Brisbane housing market- record prices, record growth, what’s actually going on?

In March 2021, Elevate Residential hosted a market update with property analyst and commentator Tim Lawless, founder of CoreLogic Australia research division. Tim provided a timely update regarding the state of the current Brisbane property market and future predictions, following is a summary of his key points: 

House values 

• Nationally, we are seeing a synchronised upswing in housing values with prices rising across every capital city and for the broad ‘rest of state’ region nationally. After recording only minor falls through the worst of the COVID period to-date, Brisbane housing values have been on a solid and broad-based upswing, recording a solid 5% 12-month increase.  
• One of the main reasons Brisbane is experiencing such strong growth is that in comparison to the housing value rises some of the other states have experienced, Queensland has a history of underperformance. Brisbane is proving to be a very ‘affordable’ housing market to invest in, compared with other states and that is driving strong interest, particularly from interstate buyers.  
• Sales activity has recovered sharply from the COVID related weakness in early 2020, with Brisbane’s six-month trend in house sales tracking 26.9% above the decade average. 

• It is a seller’s market and advertised supply levels remain around historic lows across most regions of Australia. With buyer activity up substantially, the imbalance between demand and supply is creating some urgency, supporting upwards pressure on prices– which we are certainly seeing in this local market.  
• The current rate of accelerated growth in Brisbane is predicted to slow, however this is not predicted until into the new year.  

Unit values 

• Whilst Brisbane house values are well into record highs, Brisbane unit values remain 10.3% below their 2010 peak, with values roughly on par with 2007 levels. 

• Brisbane’s unit supply is back to below average levels after a surge in unit construction activity which peaked in 2016 contributed to the weaker unit market locally. With a wind-down in new projects and a ramp-up in population growth, the supply over-hang has largely been absorbed. 
• Investment numbers are not as strong as they have been in the past for units, compared with houses, however, with prices low, there are arguably some good buying opportunities.  
• Apartments are stronger in the middle to outer rings, compared with the inner-city ring, however this trend is predicted to soften as people start to return to work and education.  

 Buyer preferences 

• Queensland is leading population growth across the country with interstate arrivals booming. This interstate migration can be attributed to housing affordability, employment and lifestyle considerations that are currently on offer in Queensland.  
• The major regional centres are outperforming their capital city counterparts through COVID with the ‘escape to the country’ lifestyle popular. This regional shift is most apparent in Victoria and New South Wales, however we are seeing strong interest in Queensland’s southern coastal areas.  
• We are seeing a shift in the preference for lower density housing options, a result of the home isolation and social distancing requirements of the pandemic. 
• Demand from net overseas migration has stalled and the impacts from this are being felt more substantially more in areas such as Melbourne and Sydney that rely on this market– there has been a limited impact in Queensland from this reduction.  

 Rental market 

• In Brisbane, even the weakest rental markets have not recorded a material drop in rents over the past twelve months. Stronger rental conditions are generally concentrated within the middle-to-outer ring detached housing markets. 
• Brisbane rental yields are substantially higher relative to the larger cities. With housing values generally outperforming rents, yields are trending lower, but with mortgage rates so low, there are likely to be more opportunities for positive cash flow investments. 

Economy 

• With all fiscal support reducing it is anticipated to impact property prices in some regard, however, this is not anticipated to be until next year. 
• There is no expectation from analysts that interest rates will rise this year, making borrowing money to invest in property very attractive and affordable.  
• Property headwinds: Phase-out of fiscal support | Overseas migration to remain low | Labour market slack | Low-income growth | Potential for credit tightening 
• Property tailwinds: Low interest rates | Economic recovery beating forecasts | Interstate migration | Liquidity | Vaccine 

 To view the presentation slides from market update from Tim Lawless– visit here.