Brisbane still throwing off shackles of rate rises
The most recent interest rate hike has had minimal impact on the Brisbane real estate market but there are other pressures acting as obstacles to further price rises.
Brisbane’s property market continues to surpass the national average in terms of price growth.
While the national markets saw their smallest monthly gain since the growth cycle began in February, Brisbane maintained a more robust monthly growth result.
In the previous cycle, Brisbane witnessed an 8.9 per cent decrease in median property values from its peak in June 2022 to the trough in February 2023.
Since then, there has been a fast recovery, with median values experiencing growth of 12.2 per cent, as per CoreLogic data. This indicates a clear V-shaped recovery for Brisbane’s property values.
Throughout November, unlike Melbourne, Hobart and Darwin, which experienced price falls, and Sydney, which showed relatively stagnant performance, Brisbane stood out as a top performer alongside Perth and Adelaide. This could be linked to the remarkably low levels of advertised supply, occurring simultaneously with consistently high purchasing activity that exceeds average levels.
Up to now, the increase in rates on Melbourne Cup Day appears to have had minimal impact on the Brisbane market. Nonetheless, only time will unveil whether this adjustment exerts pressure on certain buyers.
Additional factors like declining affordability and consistently low consumer sentiment are also acting as obstacles. However, these factors seem to have a greater impact on the less affordable markets that also have higher listings, where buyers have more options.
In Brisbane, new listings experienced a slight increase of 3.2 per cent from October to November 2023, as reported by SQM Research. However, total listing volumes remained relatively stable, with only a 0.56 per cent month-on-month increase, still more than 30 per cent below the long-term average.
While this briefly sparked interest among buyers, it failed to match the levels of demand, as most properties continued to sell with multiple offers or multiple registered bidders at auctions.
Based on data from Apollo Auctions, the average number of registered bidders rose from 3.4 per auction in October to 3.67 per auction in November. Clearance rates stayed relatively constant at 63.2 per cent, while the number of active bidders saw a slight decrease from 62.5 per cent to 58.1 per cent.
Brisbane bettered only by Perth
Dwelling values in Brisbane saw a 1.3 per cent increase in November, according to CoreLogic, ranking second only to Perth in monthly price growth.
The median price for a dwelling in Greater Brisbane is increased $8,695 compared to the previous month, taking total gains past $20,000 over the last two months.
Slightly stronger growth was evident in the lowest 25 per cent of dwelling values across Greater Brisbane, with the middle segment and the top 25 per cent of the market not trailing far behind.
It’s crucial to highlight that the lower 25 per cent of the market primarily comprises the majority of unit stock throughout the city due to its price point. The unit market in premium locations around the city is particularly robust, with buyer demand occasionally drawing in 20-30 offers for well-located and affordable options for buyers.
Houses continue to outpace units
Over the past three consecutive months, house price growth in Brisbane has maintained consistency at approximately 1.4 per cent per month.
Brisbane has demonstrated robust year-to-date performance, achieving a 12.1 per cent growth during this period, bringing the current median value to $870,526, an increase of $10,061 compared to the previous month.
Unit values continued their upward trajectory in November, registering an additional 1 per cent growth for the month.
It’s worth highlighting that, according to CoreLogic, annual unit price growth in Brisbane remains more robust than house price growth. This is noteworthy, given that the magnitude of unit price growth has been less than house price growth since July of this year.
The median value of a unit in Greater Brisbane has now reached $552,332, marking an increase of $6,977 compared to the previous month.
Rental market in Brisbane
Between September and October, rental vacancy rates in Brisbane tightened further, decreasing from 1 per cent to 0.9 per cent, indicating a scarcity of available rental properties across the city, as per SQM Research.
The growth in rents for Brisbane houses has decelerated, with an annual rent growth rate of 6.6 per cent.
In contrast, annual house prices, as reported by CoreLogic, have reached 10.6 per cent.
This slower pace in rent growth compared to home values is expected to compress gross rental yields across the city, currently standing at 3.7 per cent for houses.
Conversely, for unit rents, the annual change has been 13.2 per cent, while unit prices have shown an 11.3 per cent annual change.
This implies that gross rental yields for units in Brisbane will continue to rise. Currently, they are at 5.2 per cent.
Low listings continue to usurp high interest rates
While the national trend for housing markets shows movement through a new inflection point, in Brisbane our local property market remains relatively buoyant.
The downside risk factors cannot be overlooked, with interest rates that are much higher now than 18 months ago impacting affordability when consumer sentiment is still extremely low.
The main difference that sets Brisbane apart, as well as other markets that continue to deliver monthly price growth such as Perth and Adelaide, is the fact that our listing volumes remain consistently low.
As we approach the final weeks of 2023, it's an opportune moment to contemplate how swiftly property markets can shift and why timing the market can be a challenging strategy.
A year ago, with Brisbane prices experiencing monthly declines, there was considerable fear and uncertainty among both buyers and sellers. Looking ahead to the present, those who adhered to Warren Buffet's advice of “be greedy when others are fearful” have reaped substantial rewards.
With listings expected to fall away as we approach Christmas, and buyers starting to thin out as they prepare for the festive season, the next month is likely going to be quieter across all segments of the market.
But 2024 is gearing up to be another exciting year for Brisbane, so let’s see what the city’s property market can deliver.