Brisbane property market update May 2023 | An astonishing property price surge shakes up Brisbane

Brisbane property market update May 2023 by Melinda Jennison – Streamline Property Buyers

After two months of very modest dwelling price growth in Brisbane, the May data shows a huge spike in property values over a short period of time. Whilst it might be a surprise to some, the price surge in Brisbane property values last month has been on the radar for some time. With very low inventory levels, combined with increasing demand, buyers who may have been looking for a while are starting to stretch. Competition has been building for several months and, suddenly, the market conditions have turned once again.

The availability of stock is the biggest concern for buyers in the Brisbane market. City-wide, the flow of listings in Brisbane is tracking 26% below the previous five-year average according to CoreLogic.  Additionally, for sale stock levels in Brisbane are 39% below average.  At the same time, housing demand is slightly above the previous five-year trend.  This mismatch between the number of properties available for sale, and the number of buyers in the market is causing an element of FOMO to creep back in for some buyers.

Some suburbs are demonstrating tighter supply than others, with some of the biggest decreases in new listings on realestate.com.au occurring in Clayfield (-66% YoY%), Petrie (-63% YoY%) and Kangaroo Point (-60% YoY%). At the same time, other suburbs have seen listing volumes increase over the last 12 months. These locations include Aspley (+150% YoY%), Greenbank (+50% YoY%) and Jimboomba (+47% YoY%). Local dynamics like this can have an impact on the performance of different segments of the Brisbane property market, so it is always useful to understand that not all Brisbane locations will follow the broader trend.

 

If you would like some more data, listen to our episode of the Brisbane Property Podcast – Episode 157 Brisbane Data Update with Tim Lawless, Head of Research at CoreLogic Asia Pacific.

 

The competition is also causing days on market to trend lower, meaning properties are starting to sell quickly once again. It is very common for properties listed by private treaty sale to have multiple offers after the first Saturday open home. Brisbane buyers are once again compelled to be fully prepared for a purchase, often even before inspecting. This means completing thorough property due diligence, pricing analysis, and having advanced financing arrangements already in place to enable a quick offer process.

The demand for Brisbane properties is coming from local, interstate and overseas buyers. Interstate migration is still very strong off the back of the post-covid boom with Southerners looking for a more affordable, warm, and laid-back lifestyle. Also, according to PropTrack, Brisbane is one of the top five regions within Australia searched by international buyers from United Kingdom, United States, China, Hong Kong, New Zealand and Singapore. With the push for skilled migration, based on real estate search behaviours, it seems Brisbane is a destination of choice for many international migrants.

Apollo Auctions reported auction activity in Brisbane during May increased with an average of 3.9 registered bidders per auction which was up from 3.5 during April. On average, 60.3% of registered bidders were actively bidding during auctions in May, compared to 53.5% in April. Domain auction clearance rates came back slightly during May to 57%, compared to 62% in April. This is not due to the depth of buyers based on the volume of registered bidders, but perhaps due to the seller’s expectations being ahead of the market.

It is not a surprise that property prices have surged during May as the mismatch between supply and demand in Brisbane continues to escalate.

 

Brisbane Dwelling Values

CoreLogic data showed a jump in dwelling values in Brisbane of 1.4%. in May with quarterly growth now up 1.8%.  All segments of the market grew strongly, with a more rapid recovery in property prices being seen in the most expensive quarter of the market.

Source: CoreLogic

 

PropTrack also confirms positive price growth in Brisbane dwelling values in May with prices 0.33% higher across the month.

Source: PropTrack

 

House Prices in Brisbane

House values grew 1.5% in Brisbane in May, which was a large jump off the back of 0.2% growth in April.  The difference between last month’s median value and the median value this month is $10,244, which represents 4 weeks of market movement.

Source: CoreLogic

 

Proptrack data also confirms price growth in Brisbane houses for the month with a 0.22% increase reported over the month.

Source: PropTrack

 

Brisbane Unit Values

Units across Greater Brisbane grew 1.1% in May.  It is the first month since April 2022 when the housing market has outperformed the unit market in Brisbane, according to CoreLogic Data.  Units continue to outperform houses when looking at both quarterly and annual growth indicators.

Source: CoreLogic

 

Data by PropTrack also confirms growth in the unit market in Brisbane for May. This data shows 0.99% price growth in the unit sector, which suggests that units are still performing stronger than houses across Greater Brisbane.

Source: PropTrack

 

Both Units and Houses have demonstrated month-on-month growth over the last 3 months in Brisbane according to CoreLogic.  The graph above shows the rapid recovery in the change in property values following several months of negative growth in median values throughout Brisbane.

 

Brisbane Rental Market

The rental market across Brisbane remains tight with vacancy rates at 1% for all dwellings throughout the city.  The unit market is tighter than the housing market with vacancy rates according to CoreLogic sitting at 0.7% and 1.3% respectively.  These are well below the ten-year average vacancy rates for the city.  These are 4.1% for units and 3% for houses across all of Greater Brisbane.

Source: CoreLogic

 

The tightening of vacancy rates in Brisbane has been caused by a combination of a reduction in the supply of rental properties along with heightened demand.  More people have been needing rental accommodation off the back of record interstate migration in the post Covid-19 period, and also the reopening of the international borders.

It appears that many property investors decided to sell out of the market during the latter months of 2021 and early in 2022 with a higher-than-normal spike in the number of properties assumed to be investment properties hitting that market at that time.  According to CoreLogic, at its peak, it was assumed that up to 41.3% of properties being sold were investors off-loading.  At the same time, the lending data confirmed that the buyers were largely those looking to purchase their home.  So the net effect was a reduction in rental property supply.

Source: CoreLogic

 

Additionally, the number of advertised rental properties in Brisbane is almost 40% below the previous five-year average.  This is further confirmation that the supply of rental properties is supressed, at a time when more and more people are relocating to Brisbane and needing a place to call home.

Source: CoreLogic

 

As a result, rents are still increasing.  Rental price growth is higher in the unit market compared to the housing market.  Unit rents have grown 16.4% in Brisbane over the last 12 months and this growth still appears to be close to the peak rate of growth.  House rents have grown 9.4% over the last 12 months, however, the growth in rents in this segment of the market now appears to be slowing down month-to-month, perhaps due to some areas reaching affordability constraints.

Source: CoreLogic

 

Summary – Brisbane property market update May 2023

On-the-ground buyers appear to have regained confidence, especially in inner-city and middle-ring locations.  The market has turned around quickly, but uncertainty remains regarding the direction of interest rates in the months ahead.  It appears that buyer confidence picked up a lot at the time that interest rates paused in April, but it is possible that any further hike in interest rates in the months ahead could induce some further fear and uncertainty for buyers and consequently impact confidence.

There is still little evidence of forced selling in Brisbane due to mortgage arrears, however, this is unlikely to be a uniform effect across all locations.  Lower-income earning areas are more likely to feel the impact as higher-income earners generally have more of a buffer to withstand higher holding costs.

It’s important to note that unemployment remains historically low.  This is reassuring given it is less likely that we will see forced selling if people coming off fixed interest rates have a job.  It simply means most people will be able to afford to keep their properties with some lifestyle changes in their spending habits.

The future still looks stable for Brisbane property, despite the headwinds.  There are low volumes of properties to buy and low volumes of properties to rent at a time when demand is heightened. This fundamental mismatch between supply and demand will continue to support price growth in the months ahead.

 

We hope that you have found our Brisbane property market update May 2023 helpful.

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