Imagine if you could get rid of your mortgage overnight, double the quality of your home standard or location, and improve your lifestyle in the process?
Well, that’s exactly why many Sydney-siders are moving to Queensland and why the Sunshine State could be in the early stages of the next big growth cycle.
A key reason behind this can be seen in the Price Point Difference between Sydney and Brisbane.
According to the Australian Bureau of Statistics, in March 2009 the average price of a house in Sydney was $530,900 while in Brisbane it was $399,000. A difference of just $131,900. In December 2018 this gap had widened to $532,600 even after the cooling-off of the Sydney market, with Sydney average price at $1,062,600 and Brisbane at $530,000.
This is emphasised even more in particular pockets of Sydney, where some homeowners are selling houses they bought a decade ago for $600-700,000 at prices now closer to $2 million. This means that they are sitting on million-dollar profits.
In fact, it is largely unnoticed that the recent Sydney market surge is the first time that normal homeowners have experienced million-dollar profits on their property in a single growth cycle. And if that is your family home, these profits come to you completely tax-free and are life-changing.
If you look at what you can then go to Queensland and buy, the same house will cost you almost half as much. The median price in Brisbane is around $486,121 according to CoreLogic. But importantly if you look at average wages they are about the same.
So an average person in Sydney can sell their house for a substantial profit, clear out what is still remaining on their mortgage and buy another house of a better standard in Queensland without a mortgage while swapping their job with little or no effect.
Now again, this is a modern phenomenon. In the old days, all the big money jobs were in Sydney. If you were in W.A. or Queensland or anywhere else, you didn't get paid as much. But not anymore. There are a lot of comparable federal and corporate jobs and they are on the same pay scale as Sydney. So things have changed significantly.
Interestingly, while house prices were going up in Sydney, it was easy for homeowners to sit on their hands and not do anything. But that’s also changed.
So there is now a significant catalyst that could well power the next growth cycle in Queensland. Sydney-siders are making the move across the border chasing an all-round better life.
We are already starting to see this migration take place in the early stages of the cycle. If you look at the long term stats all the way back to 1980, Queensland should have been seeing a good strong cycle. But a population drop off was the issue.
During the last phase, we have only seen average growth year on year of around three to five per cent. But if we look at the spike in incoming migration on a quarterly basis we start to see that there is demand pressure coming. And because it's largely from New South Wales with that extra cash, supplemented by offshore buyers also with cash, the demand pressure becomes really high.
We are looking at around 4-5000 people moving to Queensland each quarter. As it stands at the moment, they are not currently building 4-5000 new high-end properties to accommodate this influx of people. Plans are in place to build 2-3000 low-end properties. But a person with millions of dollars to spend, who are relocating their entire life to a new state doesn’t want low-end. Demand is strong and supply is nowhere near where it needs to be.
If you’ve been to Queensland, you would understand why all those Sydney-siders are moving. There’s less traffic, it’s less crowded, there are lower costs and a better lifestyle.
With more cashed-up Sydney buyers moving across the border by the day, a strong increase in property prices will likely follow. Now is a really exciting time for the Queensland market.
