Brisbane sales stay strong heading into winter
Brisbane sales stay strong heading into winter
Buyers are being warned to act now in Brisbane or pay a higher price in the future, with River City property firmly entrenched in booming conditions.
Brisbane’s price growth is being driven by the most expensive end of the market, which is growing at more than double the rate of the least expensive segment.
This is most likely due to a high level of activity by non-first homebuyer owner occupiers.
With interest rates still at record lows, buyers are taking advantage of cheaper than ever finance and we are seeing huge demand for large family homes in premium locations around the inner-city suburbs.
Investors are also stepping up their activity across Brisbane, motivated by the prospects for continued strong capital growth and also attractive investment yields compared to other large capital city markets around the country.
First home buyer activity is starting to pull back based on lending data, perhaps due to the rapid price growth to date likely impacting on affordability in some locations through the city.
With the local economy continuing to show signs of improvement, interstate migration stronger than ever, consumer confidence remaining high and even business confidence remaining strong, we are seeing persistently strong demand for housing across Brisbane.
Auction clearance rates have even been consistently strong every week in Brisbane, yet another sign of a strong housing market through the city.
The demand for housing is stronger than we have ever seen in our city.
In fact, Corelogic estimates that sales volumes have increased 25.6 per cent in Brisbane over the 12 months to April 2021.
This is a sign that people are buying, and they are buying at a rapid pace.
From the supply side, total listing volumes are still approximately 30 per cent down in Brisbane compared to the same period last year.
So, we have a huge number of buyers, competing for less stock. There is a very large imbalance.
This imbalance between supply and demand is continuing to create urgency for those in the market.
Fear of Missing Out (FOMO) is something we are seeing a lot among buyers.
Every time a buyer misses out, they get a little less fearful next time and they tend to get a little more desperate as well, often paying top dollar just to get into the market and out of the rat race.
Brisbane Property Market Prices
The latest Hedonic Home Value Index data by Corelogic showed that the median dwelling value in Brisbane increased 2.0 per cent in May.
This is a stronger result compared with April (up 1.7 per cent), so property price growth is again accelerating throughout Greater Brisbane.
The current median value for dwellings across Greater Brisbane is $574,572 which is $16,277 higher than just one month ago, and $52,886 higher since the CoreLogic results were published at the beginning of the year on January 4.
The quarterly growth in dwelling values across Greater Brisbane is now 6.2 per cent and annual growth for the last 12 months is now 10.6 per cent.
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 May 2021.
The 12 month change in Brisbane house prices has been 11.9 per cent.
The current median value for a house in Greater Brisbane is $641,727, the highest it has ever been and $19,921 more than one month ago.
Brisbane Unit Prices
The Unit Market in Brisbane saw further positive growth in the median value this month with another increase of 1.2 per cent growth in May 2021.
The 12 month growth for units across Brisbane is now 4.2 per cent, definitely a sign that the unit market has bottomed out and is beginning to recover.
The current median unit price in Brisbane is $411,664, which is $5,762 more than one month ago.
Brisbane Rental Market Movements
Vacancy Rates in Brisbane tightened further throughout May moving from a city-wide vacancy rate of 1.5 per cent in March to 1.4 per cent in April.
Every region tightened further between March and April which indicates a rental crisis is looming throughout Greater Brisbane.
This is something that is going to put upward pressure on rents as supply tightens in an environment whereby the demand for rental properties continues to increase.
Already, rents in the unit market in Brisbane have seen an annual increase of 2.6 per cent, up 0.5 per cent compared to last month.
Housing rents, however, are climbing faster, with the annual increase in rents for Brisbane Houses now at 7.3 per cent according to CoreLogic, which is 0.9 per cent higher than a month ago.
Gross rental yields for dwellings across all of Greater Brisbane remain at 4.2 per cent, which is still well above Sydney at 2.6 per cent and Melbourne at 2.9 per cent.
What did we see on the ground across Brisbane during May?
Not a lot has changed on the ground throughout May. Buyers are still very active at open homes on Saturdays and if you arrive on time to a property, you can expect to line up before you can move inside.
It can be quite tight in some properties, especially when buyers are all attempting to comply with social distancing requirements.
At auctions attended by members of our team, we are seeing a good volume of people registering to bid. Fewer buyers actually place a bid, possibly because the price escalates too fast and the property becomes out of reach for some early in the bidding process.
Most properties are achieving a good price at auction, especially when only two bidders are left and both parties seem to have that ‘never-give-up’ attitude. When this happens, the price achieved can often be quite inflated.
There has still not been a property that we have considered for our clients where multiple other buyers are also interested.
This is usually the case both on and off-market. The multiple offer process is becoming mainstream and most buyers who are active in the market are getting better prepared as they know properties are selling after the very first inspection.
The months ahead …
We often get asked ‘is now a good time to be buying in Brisbane’? The answer to this question requires an understanding of which direction the market is moving and what the likelihood of a market correction in Brisbane is, in the near future.
Based on our observations, the Brisbane property market will continue to grow in the coming months. This is because the demand for property from buyers still exceeds the number of properties available for sale. When demand exceeds supply, prices rise.
We need to see either buyer numbers significantly drop off, or listing volumes significantly increase for the market to slow down. When this happens, we will only see prices fall if the supply of properties exceeds the demand for those properties. This is not a situation we envisage any time in the short-term future for Brisbane.
So, if you want to avoid the competition, and sit on the sidelines until the market slows down, you may need a higher budget to buy into the same area that you can afford today.
Alternatively, you may need to look at alternative locations in the future, given you will most likely be priced out of your preferred suburbs due to market growth that will continue to happen between now and when the market starts to slow.
The time to buy – is when you can afford to do so. Don’t let the market conditions dictate the timing, or you may be disappointed in the future.