There are pre-Games property opportunities in Brisbane. Rhett Hammerton
How to work out where to invest so that your gains hold for the long term.
The Brisbane Olympics may be eight years away, but the city’s property market hype is well and truly out of the blocks.
Median house price in Brisbane’s Olympic suburbs – such as Hamilton, South Brisbane and Ipswich – could more than double by 2033, according to PRD Research.
Global cues from past Olympic cities show a 14 per cent price spike in the year after major events, generally clustering around Olympic venues.
Pre-Olympics boom
The Olympics creates a groundswell of activity, propelling large-scale developments, jobs, population growth and housing demand in the lead up.
For example in Sydney, between 1993 (Games announcement) and 2000, home prices jumped by around 60 per cent, almost double that of Australia’s combined capital cities, according to CoreLogic.
Brisbane’s pre-Olympics growth trajectory is heading in the same direction, with May PropTrack data showing prices rising 13.6 per cent compared to a year ago. It has overtaken Melbourne as the second-most expensive city in Australia.
Beyond the Olympic rings
But don’t let the Olympic hype overshadow the underlying fundamentals – the shoots of Brisbane’s property growth were underway well before it was named as host city in July 2021.
In fact, in the pandemic year of 2020, house prices rose 4.7 per cent, setting a record median price of $738,000 according to Domain.
That’s been driven by a surge in job-creating infrastructure developments planned before the Olympic announcement, including the $6.3 billion Cross River Rail, $1.7 billion Brisbane Metro project, and $5 billion Brisbane Airport upgrades.
And a significant population surge, driven by an influx of southern state migrants following the pandemic, has also contributed to housing demand.
CoreLogic data shows that since the pandemic, Brisbane’s median dwelling values have increased at more than five times the pace of Melbourne’s – 59.8 per cent and 11.2 per cent respectively.
Risk of Olympic sugar hits
Add the Olympics into the mix, and it’s little wonder that Brisbane’s property projections are being highly touted.
But if you invest in the games hype, are the gains likely to hold for the long term?
Sydney, for example, saw an immediate spike in prices after the Olympics, but between 2002 and 2008 they rose just under 5 per cent, while Brisbane and Melbourne increased more than 60 and almost 43 per cent respectively.
Sydney’s prices obviously went on to recover and surge. But other Olympic city property investors aren’t so lucky.
Owners in Athens saw their investments surge in the lead up to the 2004 Olympics. However, several years later, the city was left with ageing, unused, poorly planned infrastructure, national debt and plummeting property prices.
Investment options
If you’re considering investing in the Olympic infrastructure itself, such as an athletes’ village, ensure it has connectivity and services.
While many past Olympic villages were plagued by poor planning and a lack of post-Games infrastructure, Western Sydney’s Newington village serves as a successful model.
It was reconfigured to offer more than 1500 dwellings, with excellent transport, amenities, and green spaces. Prices have risen by about 250 per cent since they were built.
Despite these great results, new-build units in development areas typically lack the same scarcity value compared with older-style, land-heavy houses in more established areas.
Greater capital gains are likely to be found in the latter. Thus, an established property that will benefit from the flow-on effects of Games infrastructure is likely a better investment option.
In this regard, assess the long-term utility of the infrastructure being built. A rail line or highway that provides a suburb with greater connectivity to the CBD will drive more value than an ageing Olympic swimming pool.
Brisbane’s global appeal
While Paris, Tokyo and Sydney were already seen as global cities, Brisbane has typically been considered a secondary city.
However, its growing population, expanding industries, infrastructure investments and strategic proximity near Asia mean it’s been on the rise for years.
The Games will be a chance to showcase that to the world, with the potential to significantly boost the city’s property market, long after the Olympics leaves town.
(Fin Review – July 2024) If you would like assistance with a home loan health check, purchasing property or refinancing, or to discuss any other lending needs, please do not hesitate to contact Geoff.
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