Surfs up – Is the Queensland residential market set to ride the wave of interstate migration?

November 9, 2015 / By  

Queensland’s economy has long benefitted from interstate migration, especially the Brisbane residential sector through affordability advantages over Sydney. Queensland has traditionally been the number one destination for interstate migration, particularly from New South Wales. However since 2002, the number of interstate arrivals has been on the decline. With house prices in Sydney now reaching record heights, the appeal for Queensland’s southern neighbours to venture north to the golden sands of the ‘Sunshine State’ has never been better.

Historical trends indicate that interstate migration is inversely correlated with the ratio between the median house price in Sydney and Brisbane. The disparity between Brisbane and Sydney house prices reached its previous peak in 2002, coinciding with the peak of interstate migration into Queensland (see Figure 1).

Picture2_9Nov2015The price ratio for houses comparing Sydney and Brisbane is currently at the same level as experienced in 2001. Interstate migration picked up shortly after when Brisbane’s affordability peaked. The economic downturn in Queensland during this period has significant similarities with the decline that the state is experiencing today.  This comparison has prompted suggestions that the Queensland residential market will again ride the wave of inter-state migration, once the recovery in the Queensland economy gathers momentum.

Sydney’s median house price in September ($920,000)[1] was 86% higher than Brisbane’s ($494,000)¹. Sydney house values are forecast to grow on par with Brisbane over the next five years (3.0% p.a.)[2], As a result the price gap will only continue to increase. By 2020 the difference in house prices between Sydney and Brisbane is forecast to reach $493,850. This disparity suggests that there is potential for inter-state migration numbers to pick up again. However, the extent of interstate migration is dependent on the strength of the Queensland labour market.

Queensland is past the worst of the current economic slowdown, and Deloitte Access Economics forecasts a positive economic outlook for the state as it transitions from its reliance on the mining sector. On the back of the lower Australian Dollar, Queensland has the potential to experience stronger growth for the tourism, higher-education and agricultural sectors. Coupled with the continued appetite that foreign buyers have for Australian property investments, the Queensland economy has the potential to once again prosper. Private sector investment and the commencement of a number of key infrastructure projects across the state will provide the catalysts for an improvement in the Queensland labour market.

While it’s unlikely that Queensland will experience the same heights of economic growth as during the mining boom, it still has the potential to improve on its current condition. Although no great waves are forming on the horizon, ripples are beginning to appear. As a result it would seem that it’s only a matter of time before the interstate arrival numbers begin to rise, and Queensland once again rides the wave of interstate migration.

[1] Corelogic RP Data

[2] Residex Pty Ltd

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