Major bank picks Brisbane as best city for capital growth this year

ONE of the biggest banks in the country has picked Brisbane as the best city for capital growth this year, with Queensland also emerging as one of two states to see higher than average house price growth.

The latest National Australia Bank Residential Property Index tipped Queensland and Victoria as most optimistic markets, with house prices to rise 2.1 per cent here and 2.2 per cent in Victoria compared to a pared-back national average of about 1.5 per cent.

NAB chief economist Alan Oster said Brisbane was the best city for capital growth this year (5.7 per cent), followed by Sydney (4.1 per cent) and Melbourne (2.7 per cent).

The Queensland capital was also expected to hold onto that mantle into 2016 (3.8%), with Sydney and Melbourne to both sit on 2.3 per cent.

The NAB survey had some bad news for renters though, with rental growth expected to be strongest in Queensland and Victoria this year.

All markets except Victoria were also expected to see foreign buyers make up a smaller portion of the market. In Victoria foreign sales were around one in three according to the NAB survey, with the rest of the country sitting at around half that.

Mr Oster predicted there would be two rate cuts this year, in March and August, bringing the cash rate target to a new record low of 2 per cent.

“Our assessment of the market remains that house price growth will continue to moderate because of rising unemployment, sluggish household income growth, affordability concerns, cost of living pressures and high levels of household debt.”

But he said the two interest rate cuts “should support house prices a little more than previously expected”.

The figures come as one of the country’s biggest developers Stockland announced its first major acquisition of land in Queensland in five years, a $67 million purchase of 143 hectares of residential land at Scarborough in Brisbane’s north.

The Isles of Newport site was expected to have an end value of $590 million, with 1,500 new homes, a 28 hectare lake with high mast boat access to Moreton Bay, a village centre, parks and recreation facilities.

Stockland managing director Mark Steinert said building would start early next year with first settlement in 2017.

“We have some $3.7 billion invested in active projects in Queensland, and a further $3 billion of investment planned for future residential, retail and retirement living projects across the state,” he said.