Following the highest levels of interstate migration since March 2006, the Queensland property market is set to explode across all sectors.
Regional internal migration estimates revealed Queensland as the preferred destination for relocation in Australia, with a net total of 27,115 interstate residents moving to the state from January to September 2020.
ABS data revealed regional Queensland welcomed 14,101 residents, outperforming the 13,014 people moving to Greater Brisbane over the same period.
A net estimate of nearly 150,000 people have relocated to Queensland from interstate over the past decade – 18 per cent of the state’s population growth – with the Federal Budget Strategy and Outlook 2020/21 expecting this trend to hold firm until the year 2022/23.
It’s tipped Queensland will have an annual average of 21,500 residents over the next four years, setting up the pillars for economic recovery and for demand growth of the residential and commercial property over the years ahead.
“Looking at the impact of net interstate migration on the different property asset classes, we have witnessed a resilient performance of the industrial and residential sectors in 2020; and this trend is expected to continue in 2021 with the need to fulfil residential supply for an increasing population,” explained Colliers.
Industrial property outlook
A larger population also triggers a multiplier effect on consumer spending, according to current retail trends.
“For every one billion AUD spent on online sales, approximately 85,000 sqm of warehouse space is needed which is three times the amount of warehouse space required for traditional brick-and-mortar sales. Based on the increase in online retail sales of A$12 billion in 2020, we estimate an increase in industrial demand across the country in the vicinity of ~1,020,000 sqm,” the report read.
“Under this context, the Queensland industrial property market has already been a beneficiary of this trend, with new industrial development supply (over 5,000 sqm) exceeding 410,000 sqm p.a. since 2019 and sitting well-above the annual long-term average of 299,000 sqm.”
The Queensland industrial investment market has also capitalised from strong interstate migration, reaching A$1.3 billion in sale volumes in 2020.
“Prime grade yield compression of nearly 50 basis points even during a pandemic year has demonstrated the consolidation of Queensland industrial property as a defensive investment offering,” the report read.
“We expect to see increasing interest from institutional investors on regional industrial assets (outside the capital city) as internal migration to regional areas has regained its position as a preferred destination for interstate and intrastate migrants.
Queensland housing market
Housing affordability remains as one of the key drivers of internal migration to the Sunshine State, with over 55 per cent of net interstate migration relocating from New South Wales.
According to CoreLogic’s Home Value Index for January 2021, the median dwelling value in Brisbane is over $A350,000 more affordable compared to Sydney and nearly $A165,000 more affordable compared to Melbourne.
Over the year to January 2021, Queensland regional housing values have surged 7.7 per cent higher, while Brisbane housing values increased 4 per cent.
“We expect the resilience of the QLD residential sector will be supported by the extension of the HomeBuilder assistance package until March 2021, while mature buyers relocating from Sydney and Melbourne are expected to drive residential property demand in regional areas given the lifestyle and affordability benefits,” the report read.
Based on the forecast population growth of 7.1 million by 2041, Colliers Research forecasted the need to build circa 796,000 new residential dwellings until 2041 to be able to accommodate the forecast growing population.
Retail and office forecast
Retail activity is expected to hold steady in Queensland – particularly for neighbourhood retail centres and specific LFR centres with a focus on fast food, home improvement, renovation, construction, and technology.
In 2020, investment sales over $A5 million of neighbourhood shopping centres accounted for about 35 per cent of the state’s annual retail investment volumes.
Demand for office accommodation across the Sunshine State is expected to recover gradually over the next two years, mainly supported by the growth in base office demand from the public sector and from companies offering social services to the growing population.
Overall, the outlook of the Queensland property market remains promising and well supported by consistent net interstate migration, housing affordability and a solid infrastructure program expanding from the capital city to regional areas.