Bottoming out
Sentiment in Queensland has generally been consistently downbeat in recent years, and it's not been especially hard to see why, with mining investment falling by about two-thirds from the peak.
When things have been a certain way for some time - whether that be good or bad - human nature dictates that people begin to expect them to stay that way forever.
As the Reserve Bank Governor highlighted in his speech this week, however, mining investment is now finally lifting, which means brighter news for Queensland.
And mining investment is forecast to continuing lifting over the coming years as depleted reserves need to be replenished through renewed exploration and drilling, and as as new resources projects are constructed.
It's become quite fashionable to be all negative about - well, pretty much everything, to be honest - but the leading indicators already suggest that things are gradually picking up in the Sunshine State.
This week's figures showed that the state's job vacancies at about 40,000 are now some 73 per cent higher than they were at the horrible 2016 nadir, so hiring is set to lift steadily from here.
Inner Brisbane is also undergoing a huge infrastructure-driven facelift, as you can see in this short video here, with stage one of the multi-billion-dollar Queen's Wharf project due for completion by 2022.
For the housing market, affordability as measured by mortgage serviceability can seldom have been higher, with the more competitive mortgage rates set to fall towards just 3 per cent over the coming six months.
Proving that housing affordability will never be out of the headlines regardless of what happens, nominal asking prices for units are now roughly the same as they were almost a dozen years ago, when standard variable mortgage rates were running between 8 and 9½ per cent!
Proving that housing affordability will never be out of the headlines regardless of what happens, nominal asking prices for units are now roughly the same as they were almost a dozen years ago, when standard variable mortgage rates were running between 8 and 9½ per cent!
Excellent work by Louis Christopher of SQM Research has shown there typically to be a strong relationship between rental yields and mortgage rates, yet the credit squeeze, soft apartment prices, and the now-receded threat of a Labor government have seen Brisbane's yield gap open up remarkably since 2014.
Source: SQM Research
Meanwhile, interstate migration from the southern states has helped push annual population growth in Queensland back up from under 60,000 to about 90,000.
And in real time we can clearly see that the rate of apartment dwelling construction is now collapsing, following a record burst of inner city high-rise, even if the official statistics don't yet fully reflect this.
As such, rental vacancy rates have been easing back down to earth in Brisbane over the past few years.
Some areas still have elevated vacancy rates, it's true, but the more popular and supply-constrained locations are now finally tightening (the chart below is for New Farm and Teneriffe):
Source: SQM Research
Time to shine
Overall, record low mortgage rates are set to give Brisbane's housing market a welcome lift, yet the usual caveats still apply.
If the budget allows, try to look for a high land-to-asset ratio, plus locations and property types where demand has consistently outstripped supply historically.
If you're interested in buying a home or investment in Brisbane you can download our free buying guide here.
