Brisbane price growth has officially turned around
Brisbane Property Market Update March 2023 by Melinda Jennison – Streamline Property Buyers
- Brisbane property prices are now growing again after several months of median value price falls.
- Quality listings are scarce and therefore the concentration of buyers is high for these properties.
- The Rental market remains very tight with good opportunities for investors to move back into the market
There is a lot to get excited about for Brisbane’s future! Our city is already gearing up with huge infrastructure advancements in the lead-up to the 2032 Olympic and Paralympic Games. This will benefit visitors to the city, but more importantly, it will have a huge and lasting impact on the local economy. Brisbane will see more jobs, improved commuting options, better lifestyle precincts, and a lot more. This is one of the reasons why this month, Brisbane was voted by Time Magazine as one of The World’s Greatest Places of 2023! How incredible is that!
March also demonstrated the first month of positive price gains across both the housing and unit markets throughout Brisbane, which brings more positive news for Brisbane property owners. Sentiment on the ground has picked up once again. Competition for quality properties is high and there are frequent examples of sales that take place with multiple offers as well as multiple registered bidders. Some people are wondering, how can this be? Weren’t property prices predicted to keep falling throughout 2023 according to a lot of economists?
It is interesting to see how property price predictions play out. It is rare for economists to get it right given they are usually sitting at a desk in an office somewhere, not seeing what is actually happening at the coal face.
For the last few months, the buyer activity in Brisbane has been increasing. This is based on the volume of people turning up at open homes, the number of registered bidders at auction, and also the number of properties that are being sold with multiple offers once again. This is occurring at the same time as listing volumes have been low. CoreLogic reported -17.1% fewer new for sale listings over the last 12 months in Brisbane.
Whilst total listings have increased slightly by 1.5% over the same period, there has definitely been an appetite for buyers to be much more selective in what they are looking to buy. This means that B and C grade properties that may be impacted in some way are taking a lot longer to sell. Whereas quality properties are being taken off the market very quickly.
Clearance rates throughout March, on average, according to Domain were 53% across Brisbane. This is slightly lower than last month. Remember clearance rates are not always an indication of the strength of the market as a whole, but rather an indication of a seller’s motivation to meet the market. There has been no shortage of registered bidders at Brisbane auctions with Apollo Auctions reporting an average of 3.7 registered bidders across the month at their auctions.
What is driving Demand?
With the latest population growth figures from the ABS confirming that Queensland’s population growth was higher than every other state and territory throughout Australia, it is not a surprise that we have more people competing for properties that become available for sale. Breaking down the volume of the population growth in Queensland, there were 2,201 people EVERY WEEK entering our state.
With almost one third LESS stock on the market in Brisbane now compared to our long-term average it is not a surprise that a floor has been placed on property values.
Whilst it is acknowledged that interest rates have been rising, contributing to the cost of living pressures, the most recent pause by the RBA will provide further confidence for buyers that we must be approaching the top of the interest rate cycle. Also, rising interest rates seem to impact lower-income earners more so than higher-income earners, so not everyone is experiencing the same effects.
In a recent report, Tim Lawless (Executive Research Director at CoreLogic), states “Although interest rates are high and there is an expectation the economy will slow through the year, it’s clear other factors are now placing upward pressure on home prices,”
The median house price in Brisbane is also a lot more affordable than the cost of housing in areas such as Sydney and Melbourne. So for those relocating, there is definitely excitement for what a certain budget will buy in Brisbane when comparing what that same budget might buy from the location they are leaving behind.
Additionally, with rental markets so tight it is possible that there might be some spillover from tenants who seek to buy instead of rent. Again this will be dependent on their affordability levels.
Brisbane Dwelling Values
For the first time since Mary 2022, according to CoreLogic data, Brisbane dwelling values showed positive growth in March. Dwelling values grew by 0.1% which is up from a -0.4% change during February. The quarterly growth trajectory is also rapidly turning around. Quarterly growth for Brisbane dwellings is now -1.7%. The median value for a dwelling across Greater Brisbane is now $698,071.
On the contrary, PropTrack data showed a very slight fall in Brisbane dwelling values of -0.06%. To quantify this, for a $1,000,000 property this equates to a price change of just $600 over the month. PropTrack data shows the median value for a Brisbane dwelling is now $712,000.
Brisbane House Values
House value changes in Brisbane have turned around rapidly over the last 4 months. In March, CoreLogic data showed a small increase of 0.1% with the quarterly change now reported to be -2%. The median value for a house in greater Brisbane is now $772,020.
PropTrack data this month reported house values in Brisbane retracted -0.02% with the current median value being $801,000.
Brisbane Unit Values
Following the trend from previous months, there was more strength in the unit market compared to the house marked in Brisbane throughout March. CoreLogic data showed that unit values increased 0.2% over the month with the median value recorded to be $492,415.
The alternative view reported by PropTrack data demonstrated that value growth in Brisbane was weaker for units than houses throughout March. PropTrack data showed unit values retracted -0.3% with the current median value being $532,000.
Whilst the fall in median house values in Brisbane was hard and fast from July 2022, the recovery at this stage appears to show a similar gradient. Of course, the months ahead may still have some headwinds but based on the graph below things certainly appear a lot more optimistic.
We remain curious as to why the two largest data providers for property values show slightly different results when they are meant to be measuring the same thing month-to-month. This is why we place a high level of importance on our on-the-ground research. When the reliability of the reported data is questionable it is definitely important to overlay that with what is being observed through buyer and seller activity on a week-to-week basis.
Brisbane Rental Market
Brisbane residential vacancy rates remain very tight and at record lows. Across all of Greater Brisbane, the current vacancy rate according to SQM research is 0.8%. It is not surprising that because there are so few properties available for rent, coupled with high tenant demand – rents are still rising.
House Rents in Brisbane have increased 11.2% over the last 12 months, while unit rents have increased 16.1% according to CoreLogic. With this growth, rental yields have become a lot more attractive for property investors. Gross yields are currently 4.1% for houses and 5.4% for units according to CoreLogic.
With such strong growth in rents, it is not a surprise that homelessness has increased as evidenced by tent cities popping up in many areas throughout Brisbane. According to the Queensland Council of Social Services homelessness across the state of Queensland has surged 22% since 2017. Currently, more than 300,000 Queenslanders are experiencing housing insecurity.
Reports show that the Queensland State Government needs to increase the delivery of public housing tenfold to keep up with the current demand. Clearly, this is not a situation that is likely to change any time in the near future.
The expected turnaround in property price changes in Brisbane has now arrived. Could this be the start of renewed optimism? Or is this just a momentary slowdown in falling prices?
Based on the fundamentals that drive property price changes, it is evident that across Brisbane we have very low supply and high demand. Whilst higher interest rates combined with high inflation levels have impacted some buyers, the impact does not appear to be the same for everyone.
It is also important to remember there still are markets within markets. A recent report by HotSpotting showed the strongest market sector across Greater Brisbane right now is the inner Brisbane precinct. These areas are typically occupied by higher-income earners who can afford to pay higher property prices or higher rents. This is another illustration of the fact that not all people are impacted in the same way by rising interest rates and higher inflation.
Of course, the full impact of the higher interest rates may not have yet flowed through to borrowers and we can expect some weaker economic activity in the months ahead. But despite these headwinds, we are starting to see the weighting lean towards more positive factors including inflation figures falling, the RBA cash rate cycle approaching the peak, and the volume of people still coming to Brisbane, and Queensland as a whole, is still increasing.
Fundamentals. This is what people should focus on. Getting caught up in the short-term changes in sentiment caused by factors that are transient can mean that property buyers can miss good opportunities when they become available.
Brisbane is a growing city. We have a shortage of dwellings. This situation will not change quickly. Therefore we can only see positive signs ahead when we focus on long-term property price movements across the city.
We hope that you have found our Brisbane property market update March 2023 helpful.
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