Property price declines are no longer accelerating in Brisbane
Brisbane property market update November 2022
As we reflect back on this time last year, it is definitely apparent in our Brisbane property market update November 2022 that we are heading into the Festive Season this year with very different property market conditions throughout Brisbane. In November and December of 2021, we were hitting our peak rates of median property price growth across the city. This year, and as seen in the Brisbane Property Market Update October 2022, we have seen the opposite. Instead of growth, we have experienced declines in median property values in Brisbane over recent months. But the rate of these price declines now appears to be easing.
Segmented Market in Brisbane
The market has been segmented in Brisbane over the last few months, with unit values remaining relatively resilient, compared to house values. This is possibly due to the fact that houses had a much stronger period of growth during the recent bull market. From January 2020 (pre-covid) through to the peak in June 2022, Brisbane houses grew 42.7% according to CoreLogic data. And from September 2020 (during the first wave of covid) through to July 2020, Brisbane units grew by 20.6%. This was the fastest lift in prices in over two decades. Since reaching the peak, the median value of Brisbane houses has retracted -9.6% whereas the median value for units since the peak has changed only -1.7%.
Based on CoreLogic data, Brisbane houses have still demonstrated growth of 33.1% since the start of covid and Brisbane units have grown 28.9% since Covid first hit. The performance of both segments of the market has been very strong until recent months.
With the Reserve Bank of Australia hiking interest rates for eight consecutive months, we have now seen the official cash rate reach its highest level in a decade. With another 25 basis points rise on 6th December, the official rate now sits at 3.1%. This has had a marked impact on buyer sentiment and borrowing capacity, thus impacting the demand in some areas in recent months.
Population Growth
At the same time, Queensland has experienced the highest rate of population growth compared to all other states and territories over the year to March 2022. According to ABS Data, population growth figures were at 1.8% which is equivalent to 92,000 more people over the 12 months period. This is the highest level of population growth throughout Queensland since 2012. The large majority of this growth occurred due to interstate migration, with a net figure of around 54,000 more Australians moving to Queensland over the last 12 months.
Rolling Annual Interstate Migration (Australian States)
Interestingly, departures from Queensland actually declined marginally over the last two years, an effect perhaps due to lifestyle changes off the back of covid – especially for southerners looking to relocate.
A higher volume of people moving to a given location puts pressure on housing market conditions. Whilst the rising interest rate environment and inflationary pressures may have impacted demand in some ways, the increasing number of people relocating to Brisbane and surrounding areas has also helped to maintain the levels of demand in some areas. It is important to remember that there are a number of variables that impact the demand for property in any given market.
What is the Driving Force?
Data from the ABS relating to internal migration in the year to March 2022, showed that 47.8% of interstate migration to Queensland was from New South Wales. A further 27.9% was from Victoria. The relative affordability of housing across Brisbane compared to Sydney and Melbourne has been described as one potential pull factor.
The latest CoreLogic Data shows the median house price in Sydney is $1,243,126 and in Melbourne, it is $915,005. The median house price in Brisbane is just $798,552. The premium on the median Sydney House value is $444,574 and the premium on the median Melbourne House value is $116,453.
Another alternative driving force might be improved job opportunities. The annual jobs growth figure for Queensland was 4% in September 2022 which is well above the 20-year average of 2.4%. Also, the work-from-home shift perhaps made some areas in Queensland more attractive for those from other states who no longer had to commute into an office environment each day. The adaptation to remote work may have allowed more Australians to relocate to lifestyle locations for this reason.
Dwelling Prices in Brisbane
Throughout November, the median value of dwellings in Brisbane declined -2.0% according to CoreLogic. This is comparable to last month so there is no further acceleration in the median value changes. The annual change is still +3.3% for Brisbane Dwellings.
The median value of a dwelling in Brisbane is now $715,130.
Source: CoreLogic
Proptrack data reports a much more modest change in Brisbane property values during November. The Proptrack HPI model uses a hybrid methodology that combines repeat sales and hedonic regression. This is designed to estimate the change in property values in a way that is not affected by the quality and location of the sample of homes that transact in a given period.