Professional gamblers and rash speculators: A summary of the dynamics of the housing market in Brisbane's West End

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Although it is now widely acknowledged that the property boom in Australia has run its course, one area of continued interest in property markets is the interface between fundamental drivers of urban change and investment speculation. Gentrification or the revitalisation of inner-city neighbourhoods is an important aspect of urban change. Increased property value is one well-recognized dimension to gentrification, but the micro-spatial factors driving up prices are still debated. In particular, the role of heterogeneous players in the evolution of a residential housing market system is often neglected. In this paper, price changes in one inner-city setting in Brisbane, Australia, are dissected. Two categories of market player operated during different phases of the real estate boom in West End. Announcements of public investment disbursements seeded the entry of "professional gamblers" into the investment fray. "Rash speculators," on the other hand, delayed their purchase until they were convinced that premiums were being realised in the neighbourhood.

West End Prices in the Brisbane Context

This paper examines how the explosion in the demand for real estate played out in one inner-city suburb in Brisbane, Australia, between 1998 and 2004. According to the latest figures from the Australian Bureau of Statistics (ABS), during the twelve months to September quarter 2004, established house prices in eight Australian capital cities rose 8.2%--"the lowest annual increase since June quarter 2001." (ABS 2004) In Brisbane, although metropolitan-wide house prices grew by 20.5% for the year to September 2004, prices actually dropped during the last quarter of this period by 0.2%. The metropolitan-wide summary statistics mask considerable geospatial variation of price changes. It is likely that falls in inner suburb prices during 2004 were compensated by fringe suburb "catch-up" growth. Consequently, the summary 2004 figures need to be put in a geographically focused and longer-term context.

Taking 1991 as a base period, in the decade to 2001, median prices in central Brisbane metropolitan suburbs, defined as the 77 inner and core Statistical Local Areas (SLAs) out of the 163 SLAs comprising metropolitan Brisbane, grew annually by 5.14% in nominal capital growth terms. If 1998 is used as the base year, then nominal capital returns increase to 13.04% on an annually compounded basis. As table 1 illustrates, performance during the past seven years from 1998 can be split into two distinct phases, with 2001 being the watershed or "tipping point." From 2001, house price inflation accelerated. Table 1 also shows that West End enjoyed a fairly typical inner-city growth profile although it lagged behind some other suburbs, such as Cannon Hill, in price performance.

Background to West End

Brisbane has undergone significant structural urban change over the past decade (Stimson et al 1999; Stimson et al 2000). Urban change has also affected West End. In fact, significant industrial transformation of the suburb took place in the 1960s. For example, West End Traders Association president David Marinelli recently commented that "changes were part of the continual evolution of the inner city area and the industrial area itself only sprang up...

Original languageEnglish
JournalJournal of Property Tax Assessment & Administration
Issue number2
Publication statusPublished - 1 Apr 2005


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