In this months’ Brisbane Property Market Update, it has been described as the “busiest January in a decade” by some real estate sales agents and we certainly agree with this statement.
Right from the first Saturday in January, we have witnessed record numbers of people at open homes, most likely fueled by the low interest rates, the limited volume of properties available for sale and rising market confidence.
Corelogic data released on 3rd February 2020 has confirmed that the median dwelling values in Brisbane rose again in January by a modest 0.5%, but when we look at houses alone this growth was 0.7% across January whereas units experienced negative growth of -0.6%. Of course, seasonal factors often result in reduced sales activity in the month of January, so we expect February will deliver a much better feel for the current Brisbane trends as activity returns to normal.
Looking ahead, interest rates are expected to see further reductions in 2020, which along with consistently strong population growth to South East Queensland, is likely to continue to support housing demand in Brisbane.
In terms of supply, according to the most recent quarterly ABS Data, published on 15th January 2020, dwelling approvals, commencements and completions are all collapsing across Queensland as a whole, despite rising population growth. Total dwelling commencements are down 27% from the previous year. Listing volumes remain 6% lower in Brisbane compared to this time last year, so this also puts limits on the available supply in the current market.
To summarize, supply is currently constrained and demand for property is huge right now in Brisbane.
If you are looking for sustained capital growth opportunities, according to Herron Todd White’s latest Month in Review, the closer you buy to the Brisbane CBD, the more likely you will see capital gains. Add to that … detached housing still attracts better growth premiums than attached housing. This is certainly supported by current Corelogic data. Commentary in the latest Herron Todd White report indicates that for a good investment location in Brisbane, you can travel further out but be nearby to public transport options, major services and employment centers.
With the First Home Buyers Deposit Scheme now in place, there is also going to be more competition in the market where properties are valued up to $475,000 in Brisbane (being the threshold that the Australian Government has applied for our City) This is something to keep in mind if you are looking to buy with a similar budget.
Gross yields are still very attractive in Brisbane, averaging 4.5%. Corelogic has confirmed that the City has experienced rental price growth of 1.8% over the last 12 months and SQM Research aligns with this showing an increase of 3.7% in asking rents over the last 12 months across Brisbane as a whole.
With interest rates at record lows (the average fixed rate mortgage for an investor was 3.48% at the end of December 2019) it is not hard to find positive cash flow properties in Greater Brisbane areas, but we urge investors to assess the potential for strong capital growth drivers in some of these locations if this is also part of an investors’ strategy.
As we always say. Brisbane is not one property market and there are certainly local pockets where growth has been much greater than the overall City average. The latest Domain House Price Report reported a number of suburbs that completely outperformed the Brisbane average – with many suburbs reporting strong annual growth well above 7% – and a few suburbs with double digit growth.
We are certainly excited by what we are seeing on the ground every week. The Brisbane market seems to be hot …. and the competition is fierce. We are monitoring closely price movements in “real time” throughout certain pockets to ensure we keep up with the very latest trends in our great city. It is interesting to monitor what we were saying 12 months ago. We will continue to write our regular Brisbane Property Market Updates to report on what we are seeing on the ground, as well as in the data itself. If you are interested in getting in understanding how we may be able to help you with a property purchase in Brisbane … please reach out to us at any time.