Brisbane property market cools sharply as buyers regain the upper hand

October delivered another month of softer numbers for Brisbane property, and there is no point pretending otherwise.

Cotality recorded a 2.0 per cent fall in Brisbane dwelling values over the month, taking the rolling three-month decline to 6.1 per cent. Brisbane was the weakest-performing capital over October and, at face value, those numbers look confronting.

But I think this is one of those periods where the headline number needs to be read alongside everything else that is happening in the market.

The first thing to remember is that Brisbane is coming off an extraordinary period of growth. Even after the recent correction, dwelling values remain 46.1 per cent higher than five years ago and 98.2 per cent higher than 10 years ago. The current median dwelling value is $1,018,401. So while values have fallen from their May peak, most Brisbane homeowners who have owned for any reasonable period are still likely to be sitting on a very substantial equity buffer.

More listings, greater choice

The second thing is demand. Estimated home sales across Brisbane over the past three months were around 29 per cent lower than the same period last year. Median days on market has increased from 17 days a year ago to 38 days, while total listings over the four weeks to 25 October were 58.1 per cent higher than a year ago. Yet new listings were actually 12.9 per cent lower.

Stock is accumulating because property is taking longer to sell, not because Brisbane has suddenly been flooded with new listings.

Buyers have more choice, more time and more negotiating power, while sellers are having to be more realistic about where the market is today. In fact, Brisbane’s total listings are now 24.6 per cent above the previous five-year average, despite new listings sitting 16.9 per cent below that average.

Higher interest rates are clearly playing a role. The cash rate had already increased by 100 basis points this year to 4.60 per cent ahead of the latest RBA rate hike, reducing borrowing capacity and affecting confidence.

For many buyers, the issue is not that they no longer want to buy. It is that the amount they can borrow has changed, repayments are higher and they are less willing to rush.

The Reserve Bank then lifted the cash rate by a further 25 basis points on Melbourne Cup Day to 4.85 per cent. Cotality estimates that this latest increase takes the reduction in borrowing capacity through the current rate-hiking cycle to around 11.5 per cent, or more than $105,000.

There are still some important positives sitting underneath the short-term data. Queensland’s unemployment rate was 4.5 per cent in September, slightly below the national rate of 4.7 per cent. Within Brisbane, unemployment remains lower again across the inner city, north and west.

Brisbane’s economy is also forecast to grow strongly over the longer term, supported by professional services, healthcare, transport and logistics, advanced manufacturing, construction and the visitor economy.

We have also seen a market like this before. During the second half of 2022, Brisbane house values fell by more than 2 per cent in a single month at the steepest point. By early 2023, values were rising again even while the Reserve Bank was still increasing interest rates. That does not mean history will repeat itself in exactly the same way, but it is a useful reminder that sentiment can change relatively quickly.

Brisbane dwelling values falling

Brisbane dwelling values fell 2.0 per cent in October, following a 1.5 per cent decline in September. Readers comparing this with last month’s update may notice that Cotality has since revised September’s result to a 2.1 per cent fall. Revisions are a normal part of the index methodology, with each month updated as later-settling sales are recorded.

Over the rolling quarter, values were down 6.1 per cent, compared with a 4.7 per cent quarterly fall reported a month earlier. Annual growth has now slowed to just 0.4 per cent.

That still compares more favourably on an annual basis with Sydney, down 9.4 per cent, Melbourne, down 7.6 per cent, and Canberra, down 3.7 per cent. Adelaide was up 3.7 per cent, Perth 3.9 per cent, Hobart 5.5 per cent and Darwin 9.7 per cent.

It is also worth looking at a second data set. PropTrack’s Home Price Index, which measures the same Brisbane market, is reporting a much milder result. PropTrack shows Brisbane dwelling values down 0.4 per cent over the month and 0.2 per cent higher over the year, with a median dwelling value of $1,014,000.

In theory, both indices are tracking the same thing. In practice, they use different methodologies, data inputs and reporting periods, so their monthly results can diverge, particularly when market conditions are shifting quickly.

Both measures agree on the direction. Brisbane values are falling, annual growth has flattened to close to zero, and the median dwelling value sits at just over $1 million on either measure.

The market has also become much more uniform across price segments. Over the three months to September, Brisbane’s lower quartile fell 4.3 per cent, the middle 50 per cent fell 5.0 per cent and the upper quartile fell 4.6 per cent. In the previous three-month period, those falls were 2.0 per cent, 2.9 per cent and 2.8 per cent respectively.

Earlier in the downturn, the more affordable end was showing greater resilience, but that gap has now narrowed considerably.

Brisbane house prices slip below year-ago levels

Brisbane house values fell 2.0 per cent in October, taking the median estimated house value to $1,111,530. That is $34,548 lower than the $1,146,078 reported at the end of September.

Over the quarter, house values fell 6.2 per cent, compared with 4.9 per cent in September. On an annual basis, Brisbane houses are now 0.2 per cent lower than a year ago.

PropTrack recorded a smaller 0.4 per cent fall in Brisbane house values over the month, with house values 0.8 per cent lower over the year and a median house value of $1,150,000. On both measures, Brisbane houses are slightly lower than a year ago.

Again, the comparison with other capitals is useful. Sydney house values were down 10.8 per cent annually and Melbourne 8.9 per cent, while Adelaide and Perth were both still up around 4 per cent. Brisbane is therefore clearly in a correction, but it is not experiencing the same annual decline as the two largest capital city markets.

Brisbane unit values hold up better than houses

Units also moved lower in October, falling 1.7 per cent over the month and 5.6 per cent over the rolling quarter. The median estimated unit value is now $811,084, down from $834,627 in September.

Importantly, units are still outperforming houses over the year. Brisbane unit values remain 3.4 per cent higher than 12 months ago, compared with houses at -0.2 per cent.

PropTrack tells the same story, with Brisbane units down 0.3 per cent over the month but still 3.2 per cent higher over the year, at a median of $810,000. On either data set, units are outperforming houses.

Units generally sit at a lower price point, which is significant when borrowing capacity is constrained. There is also still a significant affordability gap between houses and units, so the unit market continues to attract buyers who may no longer be able to stretch to a detached house in their preferred location.

Rental market remains tight

The rental market remains much tighter than the sales market.

Greater Brisbane’s vacancy rate remained at 0.9 per cent in September according to SQM Research. Cotality shows annual house rent growth holding at 6.7 per cent in October, unchanged from September, while unit rent growth increased slightly from 5.9 per cent to 6.1 per cent.

Gross rental yields have also edged higher as values soften and rents continue to rise. House yields increased from 3.4 per cent in September to 3.5 per cent in October, while unit yields increased from 4.2 per cent to 4.3 per cent.

For investors, that does not suddenly make every property cash-flow positive. Interest rates, insurance, maintenance, strata and other holding costs remain high. But it does reinforce the point that rental demand remains very different to buyer demand, and Brisbane’s underlying housing shortage has not disappeared.

Brisbane property’s outlook

There is no question Brisbane has moved into a softer phase. Values are falling, homes are taking longer to sell and buyers have more choice than they have had for some time. Cotality and PropTrack differ on how sharp the decline has been, but both point in the same direction.

But this is also a much more fragmented market than the median numbers suggest.

We are still seeing scarce, high-quality property attract strong competition, and there have been suburb records broken across Brisbane even during this period of broader decline. Not every property follows the citywide median. Location, land, street quality, flood exposure, renovation quality, scarcity and the depth of the buyer pool are still of enormous importance.

It is also worth remembering that much of the October data reflects transactions occurring through a period when buyer sentiment was particularly weak. On the ground through October, we have started to see some improvement in engagement. That does not mean values will suddenly turn positive in November, but the rate of decline may begin to moderate if confidence stabilises.

The structural shortage of housing in Brisbane has not been solved. Brisbane is projected to add around 470,000 people over the decade to 2034–35, while delivering new housing remains difficult and expensive.

Sentiment will change at some point. When it does, buyer activity can return much faster than many people expect.