Where to invest in 2024: Qld’s best affordable markets revealed
Some surprise locations featured in an investor’s cheat sheet ranking Queensland’s best and cheapest locations to maximise returns in 2024. SEE WHERE
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An investor’s cheat sheet has ranked Brisbane’s oversupplied inner-city unit market as one of Queensland’s top affordable locations to maximise returns in 2024, alongside up-and-coming regional hotspots including the home of a controversial coal mine.
Property guru Terry Ryder scoured the nation to distill the 10 best and cheapest places in each state with good propects for growth.
Top Queensland picks were Brisbane CBD units and houses in the Rockhampton suburb of Berserker.
Other house markets for investors to kickstart their portfolio were: Gatton (Sunshine Coast), Gladstone (Central Queensland), Goodna (Ipswich), Loganlea (Logan), Toowoomba and Townsville. Units in Caloundra and Redcliffe (Moreton Bay) also promised healthy returns.
“Property prices may have increased substantially during COVID, but there are still plenty of affordable locations for investors,” Mr Ryder said.
“It’s important for investors to look at locations with good future infrastructure spending and job opportunities, which will lead to further demand for property and future price growth.”
Mr Ryder said Brisbane CBD had notched up a “dramatic turnaround”, with continued strong interstate migration and a pipeline of development ahead of the 2032 Olympics underpinning price growth despite rising interest rates.
“Brisbane unleashed a major recovery in the June quarter, reversing the steady declines that had been evident in the previous 18 months, and went to another level in the September quarter.
“The turnaround has been dramatic with buyers and renters once again seeking out apartments in the inner city.”
The precinct remained attractive for first-time investors, with Brisbane CBD units priced under $500,000. Rental vacancy hovered at 1.7 per cent and median asking rent was $725 a week, offering 6.1 per cent rental yield.
“It [is] an extremely affordable entry point for investors keen to snare a slice of a capital city market,” Mr Ryder said.
Buyers agent Lloyd Edge backed inner-city Brisbane for first-time investors, but noted the impact of a glut of new high-rise projects approved for the CBD even prior to the pandemic boom.
“The inner city has an oversupply issue with apartments, but the real estate market is dynamic and can change over time,” Mr Lloyd said.
“There has been a focus for investors in Brisbane due to its steady population growth, major migration from the southern states, diverse economy and major infrastructure projects which are a flow-on from the announcement of the 2032 Olympics.
“Areas with good transport links are often sought after and offer long-term growth potential.
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Brisbane City Council has started approving less developments, so apartments could make a good investment for entry-level investors into the future.”
Outside of the capital, Mr Ryder’s top pick was Berserker in Rockhampton, Central Queensland.
Berserker’s prospects included a median house price of just under $285,000, vacancy rate of 0.6 per cent and rental yield of 8.1 per cent.
“Berserker has been largely unaffected by the pandemic and has even seen a benefit due to the shift in preference towards more affordable lifestyles that has been amplified by the virus lock-down phases.”
Mr Ryder said the Rockhampton region was “a magnet for southern migrants, first-home buyers and investors”.
“Rockhampton’s diverse economy is being boosted by the resources sector with construction of the Bravus (formerly Adani) coal mine well underway,” Mr Ryder said.
Bravus’ Carmichael operation was approved in 2019 amid high-profile protests sustained until shortly before the company exported its first coal to the market in January 2022.
The project is headquartered from Townsville and the business centre in Rockhampton.
Mr Edge said first-time investors could adopt a strategy focused either on cash flow or long-term growth.
“Having a property which has positive cash flow is usually a good strategy to start an investment portfolio, however interest rates are making that very challenging at the moment,” Mr Edge said.
“Pros of a cash flow strategy include rental income which is greater than your mortgage repayments, so the property is essentially paying for itself.”
However, this short-term cash flow often came at the expense of long-term capital growth associated with buying in more expensive, blue-chip locations.
Ray White economist Nerida Conisbee said high interest rates and restrictive government policies had driven investors from the market, a trend which would continue into 2024 and limit the number of available new rental properties.
“There are not enough rental properties and without investors, this won’t change,” Ms Conisbee said.
She said the rental market relied on ‘mum-and-dad investors’ as government housing had declined dramatically over the past 25 years, while build-to-rent programs provided less than 1 per cent of total stock.
“Right now, investors aren’t very active. Interest rates are too high and there are a lot of impediments to owning a rental property relative to other investments,” Ms Conisbee said.
“While this should improve maginally in 2024, there will remain a shortage.”
Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella said tax concessions provided to institutional investors to build more rental homes should be extended to private investors — “the primary housing engine behind buying, building, renovating, and housing the state’s tenants”.
“Why is there reluctance to apply that incentive approach to the average investor who might own 1-2 properties, when the principle of wanting to create more building supply is the same?,” Ms Mercorella said.
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