A new report by CBRE Research has found that the fundamentals of an economic boom in Queensland are present and that all signs show that a growth spur could be around the corner.
The report finds that white-collar employment growth along with the house price differential between Brisbane and Sydney are two key variables that drive large waves of interstate migration to Queensland.
What is most interesting about the findings is that in the last two decades, interstate migration peaked at just under 40,000 (people per year) in 2002. At the time, the cost of housing in Brisbane cost just 43% the that of Sydney.
After 15 years and a growing price gap between Brisbane and Sydney, we have now reached that same percentage of 43% the cost of Sydney. Since 2014, interstate migration has again been on the rise and continues to increase to the same levels as before the GFC.
State final demand (SFD) in Queensland has also recorded its best performance since June 2013, increasing by 2.0% following the collapse of mining investment across Australia. Queensland’s more diversified economy has resulted in a stabilisation of state final demand compared with WA which is still heavily reliant on the mining sector for economic growth.
The indicators for an improvement in the Queensland economy are again falling into place. Historical evidence shows that when Sydney and Melbourne face housing affordability issues, net migration to Queensland always increases. As previously pointed out, Brisbane housing prices as a percentage of Sydney’s are now at the same rate as they were in 2002 and net migration is on a similar growth trajectory. Population growth is a key driver of the economy and a strong indicator of future performance.
This melting pot of migration and economic activity has historically created a situation whereby Brisbane property prices that have no experienced the extreme growth of the other two major cities generally begin to play catchup, which is good news for residential development in South East Queensland.