Brisbane CBD struggles as outer suburbs attract attention

Brisbane’s inner city rental and property market has taken a major hit but in the western corridor and outer suburbs buyers are competing for properties and rentals have avoided the discounting rife in the city.

The Brisbane property market as a whole has escaped the COVID-19 crisis relatively unscathed. House values rose a fraction in May, to a median house price of $508,386, following a 0.4 per cent the previous month.

Brisbane Real Estate sales manager Kel Goesch said investment buyers had dried up in March and April but that contraction appeared to be history.

“In the past few weeks, the investors have come out of the woodwork, particularly in the cheaper areas,” he said.

“Your more fringe suburbs in the three to five hundred thousand dollar range have really taken off as investors look for rental properties they can positively or neutrally gear with a view to capital gains in the years ahead.”

New listings climbed 37 per cent in Brisbane, compared to new stock on the market growing by 30 per cent nationally last month (to June 7), as the nation’s housing market and home opens emerged from their pandemic hibernation.

“Prospective sellers who had been sitting on the sidelines are now emerging as they see the ‘sold’ signs popping up on front lawns around them,” Mr Goesch said.

Defiant but tested

Universal Buyers Agents’ property expert Simon Clarke said shockwaves from coronavirus were being felt in most parts of the domestic economy, but the Queensland property market had defied broader predictions of a downturn. 

“We certainly saw the number of listings slow down, but what’s incredibly encouraging is that prices and interest have remained very steady,” Mr Clarke said. 

“There was some early uncertainty around whether prices would come under pressure due to social distancing, rising unemployment and consumer confidence taking a battering.

“But the latest data and our own experience in the market has shown that despite the battering the ASX and other investment portfolios have received, Queensland’s property market – particularly Brisbane – has remained rock solid.”

Mr Goesch supported that premise, saying demand was outstripping supply.

“We are getting a lot of buyers and multiple offers because of the low stock levels – in just 13 home opens we had more than 120 groups through last weekend, including 42 at one property alone.”

While the suburbs are shaking off the COVID malaise, it’s a different picture in the CBD. 

The exodus of students, expatriates and hospitality workers sparked skyrocketing vacancy rates and soaring discounts.

According to data published by Domain, some of the city’s inner hot spots were forced to slash median weekly rent prices by more than 30 per cent during the COVID-19 pandemic peak in April, with an overwhelming 636 rental listings still available as of May in Brisbane City alone.

The CBD’s rental discounting rate was still very high, at 32.9 per cent last month. 

This compared to outer suburban Manly, where there was a rental discount of less than one per cent.

With inner city rentals heavily dependent on absent international students, the toughest market in a generation for city landlords will take time to recover.

Green spaces, green shoots

As the CBD flounders and the outer suburbs attract heavy competition for buyers, the leafy suburbs in the middle were the next potential hotspot, according to Brisbane Real Estate.

Mr Goesch identified the western corridor’s Chapel Hill, Kenmore, Brookfield, Indooroopilly and Pullenvale as areas he expected to generate “exceptional demand”. 

The suburbs are only 15 minutes from the city centre but back onto 1600 hectares of forest in Mt Coot-tha Reserve.

“These leafy suburbs are attractive to the increasing numbers of buyers seeking lifestyle, with bigger blocks, great infrastructure and a commercial buzz,” Mr Goesch said.

Chapel Hill, for example, has a median house price of close to $700,000 and a median income over double the Brisbane equivalent. Many of its residents are professionals and academics who commute to work outside of the suburb.

Devoid of apartments, the suburb is currently undergoing a major suburban renovation, with many of the original houses (built in the 1970s to 1990s) being renovated and updated, with others demolished to make way for newer houses.