Brisbane Property Market Update August 2024

Brisbane Real Estate Trends: Units Outperform as Buyers Seek Affordable Options

Melinda Jennison

 

 

August has been another strong month for the Brisbane property market, which continues to show month-on-month growth amidst varying economic conditions at a national level. Brisbane remains a standout among Australian capital cities, continuing its trend of strong price growth over the past year. According to CoreLogic, Brisbane’s dwelling values rose by 1.1% in August, the same rate of growth from the previous month.

The quarterly growth rate in Brisbane has slowed more noticeably between May (4.1%) and August (2.9%).  This indicates a potential easing in demand as the market becomes less affordable.

Compared to other capital cities, however, Brisbane’s market remains one of the strongest performers. Perth leads the national market with a 2.0% increase in dwelling values in August, followed by Adelaide at 1.4% and Brisbane at 1.1%. On an annual basis, Brisbane’s dwelling values have risen by 15.0%, placing it behind Perth (24.4%) and on par with Adelaide (14.9%) in terms of capital growth​.

 

Brisbane’s unit market continues to outperform the housing market, demonstrating stronger growth across monthly, quarterly, and annual measures. This sustained trend highlights the increasing demand for more affordable and accessible property options within the city, as rising house prices have pushed buyers to consider units as a viable alternative. The strength within the unit market underscores its appeal to a diverse range of buyers, from first-time purchasers to investors seeking better gross rental yields.

Looking at the supply and demand indicators within the local market, Brisbane has seen an increase in both sales volumes and new listings. Sales volumes in Brisbane have grown by 7.5% over the past 12 months, indicating strong demand from buyers does still exist, despite the quarterly growth rates easing across the city.  Also, new listings in August were 13% higher than in the same month last year and 2.4% higher than in July 2024, giving buyers in the market slightly more choice than in previous months.

The buyer profile in Brisbane continues to be diverse, with investors accounting for 38.2% of housing finance commitments in Queensland, while first-home buyers make up 25.2%. The participation of investors remains strong.  In many parts of the State, this is driven by the attractive rental yields, however in Brisbane, especially in the housing sector of the market, it’s more the potential for capital growth.

Auction activity eased slightly between July and August, with the average clearance rate dropping from 61.8% in July to 57% in August. The number of registered bidders per auction remained steady at 3.1, while the proportion of those actively participating in the bidding process declined slightly from 63.6% to 57.9% over the past two months.

Brisbane Dwelling Values

Source: CoreLogic

A breakdown of the dwelling values by market segment reveals a more nuanced picture. The most affordable 25% of properties in Brisbane have seen a 5.6% increase in values over the past three months, while the most expensive 25% have grown by 3% over the same period. This suggests a sustained strong demand for more affordable housing, likely bolstered by the stronger performance in the unit segment, which sits at the more accessible end of property values compared to the housing market.

Source: CoreLogic

PropTrack’s data supports this positive trend, reporting a 0.35% increase in Brisbane’s dwelling values for August. While slightly more conservative than CoreLogic’s figures, the PropTrack data aligns with the overall trend of steady growth in the Brisbane property market​.

Source: PropTrack

House Prices in Brisbane

The housing market in Brisbane has also shown solid performance, with median house values increasing by 0.9% in August according to CoreLogic. Over the quarter, house values have risen by 2.5%, and on an annual basis, they are up by 14.1%. The median value of a house in Brisbane now stands at $966,382, highlighting the city’s sustained growth despite broader economic challenges​.

Source: CoreLogic

PropTrack’s data mirrors these trends, with a reported 0.4% increase in house values for August. This steady growth reflects the ongoing demand for housing in Brisbane, particularly in areas that offer value for money.

Source: PropTrack

Unit prices in Brisbane

The unit market in Brisbane continues to outperform the housing market, with CoreLogic reporting a 1.7% increase in unit values for August. This strong performance brings the quarterly growth rate to 5.0%, while annual growth stands at 19.4%. The median value of a unit in Brisbane has now reached $653,325, reflecting the growing appeal of units as a more affordable entry point into the market​.

Source: CoreLogic

 

PropTrack’s data confirms this trend, with a 0.2% increase in unit values for August. The consistent performance of the unit market highlights the strong demand for affordable, well-located properties in Brisbane, particularly as house prices continue to rise.

The Rental Market In Brisbane

Brisbane’s rental market remains competitive, with vacancy rates holding steady at a low 1.1% throughout August. This tight rental market has continued to push up rents, with annual increases of 6.0% for houses and 6.2% for units. Unit rents are growing at a slightly faster pace than house rents, however, there has been a substantial fall in the rate of rental price growth in recent months.  This will be welcome news for tenants who have had to withstand rent price increases of more than 20-30% over the last 2-3 years in Brisbane.

Source: CoreLogic Summary

Gross rental yields in Brisbane are currently 3.5% for houses and 4.7% for units, making the unit market a more attractive option for investors who may be looking for higher cashflows. The rapid increase in property values in recent years in Brisbane has led to a compression in the gross yields, particularly in the house market within inner city and middle ring areas. Despite this, the ongoing imbalance between supply and demand in the rental market suggests that rents may continue to rise, but certainly not at the pace that has been experienced in the last 2 years.

Summary

Throughout August 2024 Brisbane has reaffirmed its status as one of Australia’s most resilient and robust property markets. The city continues to experience steady growth in dwelling values, with both houses and units showing strong performance. The tight supply and high demand in the market are driving up prices, while the rental market remains competitive, with low vacancy rates and rising rents, albeit at a slower rate of increase.

Although the rate of growth in Brisbane is clearly slowing, housing values remain supported by a long-term shortage of new supply, a situation that has been further intensified by ongoing challenges in the residential construction sector.

Looking ahead, Brisbane’s property market is expected to remain strong, supported by ongoing infrastructure development, economic growth, and low unemployment. The recent opening of the Queens Wharf project is just the beginning of several major developments that will further enhance Brisbane’s appeal as a leading investment and lifestyle destination.

However, affordability is becoming an increasing concern, particularly in areas where property values and rents have risen significantly. Following the state election in October, the market may see increased certainty, providing further confidence for both home buyers and investors. Nonetheless, understanding local market nuances will be crucial for those looking to invest in Brisbane, particularly in navigating the affordability challenges that are likely to persist.

Housing values in Brisbane cannot continue to rise at the same pace broadly speaking as affordability becomes increasingly strained.  This is especially true given the current environment of elevated interest rates, a loosening labour market, and mounting cost of living pressures.

In conclusion, Brisbane’s property market continues to offer strong opportunities for future capital growth, but careful consideration is required to navigate the evolving market dynamics. Whether you are a first-home buyer, investor, or looking to upgrade, Brisbane remains a compelling option with a promising outlook.

We hope that you have found our Brisbane Property Market Update August 2024 helpful.

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