Active buyers place Brisbane on firm footing
Homebuyers and investors remain active in Brisbane, resulting in steadier median home values than in Sydney and Melbourne, and rising rents across large parts of the city.
With so much variation across Australian property markets, it can be hard to keep up with changes in specific regions.
In addition to house prices, key market data, including attendance at home opens, property listings, offers to buy, and auction bids and clearance rates, shows Brisbane property is holding firmer than other major cities.
Brisbane house prices
According to the latest Hedonic Home Value Index by CoreLogic, dwelling values in Brisbane declined 0.4 per cent in July, contributing to a 0.9 per cent fall in the last three months.
Brisbane median dwelling values remain 3.8 per cent higher than this time last year, however, at $502,167.
CoreLogic head of research Tim Lawless said markets across Australia had been largely insulated by record-low interest rates, government support and loan repayment holidays for distressed borrowers.
“Advertised supply levels have remained tight, with the total number of properties for sale falling a further 4.3 per cent in the 4 weeks to July 27, sitting 15.2 per cent below where they were this time last year,” Mr Lawless said.
“Additionally, increased demand driven by housing specific incentives from both federal and state governments, especially for first home buyers, have become more substantial.”
In Brisbane, median detached house values fell 0.3 per cent in July, to $555,284.
For the quarter, detached home values were down 0.7 per cent, while they remain 4.3 per cent higher than July 2019.
Units in Brisbane recorded a slightly higher median value decline of 0.5 per cent in July, falling to $384,681.
Median values for Brisbane units remain 1.3 per cent higher than at this time last year, CoreLogic said.
Brisbane rental market
At a city level, the rental market in Brisbane has definitely recovered, although there are still some at risk markets around our city.
The vacancy rate in many locations is trending down and is very tight.
But oversupply remains an issue in the Brisbane CBD and locations immediately surrounding this, and also in areas where there are a lot of higher density unit developments.
In these locations, vacancy is still a big problem, therefore these markets remain high risk.
However, asking rents, according to SQM Research, across the city have been trending higher, so this is reassuring for property investors.
That said, Brisbane is not one property market and caution definitely needs to be taken when looking at a postcode level. You will see in the Brisbane CBD, for example, the situation is very different.
What are we seeing on the ground across Brisbane?
In our opinion, the data above may be slightly misleading based on our on-the-ground observations. Despite the overall median data trend showing very slight falls in house values, we are seeing quality housing in very high demand.
Some open homes we have attended over the month of July have seen more than 30-40 groups through.
This illustrates that buyers are still very active in the Brisbane property market.
Advertised properties that are listed for sale in desirable locations are being sold very quickly in Brisbane. Often the sale is a result of multiple offers being submitted on the property. If listed for sale by auction, they are achieving high prices with multiple registered bidders.
There are markets within markets and we are seeing strong prices being paid for quality properties in many regions around Brisbane.
Herron Todd White noted it its latest monthly analysis that COVID-19 had not resulted in a measurable fall in Brisbane prices, with properties worth around $700,000 a solid value band.
“As such, don’t expect to score a bargain due to the pandemic,” Herron Todd White said.
“A lack of listings means buyer choice is limited.
“In addition, many properties are trading off-market.”
How does Brisbane compare to other cities?
Melbourne and Sydney are leading the decline in capital city values.
Melbourne recorded a 1.2 per cent fall in dwelling values across the month, whereas Sydney experienced a fall of 0.9 per cent in dwelling values in July.
This is certainly not surprising, given the recent second wave of coronavirus cases in Melbourne.
Consumer sentiment weakened in July, according to ANZ-Roy Morgan’s monthly index.
This index shows a high correlation with housing market activity (not prices), and suggests buyers and sellers may once again retreat to the sidelines.
In terms of changes in rent, Brisbane is doing well compared to other capital cities.
The weakest rental conditions are being experienced in Hobart (House rents down 2 per cent and units down 4.5 per cent since March), Sydney (house rents down 1.1 per cent and units down 3.2 per cent) and Melbourne (house rents down 0.7 per cent and units down -3.1 per cent).
It is important to mention that the weaker rental conditions are larger in the unit markets, compared to the housing markets in these cities.
What’s going to happen to Brisbane property?
There is a lot of worry and concern about what might happen to property values across the country when the government’s fiscal response starts to taper in October and repayment holidays expire at the end of March 2021.
We may see a rise in distressed properties coming to the market, but what we do not know is if this will put any downward pressure on prices.
This is where I think the different property markets around Australia will each experience something slightly different.
According to the Commonwealth Bank Home Buying Spending Intentions Index, there was a 6 per cent rise in home buying intentions nationally up to the end of June.
This index showed the index had returned back close to levels seen in March – after much weaker readings in April and May.
We are definitely seeing this trend on the ground with the current high volume of buyers in Brisbane.
Because of this, we could see some moderate increase in new listings come to the market without any significant impact on the supply and demand balance.
Remember, property prices will only fall when supply outstrips demand.
With dwelling approvals now at the lowest level in 8 years, the future supply pipeline also looks tight.
The most recent Australian Bureau of Statistics Data data showed a decline of 10.9 per cent in new detached house approvals in Queensland.
Real-time demand is still strong and Brisbane property buyers are being fuelled by the lowest ever interest rates, good levels of affordability and strong rental yields compared to many other state capitals.
This is good news for Brisbane property and these factors will continue to support our values into the future.