Olympics is the icing, not the cake
The 2032 Brisbane Olympics will deliver a timely boost to the economy and housing market in south-east Queensland, but history shows that investors wanting to benefit genuinely will need to conduct more granular research, according to Pete Wargent, co-founder of BuyersBuyers.
Pete Wargent, the co-founder of Australia's first national marketplace for buyers agents, said "like many of the widely held beliefs in property markets, there may be an element of truth in the hosting of the Olympics delivering a boost to aggregate demand. Everyone talks about Sydney's boom when house prices all but doubled over half a decade up to 2001, for example, and the Olympics may have played a part in that story, with prices booming in the lead up to the event".
"What's not mentioned so often is that after the Sydney cycle peaked - when interest rates were hiked twice in a 'double tap' on the braked in late 2003 - the Sydney market then underperformed all of the other capital cities for six or seven years" Mr Wargent said.
Figure 1 – Australian residential property prices 2003
Mr Wargent added "a similar point could be made about the impact of the Olympics on the housing market in London. There's no disputing that property prices had a solid run in the lead-up to the 2012 Olympics, rising 37 per cent over 5 years from 2009 to 2014. But then since 2017, the London market has been a relative underperformer as the pandemic saw a general shift in demand to the regions of the country".
Figure 2 – UK house prices by region
"The takeaway message from London was the massive regeneration which took place in areas like Stratford and Newham, or the other London boroughs to host the Olympics, such as Barking & Dagenham, Waltham Forest, Greenwich, Tower Hamlets, and Hackney. Not only did all of the host boroughs experience sustained outperformance in property prices over the course of a decade, but the regeneration schemes in many cases resulted in a lasting transformation."
"For the purposes of balance, it should be said that delivering the regeneration schemes was not always plain sailing, and of course, not everyone benefited from the changes, but overall there was clearly a positive lasting impact, with jobs and economic growth outperforming in the host boroughs for many years after the Olympics" Mr Wargent said.
South-east Queensland's Olympian boost
Doron Peleg, CEO and co-founder of BuyersBuyers, said "Sydney and Melbourne have generally outperformed over the past decade, both from an economic and a housing market perspective and as a result south-east Queensland has become considerably more affordable than the southern counterpart cities.
Mr Peleg said "South-east Queensland has always enjoyed strong internal migration and is considered to be a highly preferred lifestyle area in coastal Australia. And the onset of the pandemic and the advance of working from home and flexible working arrangements have accelerated these trends."
Figure 3 – Net interstate migration at 15-year highs
"Indeed, population growth in Queensland is now leading the nation" Mr Peleg said.
Figure 4 – Queensland leads population growth
"The lifestyle areas of the Gold Coast and the Sunshine Coast, which enjoy very good access to Brisbane, are experiencing outstanding demand as more Australians look for a sea-change. This, with the planned improvements in the infrastructure, will only increase that trend."
"Aside from affordability and lifestyle, the improving local economy will also be a factor. While following the end of the mining boom, the labour market in south-east Queensland was not strong, in recent years, there's been an improvement in the employment conditions. And we know that there's a strong connection between a strong economy and demand for housing."
"As for the direct impact of the Olympics? The Games will certainly add significantly to long-term projections. The hosting of the Olympics is expected to cost at least $5 billion, but when we include all of the likely associated infrastructure, the total investment will greatly exceed this figure".
"These investments not only will create jobs, but they will also provide substantial improvements to the infrastructure in Brisbane and south-east Queensland" Mr Peleg said.
Getting granular
Pete Wargent of BuyersBuyers said investors hoping to benefit from the Brisbane Olympics boom would need to do their research and get granular.
"We've long liked the suburb of Woolloongabba as a gentrification play, and Brisbane being set to host the Olympics has only cemented that view, with the Gabba stadium and Cross River Rail station representing just two of the coming improvements."
"Dutton Park - and possibly Albion - are two other locations where housing prices have traditionally been a little more affordable than some of the surrounding suburbs but may now experience favourable investment and infrastructure."
"There are always more and less desirable property types and streets in these sorts of locations, and it's important to take a more detailed view when buying in Brisbane. For example, some low-lying areas may be impacted by flooding risk, or there could be noise to consider, so due diligence and strong property selection is important."
"We already know that Hamilton Northshore will be developed into an exciting hub for living. Personally, I would stick to buying units there with outstanding water views, as this will be the critical point of scarcity as all of the new development comes online. Water views tend to be a strong and enduring drawcard in Australian property markets."
"Another excellent spot for growing housing demand will be the desirable streets of Yeronga and Yeerongpilly, as the tennis comes to town at Tennyson and the urban regeneration continues apace, and as the Cross River Rail connects the south side of Brisbane back up to the Gabba and the City."
"The Olympics coming to Brisbane is uplifting news, no doubt. It will put the city on the international map, and the associated investment in infrastructure will be very welcome. But remember this is only one factor of many impacting the housing market, and if your goal is specifically to benefit from the Olympics, then you'll need to conduct more granular research."
