Fundamentals still strong, BoQ
By Peter Munckton, BoQ economist
For some time now, Brisbane has been a city moving ahead in a positive economic direction. An indicator of a city’s attractiveness is people voting with their feet. And by that benchmark, Brisbane has been an Australian success story. Over the past 20 years, Brisbane’s population growth has exceeded that of the other major east coast cities (and was second overall only to the mining boom-powered Perth).
More recently, there has been some uncertainty surrounding the Brisbane economy, as well as those broader economies of Queensland and Australian. Business feels things are ok, but should be doing better. Consumer spending in Queensland shops has risen by only just over 2 per cent during the past year. Brisbane house prices are up, but have not been powering along as they have in Sydney. There has been jobs growth, but the unemployment rate has also been trickling up. The latest national accounts figures show that overall demand in Queensland was the weakest of all the major states during 2014.
Of course, different parts of Brisbane will have different views of how the economy is travelling. The overall unemployment rate for the city is around the national average. According to the Department of Employment, areas of inner-city Brisbane at the start of this year had a sub-4 per cent unemployment rate, a rate lower than most regions in Australia. But times are not quite as good in suburbs west of Brisbane, with some having unemployment rates above 7 per cent. And the unemployment rate in Logan is more than 9 per cent.
For at least the next 6-12 months things are still likely to feel a little tough. The Australian economy is running sub-par, with a new economic driver needed now that the mining boom has come to an end. The unemployment rate across the nation is likely to rise further, including in many areas of Brisbane.
But it should not be all bad news. Lower interest rates are having a positive effect, including in helping to get more houses built. Higher house prices and equity markets mean many consumers are wealthier. And the fall in oil prices is putting more cash in householders’ hands.
Another big plus is the significant decline in the Australian dollar. The fall in the currency boosts sectors such as tourism, important for Brisbane and other regions like the Gold Coast. Indeed, there has been strong growth in tourism-related exports over the past year.
As the economy improves, Brisbane will continue to prove attractive to potential inter-state migrants. And more people coming means more homes to build, more roads to construct and more places-to-play to be created.
Overall, the outlook for the Brisbane economy is likely to remain a little uncertain over the next year or so. But the factors that have powered Brisbane to be a strong, growing, liveable city (good weather, friendly people, rising population) should continue into the future.
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