear was that these buyers would outprice locals.
If you are looking at relocating or buying a second home, is Brisbane the wiser choice as an investment? Again, not really Matusik states. “Many think that Melbourne, Adelaide and even Sydney are better places to invest than Brisbane.” On top of that, foreign buying is on the downslide at all levels of the market. According to research by Matusik, foreign sales fell in the year following the rule changes and right now, Chinese investors, for example, represent less than 10 percent of Queensland’s overseas market. Strangely, the federal government changed its rules again in May 2010 — allegedly a knee-jerk response to foreign buyers outbidding domestic ones — and reasserted restrictions. Currently, total foreign investment makes up a tiny 1.67 percent of all new home sales.
That may not seem terribly welcoming, but if you do venture into Brisbane’s market, what can you expect in the luxury sector? “Outside of the Sydney Harbour [area] and inner Melbourne, the luxury residential market across Australia is pretty slow — especially along the coast and in seachange locations like Cairns and Port Douglas. In many of these coastal areas values are still falling,” Matusik says. “There is not much new residential construction going on outside of Melbourne and to some degree Sydney; Queensland’s new housing starts are down from 45,000 per annum two years ago to 32,000 today.” The drop is due to building simply being too expensive as a result of what amounts to red tape: long delays in planning approvals, rising infrastructure costs, a disconnect between regional goals and market demand and a glut of proposed, largely unwanted flats. “Unlike in Hong Kong, most Australians won’t live in apartments,” Matusik states flatly. Buying patterns in the luxury sector mirror the ones in the market in general “Local citizens buy 95 percent of the top-end properties. Overseas buyers actually buy very little.”
Nonetheless Brisbane has earned a reputation as something of a destination of choice (see: The Economist). Even with its bureaucracy and high costs — no one ever suggested Australia was the cheapest country to live in — the city boasts a lifestyle that is rare in many urban centres. It also has a green image. “Green residential building is growing in popularity and is important to those that can afford the extra cost: top-end buyers and inner city owners,” Matusik offers. If you consider yourself a conscientious buyer willing to pay a premium on environmentalism, eco-smart features are easier to come by in Brisbane than in many places. However once again, Matusik points out the downside of green living. “For most Australians affordable housing is more important to them than energy efficiency. By law new dwellings here have to be 6-star rated, which costs about 8 percent more to build. So for many buyers of new property, green initiatives are forced on the market by the government.”
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