Perth, Brisbane residential property construction set to take off

Fly-in fly-out workers arrive at a Queensland mine.

Fly-in fly-out workers arrive at a Queensland mine.

Two  city markets, Perth and Brisbane, are poised for growth.

I expect them to emerge as the strongest city markets next year.

The two cities have much in common: boosted by the emerging resources boom, CBD office vacancies have contracted and demand for industrial property has grown.

Both are experiencing growing airport traffic from fly-in, fly-out workers. And both have improving sales volumes and rising rents for residential property.

The next stage is an increase in prices. It’s a regular pattern in real estate that sales volumes change first and prices follow later. This occurs in both rising and falling markets.

Figures from the Real Estate Institute of Queensland show rising sales activity in Brisbane and across the state in the September quarter.

Another positive factor is the rise in residential rentals reported in some markets, including Sydney. Perth, Brisbane residential property construction set to take off

The REIQ’s September quarter report found the number of Queensland house sales rose by 17 per cent on the  June quarter.

REIQ chairman Pamela Bennett says it has taken time for markets “to heal from the natural disasters earlier this year”. She also warns that “we mustn’t get ahead of ourselves given sales activity is still 20 per cent below this time last year”.

She also notes that median house prices remain soft. But this is the normal pattern for property markets. Sales volumes turn positive first and prices follow.

In Brisbane City the number of house sales rose 13 per cent but the median house price fell 2 per cent. In boom town Gladstone, the number of sales rose 50 per cent in the quarter but the median price did not rise. It will be in the figures for the next quarter that we’ll see price reaction.

The other signal that market trends are shaping positive comes from vacancy rates, which have tightened further. Five local government areas recorded vacancy rates of less than 2 per cent in September, while nine other LGAs were below 4 per cent. The vacancy rate in Brisbane City was 2.3 per cent, while Logan City (the southern corridor of the Brisbane metropolitan area) was 1.8 per cent

Everything points to a significant upturn, with the greatest resources construction boom in Australian history about to be unleashed.

• From: The Australian December 10, 2011 12:00A