In this episode of the Brisbane Property Podcast, Melinda and Scott Jennison welcome back Tim Lawless, now Executive Research Director at Cotality (formerly CoreLogic), to unpack what’s really driving Brisbane’s red-hot property prices.
Together, they explore the hidden dynamics behind the market’s rapid re-acceleration: low stock levels, surging demand, investor momentum, and government incentives. Tim shares exclusive insights from his recent REIQ Lift Conference presentation and breaks down why Brisbane and Perth are pulling ahead nationally and what it means for buyers right now.
Whether you’re buying your first home, growing your portfolio, or just trying to make sense of the data, this is a must-listen.
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Transcript
0:02: Hello everyone and welcome back to another episode of the Brisbane Property podcast with Scott and Melinda Jennison, and we have a special guest today.
0:09: We’ve got Tim Lawless joining us from Totality.
0:12: Welcome, Tim.
0:13: Hey, Scott.
0:14: How are you going?
0:15: Very well.
0:15: It’s such a privilege to have you back on the show.
0:18: So for those that don’t know, who Tim is, he is the executive research director at KOtality.
0:24: Now, he has been on this show previously, and at that stage, he was the executive research director of CoreLogic.
0:32: So there’s only been a brand change, that’s all that’s changed, but it’s the same company.
0:37: With great property data.
0:38: And, we had the privilege of listening to a presentation that Tim delivered to the Real Estate Institute of Queensland members at the recent Lift conference.
0:49: And Tim actually presented some very relevant data on what’s happening throughout Southeast Queensland, why we’re seeing property prices escalate so rapidly, specifically in the last few months.
1:01: And we really wanted to unpack some of those insights with you on this episode today.
1:05: So Tim has kindly, provided us with the opportunity to talk through some of the, the reasons and trends behind why we’re seeing this price escalation right now.
1:15: And we’ll share, we’ll touch on it later on.
1:17: We’ll also share a lot of this information in the show notes, for everyone to have a look at.
1:21: Tim’s kindly said, Happy to share the information, I joked before we started actually, Tim, that, I probably won’t get a lot in today in this, in the podcast, because I’m surrounded by data and data people, and I called Melinda the data nerd.
1:34: Not that I’m calling you that, but, yeah, there’s a lot of information and it’s amazing, the work that you do and what you put out for people as well.
1:43: So yeah, I’m, I’ll sit back and probably listen a fair bit, but I’ll, I’ll chime in when I can.
1:47: How about that?
1:48: Well, thanks.
1:49: I’m sure you’re secretly a data nerd as well, so, He tells me it’s not, but he loves listening to me when I talk about data.
1:56: So, yeah, let’s play along with that for a while.
1:59: Tim, we know, we, we’ve talked about on this podcast through our monthly market updates, the fact that Brisbane property prices just continue to escalate.
2:09: the data’s now showed a renewed renewed lift in this, this momentum just in the last couple of months.
2:15: What is it that, you think is driving this momentum, broadly speaking?
2:21: Yeah, it, it is under some further re-acceleration after a bit of a, an ebb through, late last year and earlier this year, but definitely interest rates have a lot to do with this.
2:31: I think it’s no surprise or no coincidence that we started to see a re-acceleration in home markets around the country, not just Brisbane in February, and, they, they’ve gathered pace since then, but obviously it’s more than just interest rates.
2:44: It was just about the cash rate settings and and mortgage rates.
2:48: We’d be seeing markets booming like Brisbane is everywhere.
2:51: The reality is, lower interest rates, improved borrowing capacity and stoke demand, and that’s just running headlong into extraordinarily low available supply levels.
3:02: And, there’s only one way price for prices to go.
3:05: You’ve got, you know, rental vacancy rates are sort of sub 2%, rents are are pretty high as well.
3:11: You’ve got property prices rising really quickly and, The only other option apart from buying or renting, of course, is to stay at home for longer.
3:19: Social housing, of course, is also an option, but there’s a real housing shortage, not just in the number of homes we’re building, but just in available supply that’s facing a a demand shock, and that’s really what’s pushing, pushing prices higher.
3:33: So if we can unpack some of this data a little more, if I may, just in the last 12 months, for example, we’re seeing those listing volumes, remain consistently below our long-term average.
3:45: And I think the most recent totality data sits, those listing volumes about 31% below, unless you’ve got something more recent.
3:51: Is that correct?
3:52: Yeah, we, we did publish some, some updated this, this week, but yeah, it’s, it’s still about 31% below the 5 year average, and pretty much at record lows as well when you plot out total listings.
4:03: Over the past 15 years, we’ve never seen listing numbers this low, even, even adjusting for seasonality, so, it’s extraordinary when you have demands tracking consistently above average and just such a short level of available supply to choose from.
4:19: And I know on the ground, we can assess demand based on who’s turning up at open homes, how many people are registering for auctions, how many people are actually participating in a multiple offer scenario where there might be more than one buyer on a single property.
4:34: So those real-time measures are things that we as buyers agents can see by being out and about on the ground.
4:39: In terms of data tracking, what are some of the indicators that buyers can look at as, as a, an indicator of demand side pressure?
4:50: Well, those are good observations, and I think anecdotally, anyone that’s looking to purchase in the market is probably, you know, getting amongst it as such, and they’re probably seeing, the, the busy open homes and so forth.
5:02: But there, there is a range of data.
5:03: I mean, I think in this day and age of transparency, there is a lot of data that consumers or potential home buyers can be tuning into.
5:10: It doesn’t necessarily need to be from totality, there’s plenty of providers out there, and, Yeah, I think if you’re, I mean, you’re spending hundreds of thousands of dollars to get into a high value asset class, it’s worthwhile doing some research.
5:23: So I think, wherever you look, just try to stay on top of the numbers and, you’ll see it pretty clearly that homes aren’t on the market for very long.
5:31: They, they’re sort of racing at the door.
5:33: There’s not much negotiation to be had, discounting rates are pretty much at record lows as well.
5:38: Clearance rates are above average.
5:40: So all those indicators are pointing to a market that’s very much skewed towards sellers and buyers, probably are feeling this, this sense of angst and urgency when they’re looking to engage with the market.
5:51: We, we actually went to and we, we talk about numbers, Tim, and there was one, I think it was 2 weeks ago now, and we’re involved in a negotiation or pro well, OK, I’ll rephrase that from negotiation, but in a multi-office situation.
6:04: , and I actually told someone just the other day about it, and they thought I was joking, but there was 34 offers, I think there was, on the property.
6:12: and that’s the first home, 34 offers, that’s the sort of pressure that people buyers are under, really short time frames, they’ll list it, they’ll sell it really fast, and you’ve, there’s so much competition.
6:24: So massive, demand in the market that we see on the ground when we’re out and about.
6:30: Yeah, I can imagine how frustrating that is for someone in the market, and, they’re consistently getting gazumped.
6:37: It’s not a time to be negotiating hard when the market’s like this.
6:41: and it’s also really important to get all your ducks in a row.
6:44: Like, we do a lot of work with the banking and finance sector, and, you know, one of the key frustrations is the speed of getting loan applications through.
6:53: I mean, even though it’s pretty quick these days.
6:55: If you don’t have your finances in place before you’re, you’re ready to execute on a, on a deal, then you’re kind of gonna get left by the wayside.
7:02: Yeah, it’s a good point.
7:03: We always talk about, it doesn’t always come down to price.
7:07: The terms matter a lot, and absolutely, you’ve given some good advice there, make sure that you are finance ready and you’ve got your professional team around you to be able to act really quickly and tighten up those terms so that you can be as competitive as possible outside of price.
7:22: Tim, in terms of sales volumes, we’re seeing sales volumes track above average levels at the moment.
7:27: Another indication.
7:28: Perhaps of, the demand, you know, that is in the market.
7:32: If sales volumes are tracking above average, and yet at the same time, we’re seeing those listing volumes, consistently below average, is there a hint just in that imbalance that there may be more properties transacting off market or not actually hitting the listing portals?
7:48: Or what, what else could explain that, that difference between the, the demand and supply?
7:54: Yeah, I think there’s two things going on.
7:56: Absolutely.
7:57: I think we’re probably seeing anecdotally at least, more properties are being sold without an advertising campaign.
8:03: I have seen some headlines in the news that could be as high as 20% of properties are sold without, being traditionally marketed.
8:12: That sounds really high to me, to be honest, and it’s probably more synonymous with some of the more high-end suburbs, particularly around Sydney.
8:19: But I think overall, absolutely, when a market’s this tight,, you know, a vendor who doesn’t necessarily want to go through the, the process of having an open home or property inspections and so forth, it’s probably quite appealing to sell your home off market.
8:35: There is a little bit of risk, of course, that you’re not opening up to the broader market, you might not be getting the best price if you’re doing it that way as a vendor, but yeah, I could see the appeal, and if you’ve got a pretty good understanding of of what your home’s worth and, You’ve got a bottom line and, an offer comes over that, then yeah, you could see why properties would be selling without an advertising campaign.
8:55: But the other reason, you know, we look at the flow of new listings coming into the market as well as just the total number of listings.
9:02: The flow of new listings is relatively low, it’s below average, but we’re definitely seeing a pick up through spring, like we, like we normally do.
9:09: The simple reality is that that higher flow of fresh listings coming into the market is just getting absorbed really quickly, that the rate of sale is, is really quick.
9:18: So across Brisbane, typical days on market is 21 days.
9:22: that’s way below average, it’s one of the lowest of any capital cities.
9:26: The rate of negotiations is about 2.9%, it’s never been that low.
9:30: So, yeah, I think it’s, it just highlights that, even though we’re seeing more vendors coming into the market through spring, That stock is just, it’s not hanging around.
9:39: It’s, it’s growing really quickly, and that, that also contributes to, the, the persistently low level of total inventory.
9:46: I, I know we, I know we talk about Brisbane, in particular, obviously being the Brisbane Property Podcast, but what are you seeing, Tim, when you, when you travel around Australia?
9:54: and I know, I think even when you set off here, you’ve, you’ve recently been jetting around, I won’t say jet setting, but you’ve been jetting around Australia.
10:02: But I mean, what, what are you seeing everywhere else compared to what we see in Brisbane?
10:07: Well, yeah, there’s definitely some, some diversity.
10:09: Every market around the country is rising in value now.
10:12: Even some of the markets that have been previously softer, like Melbourne and Hobart, they’re clearly trending higher, but not as quickly as the mid-size capitals.
10:20: If you think about the last 5 years, it’s really been a story of Brisbane, Adelaide and Perth really driving the strongest capital gains.
10:27: Adelaide does seem to be tapering off a little bit now.
10:30: It’s, it’s rising and it’s accelerating.
10:32: But Perth and Brisbane are really pulling away from the pack once again.
10:35: So is Darwin, interestingly enough.
10:38: So, Melbourne’s still pretty soft, but values are rising there, they’re rising about 0.5% month on month.
10:44: Sydney, maybe surprisingly so, is still a pretty strong market.
10:48: We’re seeing the market up about 0.8% over the last month, despite the fact that it’s extraordinarily unaffordable.
10:55: So, yeah, I think, even though there’s some diversity, the the main theme is, pretty much interest rates are are floating every boat around the country.
11:03: Most markets are still seeing listings below average, again, and not to the same extent as Brisbane.
11:10: And, we’re generally seeing investment activity is relatively high as well, but that does seem to be a little bit more concentrated in markets like Queensland and WA, really surging into into Northern Territory now as well.
11:22: It’s really interesting.
11:23: I mean, I know that, you know, Queensland has been on the radar for property investors for quite some time now, and a lot of people have been attracted to the yields, and I guess until more recently, affordability drivers, especially here in Brisbane, I’d like to sort of touch on some of those affordability indicators, because I know a lot of people that we’re working with, They, there’s some hesitation in terms of, well, surely, property prices cannot continue to escalate because there’s an affordability ceiling, and we absolutely agree that that is the case.
11:55: But when we actually analyze some suburbs or, smaller geographical patches within Brisbane, we can see that there’s some areas that are a lot less affordable than other areas.
12:07: Do you feel that there may be some slowdown in some areas and, you know, the main The, the growth may be maintained in other areas simply because affordability is, is limiting that growth.
12:21: Or do you think that, in some of those areas where affordability is a constraint, those interstate investors may in fact be propping up those markets?
12:29: I know it’s a loaded question, and it’s quite a big one, but I’d love your perspective on that.
12:33: Well, yeah, I think when you unpack the Brisbane market, it’s kind of like a Russian doll, right?
12:37: There’s all these micro markets and that they all fit together as under this broader headline of Brisbane.
12:43: And as an analyst, sure, I, I normally do talk sort of the macro trends across the capital cities and so forth, but, but absolutely, when you drill down, there are very different speeds the market’s running at, and we’re seeing most of the strength in the housing market is at that lower end, that lower quartile of the market.
13:00: So when we talk about the lower quartile, that’s simply the most affordable 25% of the market based on on price.
13:06: And if you look at how values have tracked, say, across Brisbane’s lower quartile over the past five years, they’ve more than doubled.
13:13: They’re up, about 105%.
13:15: If you look at prices across the upper quartile, so the most expensive, quarter of the market, they’re up about 69%.
13:23: So 104% growth across the most affordable quarter of the market in 5 years, 69% across, the upper quartile of the market.
13:30: Even in the last 12 months, you can see this, this is still the case, a 13% rise in lower quartile values in a year, a 6.1% rise in upper quartile values.
13:40: So I think this, this is really speaking to, well, two things, the affordability you talked about Melinda, that, you know, Brisbane’s got a dwelling value to income ratio at 8.2%. That simply means if you’re on the median income and you’re buying the median price dwelling, you’re spending just over 8 times your gross annual household income, not not individual, your household income.
14:01: And if you were to service a mortgage on the median household income, buying a, the median price dwelling, you had a 20% deposit even.
14:09: You’re dedicating around about 51% of your gross your pre-tax income to service that mortgage.
14:15: The reality is, most lenders aren’t gonna lend you, gonna give you any money on that sort of a ratio.
14:22: So credit availability is another really important part of this, this scenario where a mainstream buyer on the state the median income is probably only able to service the loan, buying at the lower quartile in this sort of environment.
14:36: So we’re seeing a lot more demand just being skewed toward those lower price points simply because that’s where they can afford to pay down the mortgage, or at least demonstrate to a bank that’s where they can pay down the mortgage.
14:46: Remember banks are still assessing a borrower 3% points higher than the going mortgage rate.
14:53: Yeah, that’s, obviously those serviceability buffers are still being considered, which, you know, there’s a reason for that.
14:59: Obviously, it protects us as, as a whole economy in the event that interest rates do rise, and we want to make sure that people can continue to hold those assets, but, Based on what you’ve just shared, I mean, 51% of income to pay a mortgage based on the median income and the median dwelling value, you would think that that there’s nothing affordable in Brisbane, and yet we’re still seeing so much demand in the market.
15:25: are you, do you Foresee that, we’ll see this segmentation, the rich will get richer, the poor will get poorer.
15:31: People that can’t get into the property market, that they just won’t.
15:35: They’ll, they’ll be stuck in that rental cycle.
15:37: The people that can, they’ll just continue to build out these portfolios.
15:40: Is this the sort of environment that we’re now in?
15:43: Well, yeah, to some extent, and, I, I’ll put it this way, I think part of the strength of the marketplace, like I said, is, is mainstream buyers buying on that lower end of the market.
15:55: There’s also really elevated levels of investment activity.
15:58: I think that’s underpinning demand.
15:59: I mean, investors across Queensland are getting close to about 40% of mortgage demand.
16:04: That’s, that’s, that’s way above the long-term average of about 3, about 33%.
16:09: But there’s also this really rapid rate of interstate migration.
16:13: So there’s capital flowing across the border, a lot of it’s coming out of Sydney, which is a more expensive market.
16:18: You can, you know, sell out of Sydney or maybe utilize your equity in a market like Sydney and buy into cheaper markets like Brisbane.
16:25: And that also, I think is, is fueling some of the demand we’re seeing.
16:29: So potentially, you know, one way we could see this, this stop is, you know, we know that APRA, the financial regulator, the, the, prudential regulator, you know, they’re watching household debt levels and they’re watching the speed of investment credit growth really carefully, and if we do see investment levels remaining elevated, who’s to say we might not see credit conditions starting to tighten up for investment purposes.
16:51: That has happened before, the last time it was sort of back between, 2014 and 2018 that we saw those macro-prudential policies in place, and there’s already been some statements from both the RBA and AHPRA along those lines that this is something that they’re watching quite closely.
17:07: Yeah, it’s interesting, and I know that, You know, as the president of RIBA, which is another voluntary role that I hold, you know, we’ve been talking a lot and commenting in the media about the fact that there’s also been this surge in the number of buyers’ agents that exist in the last 5 years, and of course, they’re able to assist a higher.
17:28: Volume of investors, and they’re also operating in a way that’s borderless, so they don’t even need to be in the location that they’re buying.
17:35: And perhaps that has some influence on the volume of investors in the market as well.
17:40: Not, not an area that I want to touch on, but just a comment that I wanted to make.
17:44: Tim, you also mentioned, In relation to the dwelling price growth over the last 5 years, so the cheapest 25% of property values, the most affordable segment, grew 105% over the last 5 years, whereas the most expensive segment, grew 69%.
18:01: Now we are talking dwelling values here, I’m assuming, so.
18:05: Given that units have largely outperformed in the last 2 years compared to houses here in Brisbane, which I believe is unique to Brisbane compared to most other capital city markets, what impact do you think that might be having to this overall shift and spread?
18:22: And do you have any data that talks to the performance of the house market and the unit market in different segments over time?
18:28: Yeah, absolutely.
18:30: And it’s, it’s, it’s a great question because Brisbane is bucking the trends.
18:33: Normally, and, well, even historically, Brisbane house values have risen at a higher rate than, than apartments.
18:40: So this is a recent phenomenon that we’re seeing unit values rising at a faster, pretty decent, rate of clip, above house values.
18:48: So if you look at the last five years, the growth rate between the two assets is virtually the same.
18:53: So Brisbane house values, they’re up 80%, yeah, 81%, let’s say, in 5 years, unit values are up about 80% in 5 years.
19:03: But we’ve really seen the unit sector pulling away from houses since about 2023.
19:08: And, the last 12 months just gives you a little bit of context.
19:12: So Brisbane unit values over the past 12 months are up 12.4%, house values are up 8.1%. Now obviously if you’re talking dollar terms, it’s a little bit different, right?
19:21: So units are rising from a lower base, definitely a much higher percentage gain, but in dollar numbers, it’s not as stark.
19:29: So I think for for the local unit market, it is a market that went through a really long period of oversupply, it had a really long hangover.
19:38: That’s well and truly behind us now, we’re not building many apartments across Brisbane or for that matter most cities, it’s just really unfeasible for a lot of builders to do so, cos construction costs are so high and listing numbers are a lot lower than houses as well.
19:52: So, I think there’s a lot of things just driving this supply, demand disconnect.
19:56: We talk about the supply side, but on the demand side, units are cheaper, they’re generally more appealing to investors.
20:02: They’ve got the scarcity to them quite often, that the more established unit market is really strategically located as well.
20:09: So there’s a whole bunch of reasons why we’re seeing units outperforming, excuse me now.
20:14: But even, I mean, going back a couple of years ago, the difference between the typical house price and unit price in Brisbane.
20:19: Was above 75%, it was extraordinary, but the unit market was just chronically undervalued, and now it’s it’s a, it’s a much more more normal gap, so I think we’ve seen a really, you know, more normalization in the difference between those two product types.
20:35: Yeah, look, thanks for providing that insight, because I do know that when we are talking to a lot of people from other states and housing has outperformed units, in the last couple of years in those other states, and explaining to them some of the trends we’re seeing here in Brisbane, they’re genuinely surprised to to Hear that.
20:53: But as you’ve pointed out, it does come down to the fact that we were oversupplied.
20:57: We built too many too quickly.
20:59: We didn’t have enough, people to purchase them, nor did we have enough people to rent them.
21:04: So vacancy rates skyrocketed, and now we’re in a more normalized market.
21:08: And of course, there’s a very little supply pipeline coming.
21:13: Population trends.
21:14: I’d love to sort of touch on that, because I know a lot of people talk about population contributing to demand side drivers, and we know, as, you know, experts in the field, it’s just one thing.
21:26: but in your experience, and, and based on the research that, that you are sort of accessing, how much has the population surge off the back of COVID contributed to the current market dynamics here in Brisbane?
21:39: Yeah, it’s definitely been a factor.
21:41: I wouldn’t say, as you said, Melinda, it’s, it’s one of the factors, and I think maybe population growth is overstated a little bit in terms of its, importance to, to housing trends.
21:53: So if you look at population, there, there’s three components of population growth.
21:56: You’ve got your natural increase, that’s simply births minus deaths.
22:00: That’s pretty low at the moment.
22:01: We’ve seen a real drop in the fertility rate, which is contributing to that, people living longer as well.
22:07: And then you’ve got the, the two other components, which is net interstate migration and net overseas migration.
22:13: So most of that overseas migration is, you know, short-term migrants.
22:17: They’re here on, on short-term visas, they’re often students, and they tend to rent rather than buy.
22:23: So on our research, we definitely find a much stronger correlation between interstate migration trends, which in Brisbane or or Queensland more broadly, they, they remain the the strongest of any, any state across the country.
22:36: But they’re nowhere near as strong as they used to be, so through the pandemic, interstate migration absolutely rocketed.
22:43: It’s coming back down to pretty much pre-pandemic levels now, which again is still, still very high.
22:49: We’re seeing a lot of people coming into into Queensland, particularly Southeast Queensland, attracted by a whole bunch of things, you know, a strong economy, the lifestyle, I think that that lifestyle component is becoming more and more of a, of a drawcard when you when you’ve got hybrid working arrangements that seem to be permanent.
23:05: To some extent, the affordability, but it’s much harder just to argue that that affordability factor these days.
23:10: Yeah, it’s an interesting, thing.
23:13: I know that we often see, people market the fact that this is a high growth region, and, I think that that might imply high, property, sorry, high population growth, but not necessarily high, property value growth.
23:28: So there’s a lot of components that go into property price pressure.
23:32: Population growth is one of them, as you’ve rightly pointed out.
23:35: , the various breakdowns as to where those people are coming from has a bigger influence in terms of the demand for housing, and it’s really important that people understand that and don’t just rely on a single indicator.
23:48: I’m just gonna keep talking, Scott, because I’ve, I’ve got about 1000 questions.
23:52: We could create 3000 podcast episodes together, Tim, because I just love to, to leverage your knowledge, but also just Share some of these insights with our listeners.
24:01: But, first of October, we saw new, policy come into play.
24:07: The, the government’s expanded first home buyer guarantee scheme.
24:10: Now, on the ground, what we observed when it was first announced was this enormous shift in, in property prices almost instantaneously.
24:18: Demand just shifted very quickly.
24:21: We even heard at auctions.
24:22: Auctioneers were playing up the fact that there’s going to be more buyers, a bit of creating a bit of FOMO in the market, but it actually had an effect on moving prices very rapidly, and that’s based on our on the ground observations.
24:33: Now, anything that was happening throughout September, which is the period that we’re referencing here, is not going to be a settled sale until October.
24:41: Now, we’re recording this, nearly 3 weeks into October.
24:46: Is there anything in the data that that you’ve seen to date that suggests that September,, saw this surge, especially in price points under that $1 million price point here in Brisbane, which is the, the threshold that applies to those first home buyer guarantee benefits.
25:04: Yeah, it’s pretty much anecdotal now I would say, Melinda, and I think that the on the ground insights that that you guys would be seeing are probably the best, the best, observation at the moment.
25:16: I mean, leading into this expanded deposit guarantee, it was already those those sort of lower price markets that were performing the strongest, right, and I think this this expanded guarantee that’s taken the price cap in Brisbane, I think it was 750,000 before the 700,000 to a million, right, so it’s, it is a significant expansion.
25:37: There’s no, there’s no price, so there’s no income caps, there’s no, there’s no limits on number of places either.
25:43: So, absolutely, I, I’d see this as adding fuel to the fire and that on that market segment that’s sort of at the median or below.
25:51: and when you look around Brisbane, the sort of suburbs that are eligible, just based on their median values for houses and units across Brisbane, what, there’s, there’s about 43% of suburbs where the median house value is below a million dollars.
26:05: Almost, I mean it’s, it’s more than 90%, 94% of suburbs have a median unit value below the million dollar mark.
26:11: So I think very quickly, it’s gonna be those more desirable suburbs that are right on that sort of, the cusp of that, million dollar mark that are probably gonna be snapped up quite quickly, and before long, you’ll find that, there’s much fewer suburbs that are, sitting under those thresholds.
26:27: So I think it’s very much a case of first in best dressed with this, with this program, and then of course the other limitation is you really do need to be able to service.
26:35: The debt as well, and, and no doubt for a lot of prospective buyers, a 95% loan devaluation ratio is, it’s carrying a lot of debt and they’ve got to be able to demonstrate an ability to to pay it back, and that’s the part we talk about when we, we’ve talked about the unit sector of the market, that is the area that we’re really seeing a lot of pressure, because that’s the affordable price of that sub $1 million dollar price point for people that want the lifestyle, they want to get closer towards the city, they want the lifestyle of, You know, being near the coffee shops, those sort of things, so the unit market, which again, as you said, there’s a shortage on units, we’re still not, we’re not building and we can’t afford to build them, and that’s the market that we’re seeing more and more pressure because of this change as well.
27:19: Yeah.
27:20: Makes sense.
27:21: I’m going to, crystal ball it, and I know whenever I get asked to predict something, I hate answering the question.
27:27: So feel free to say, I’m not answering the question, Melinda, but I just want to ask you anyway, Tim, given the current fundamentals for Brisbane, obviously, we’ve got this low supply environment, we’ve got demand that’s escalated and, and likely to continue that way for some time.
27:43: Do you think we’re going to see some easing in the months ahead, or do you think it’s pretty much more price pressure and therefore, perhaps consistent growth in the months ahead?
27:52: It’s, it’s hard to see prices going backwards, that’s for sure.
27:56: But in the same sense, it’s hard to see prices or price growth continuing to accelerate like they have since February.
28:03: We’ve talked a bit about some of the, I guess the, you know, the limits or the barriers to further growth around affordability, and serviceability.
28:10: I think that’s probably the natural sort of ceiling.
28:13: To some extent anyway, but, and again, households can’t just keep on getting more and more heavily involved in debt because I think APRA and the RBA will become uncomfortable with that, and they, they impose some hard limits on debt to income ratios or something like that.
28:28: So my view is, expect prices to continue rising.
28:31: I just wonder if we’ll start to see that rate of growth plateauing out.
28:36: , due to some of those, those limitations in the market, and maybe more of this, this trend that’s really seen price growth skewed towards the more affordable edges of the market, we’re already starting to see economists, becoming more uncertain about the path of interest rates, you know, maybe one more cut through this cycle.
28:55: Hopefully it’s November, could be as late as, say, April or May of next year.
28:59: Some, some economists are predicting rates might rise from here.
29:03: So I think it’s fair to say palpable, levels of uncertainty at the moment.
29:07: But yeah, I think, if I was to pick any market around the country that’s likely to outperform, I think Southeast Queensland is going to be one of them.
29:14: The other market I’d be watching, I think, is Melbourne as well.
29:17: It’s, it’s got a real affordability advantage now, and, seems to be, well, it’s definitely offering better yields and probably starting to attract some more investment into that market as well.
29:26: .
29:27: Hot tip there.
29:29: you’ve obviously named Southeast Queensland as one of the, the locations to watch.
29:33: And, you know, I guess for investors when they’re making decisions about where to buy, there’s a whole host of, considerations that they need to take into consideration before, you know, looking.
29:44: To choose location and, based on, you know, the cost to hold, land tax, stamp duty, all of these barriers to entry can have an impact on, on where and what.
29:54: But ultimately, the long-term performance comes from the capital growth opportunity and, and that’s what we’re talking specifically about here today.
30:01: , outlook for 2025 based on, sorry, I’ll go ahead, 2026, we’re currently 2025.
30:08: I’ve lost a year.
30:09: Outlook for 2026, Tim, based on what you’ve just said, it sounds to me like you’re quite optimistic for Brisbane prices in terms of continued growth.
30:19: Yeah, absolutely, I am.
30:20: And I think, I mean, optimism is probably, it depends on.
30:25: But, yeah, I mean, some would describe a, a plateauing in, in the rate of growth is, is maybe a bit bearish.
30:31: I mean, I’ve seen some forecast, forecasts for Brisbane that are extreme.
30:35: But, yeah, my view is we’ll probably see housing values across Brisbane, sort of that the annual growth rate might get up to around 10% this year.
30:44: And then just start to taper off a little bit through next year as some of those, those barriers get in the way of further growth.
30:50: But somewhere between 5 and 10% next year sounds fairly doable to me.
30:55: And as an expert in this field, what metrics would you be keeping a very close eye on if you were looking to invest and, and at what point would you redirect your attention elsewhere?
31:07: Absolutely, the listing numbers, I think are the most important feature of the market at the moment.
31:11: So watch for any signs of, of total supply levels just starting to, to pick up.
31:17: I think that might be the first sign of of things just slowing down a little bit.
31:21: I’ll also be watching the finance trends, unfortunately they’re updated pretty infrequently, they’re quarterly from the ABS we’re looking at June data now.
31:28: But just looking for any changes in, say the investment appetite coming into different types of markets, and whether or not we’re starting to see any signs of, of credit policy changes coming through, as we saw through 2014, all the way through to 2019, amplified by the Royal Commission, access to credit is, is one of the most important things for the housing sector, and if we saw credit conditions tighten up, You’d have to guarantee that’s gonna slow the market down pretty much everywhere.
31:59: A, a bit of a different one, Tim.
32:00: I know we talk about, units and, houses on, on, we’ve gone through a lot of the data here.
32:06: What about the commercial side of it?
32:08: I know that’s a bit of a side one, but we do help commercial clients as well.
32:13: what, what do you see on the commercial side?
32:16: It’s definitely not my forte, Scott.
32:17: You’re probably better to answer that than me, but, but I’ll, I’ll say this.
32:21: I mean, commercial is, in my view anyway, anything other than residential.
32:26: And, if I was to buy anything in the, in the commercial sector, I mean, industrial still seems to be the way to go.
32:31: Sheds, are pretty low maintenance, that they’ve seen a lot of growth as well.
32:37: The yields aren’t as high as they used to be, but they’re still outpacing residential yields.
32:40: , retail’s bouncing back a little bit, even surprisingly, the office market, particularly in Brisbane, seems to be quite strong, particularly in the A grade and premium grade, but, I think for most, sort of, you know, mum and dad investors buying an office building probably is a bit, a bit of a stretch.
33:00: Stick with the units, I think, at the moment, the way they’re going.
33:03: Yeah, look, thank you so much.
33:05: Your insights have been invaluable once again.
33:07: And, just so that our listeners know, we will be attaching to the show notes, the Queensland housing trends, dated October 2025.
33:17: There’s a, a huge slide deck there showing all of the latest, trends for South.
33:23: Queensland, across Queensland as a whole, but, comparing that also to the performance nationwide.
33:29: And I think there’s some really valuable information there, and that was the content largely shared by Tim.
33:34: We’ve provided a brief overview today about some of those high-level trends that we are seeing through the data, but, hopefully that’s been valuable for the listeners out there.
33:45: Tim, thank you so much again for, for joining us again.
33:47: We’ll have to get you back again to, to talk more, and talk up, Queensland, cause I know you love it up this way as well.
33:54: And that’s why we say people want to move to, to Queensland as well for the lifestyle a little bit.
33:58: So, but, look, thank you so much for joining us again.
34:01: I will let Melinda wrap it up as I normally do and.
34:03: , we’ll talk again next week.
34:04: Thanks very much for listening and bye for now.
34:07: And of course, I will put, a disclaimer out there.
34:10: There is no bias in the detail that we’ve talked about simply because we’re based in Brisbane and then you’re based on the sunny Sunshine Coast.
34:18: So this is all fact and data and no bias.
34:21: Would you agree?
34:21: , absolutely, yeah.
34:25: Thanks for joining us, Jim.
34:27: Really appreciate it.
34:29: to all our listeners out there, thanks again for joining us on the Brisbane Property Podcast.
34:33: We hope you have enjoyed this episode.
34:35: Please, please share with friends and family if you’ve enjoyed this content, and we would love for you to leave us a review on your favorite platform wherever you listen to this show.
34:43: Until next week, we hope you have a wonderful few days.
34:46: We’ll speak to you again soon.
34:48: Bye for now.