Brisbane growth continues as buyers stay hungry

Brisbane’s rocketing price growth is showing no signs of slowing, even as momentum starts to slip in other capital city markets.

Brisbane buyers lining up
Prospective buyers continued to march on Brisbane properties en masse when the city wasn't in lockdown in June. (Image source:

Brisbane’s rocketing price growth is showing no signs of slowing, even as momentum starts to slip in other capital city markets.  

Buyer activity throughout Brisbane remained high in June, which to many market watchers is not a surprise. 

Brisbane is now ranked in the top ten most liveable cities in the world, according to the Economist Intelligence Unit (EIU), and rightly so.  Our city offers an amazing sub-tropical lifestyle where even in winter the sun shines and our outdoor lifestyles bustle.   

It is no wonder that the demand for property across the city is still strong.  With net interstate migration into Queensland exceeding 30,000 in 2020 (the first time since 2005), this was by far the fastest population growth rate of all capital cities around Australia.   

Employment also surged to a record high in Queensland with the unemployment rate for the State now sitting at 5.4 per cent.   

There are still some further improvements that we hope to see here in the coming months.   

With an increase in total job advertisements in Queensland of 154 per cent over the year, there may be further uptake in the months ahead.  

After seeing a spike in demand throughout February and March, the REA Insights Weekly Demand Index has been fairly steady since April 2021 across Queensland.  

This Index measures the number of people who are highly engaged with buy listings on compared to a baseline which is calculated as being the 52-week static average for the 2019 year. 

Interestingly, the number of people who are highly engaged with unit listings has been higher across Queensland compared with house listings.  

This is in contrast to what we have observed by being on the ground at inspections where anecdotally we are seeing more buyers attending open homes for houses than units – especially in Brisbane. 

In terms of apartment supply forecasts for Brisbane, there has been a significant slowdown in the upcoming pipeline of new developments. 

With long time frames for planning, marketing and construction for large apartment projects, the next wave of supply is still some time away.

In the meantime, the market will tighten further, particularly after borders reopen and international migration resumes.  

For property investors, the latest tax office figures have confirmed that there are fewer landlords who are negatively gearing their properties.   

This is because with interest rates so low, in many cases the rental income from the investment is sufficient to pay down the investment debt.   

This builds up the equity position in a property and provides a good buffer for any future potential increase in interest rates. 

And with the Australian economy rebounding so quickly, there are now some economists who believe that interest rates could rise before 2024.   

While there is no suggestion this is likely from the RBA, it is always a possibility.  It does look like interest rates might have reached their lowest point. 

So the outlook is definitely still bright for Brisbane.  Let’s see how the local market performed over the last month. 

Brisbane Property Market Prices

 The latest Hedonic Home Value Index data by Corelogic showed that the median dwelling value in Brisbane increased 1.9 per cent over the month of June.   

This is just slightly lower than the dwelling growth in Brisbane throughout May (+2.0 per cent) which some might assume means that the price growth is losing some momentum throughout Greater Brisbane.   

The current median value for dwellings across Greater Brisbane is $586,142 which is $11,570 higher than just one month ago, and $64,456 higher since the Corelogic results were published at the beginning of the year.  

The quarterly growth in dwelling values across Greater Brisbane is now 5.7 per cent, suggesting a slight slow down since last month, and annual growth for the last 12 months is now 13.2 per cent. 

However it is important to always break down the dwelling data into the housing and unit sectors as each of these types of dwellings has performed differently over recent months.   

Brisbane House Prices 

In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 2.2 per cent across the month of June 2021 which is consistent with the growth that we experienced in the housing sector throughout Greater Brisbane last month. 

The 12 month change in Brisbane house prices has been a gain of 14.8 per cent.   

The current median value for a house in Greater Brisbane is $657,551, the highest it has ever been.  This is $15,824 more than one month ago and $154,403 more than 12 months ago. 

Brisbane Unit Prices 

The Unit Market in Brisbane saw further positive growth in the median value this month, although a slow down in the momentum of that growth is evident within this sector.   

June saw an increase of 0.7 per cent for units in Greater Brisbane.  The 12 month growth for units across Brisbane is now 5.7 per cent.  

The current median unit price in Brisbane is $415,536, which is $3,782 more than one month ago and $28,116 more than 12 months ago. 

When we compare the Unit prices in Brisbane with other capital cities we find that our median Unit price is equivalent to the lowest 25th percentile of unit values in ACT and Hobart, and much lower than the 25th percentile for Melbourne and Sydney. 

This demonstrates how affordable Brisbane units are compared to units throughout other capital cities around Australia.

Brisbane Rental Market Movements 

Vacancy Rates in Brisbane tightened further throughout June moving from a city-wide vacancy rate of 1.4 per cent in April to 1.3 per cent in May.  

The current vacancy rates in each region are extremely tight across the city.  

Even the Brisbane CBD is seeing current vacancy rates back at levels seen in March 2020 before the pandemic.   

Tight vacancy rates like this are putting upward pressure on rents. 

Rental incomes in the unit market throughout Brisbane have seen an annual increase of 3.8 per cent, up 1.2 per cent compared to last month.   

Housing rents are still climbing faster, with the annual increase in rents for Brisbane Houses now at 8.4 per cent according to Corelogic, which is 1.1 per cent higher than a month ago. 

Gross rental yields for dwellings across all of Greater Brisbane have now started to fall with escalating dwelling prices outpacing rent price growth.   

At a city wide level, gross rents have dropped slightly to 4.1 per cent, down 0.1 per cent from last month.   

This is still very attractive compared to Sydney at 2.6 per cent and Melbourne at 2.8 per cent. 

What did we see on the ground across Brisbane during June? 

Like previous months, the number of buyers continued to exceed the number of sellers, causing most properties to sell with multiple offers throughout the month.   

The depth of buyers in some pockets of the city is greater than other pockets, and we are starting to see slightly decreased buyer depth at the lower end of the market. 

Towards the top end of the market however, the buyer depth is still very strong and houses within that top 25th percentile are moving very quickly.   

Auctions we attended were mostly sold, with the exception in a small number of cases where the vendor's expectations have now moved ahead of the market.  

This often happens when prices are escalating rapidly. Clearance rates, according to Domain, moved between 57 per cent and 88 per cent across the month, but every auction we attended had multiple registered bidders – even if it ended up passing in.   

It is possible that some buyers are starting to get buyer fatigue and this is causing them to make some very strong offers that are well ahead of the market.  

We have been seeing this – especially in the middle and top price points.  For those that continuously miss out, it is not uncommon to reach a point where getting into the market is more important than trying to buy well.   

This causes prices to rise as well, because with every new recorded sale, this becomes the new baseline that other buyers make an assessment from.

The months ahead 

Our position has not yet changed for the months ahead, and we are still optimistic that Brisbane has a lot of steam left which will keep prices escalating in the near future.   

We have not yet seen a slow down in the number of buyers in the middle and top segments of the market, so demand still outweighs supply in these sectors.   

We are watching closely for signs that demand is slowing or supply is increasing – but right now neither of these things are happening.   

For this reason we expect this price growth momentum to continue, more so for houses than units in Brisbane.

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