Brisbane's affordable suburbs, units driving price rises
The pace of property price growth in Brisbane may be slowing but units and outer suburbs in particular are still driving strong monthly capital growth gains.
The pace of growth in Brisbane’s property market seems to be slowing down, evidenced by changes in median dwelling values.
In April, the monthly growth for Brisbane dwellings fell below 1 per cent, marking the first time this has happened in the last 12 months.
An analysis of dwelling value data reveals a clear trend, showing a divergence between the performance of the housing and unit markets in Brisbane.
Price segmentation data also suggests that affordability pressures may be affecting the pace of growth across various segments within the Brisbane property market.
This slowdown isn’t surprising, given Brisbane's significant 57 per cent growth since the onset of the pandemic in March 2020.
To put this into perspective, Brisbane’s market has lifted by just under $300,000 over the past four years.
While March saw a slight relief for buyers, with a modest increase in new listings entering the market, this trend reversed in April.
According to SQM Research, new listings in Brisbane were 14 per cent lower in April compared to March 2024. Total listings also declined, down by 8.1 per cent in April compared to March.
Comparing listing volumes in April 2024 to those from 12 months prior yields an interesting narrative.
New listings were 18 per cent higher in April 2024 compared to the same period a year ago, while total listing volumes were 8.3 per cent lower. This data confirms that regardless of the angle, buyers in the market throughout April 2024 had fewer options to choose from compared to buyers from both 12 months ago and the previous month.
Sales volumes in Brisbane have risen by 4.4 per cent over the past year, indicating increased buyer activity. However, the median days on the market has decreased and currently stands at 22 days.
This downward trend in days on the market suggests that properties are selling more quickly once they are listed.
Anecdotally, we are observing many properties selling after their initial open home, indicating that the days on the market figure may include an unconditional period under any sales contract in Brisbane.
Where Brisbane dwelling values are rising fastest
In April, Brisbane saw a 0.9 per cent rise in dwelling values, according to CoreLogic.
This marks a slight dip from the previous month, which witnessed 1.1 per cent growth. The quarterly growth rate now stands at 3.1 per cent, up slightly from last month’s 3 per cent.
The median value for dwellings in greater Brisbane has soared to a new peak of $827,822, an increase of $10,258 from the previous month and $31,004 from three months ago.
When analysing dwelling value data by segments, it becomes evident that the lowest 25 per cent of property values are experiencing the most robust quarterly growth.
In the three months leading up to the end of March, the bottom 25 per cent of property values saw a 4.6 per cent increase, while the middle 50 per cent increased by 3.4 per cent, and the top 75 per cent only saw a 2 per cent increase.
Contrasting this with the three months up to the end of February, the top end of the market grew by 2.3 per cent, the middle segment by 3.2 per cent, and the bottom segment by 3.8 per cent.
These trends in price segmentation indicate that the more affordable segment of the market, whether comprising units, townhouses, or houses, is growing at a faster rate than the higher end of the market, which is typically dominated by free-standing houses due to their higher price point.
This trend can also be observed across the other major capital city markets that are experiencing strong month-on-month growth, Perth and Adelaide.
Brisbane house values still heading upwards
In April, the median house price in Brisbane saw a 0.8 per cent increase. This marks a slowdown from March, when growth reached 1.1 per cent.
The median house value in greater Brisbane stands at $920,046, and the gap between Brisbane and Melbourne’s median house prices continues to narrow every month.
The monthly change at the median value level over the four weeks in April amounts to $10,058, while the quarterly change in house values in Brisbane, according to CoreLogic data, totals $31,418.
Although we observed a slight increase in the monthly growth rate for houses last month, it's evident that throughout April 2024, momentum in housing sector growth in the Brisbane market has decelerated once again.
Brisbane unit values hit new landmark record
The Brisbane unit market has surpassed the housing market in terms of its monthly growth rate. Throughout April, the unit market in Brisbane experienced a 1.6 per cent growth rate, bringing the current median value to $600,215.
For the first time in history, according to CoreLogic data, the median value for a unit in greater Brisbane has exceeded the $600,000 mark.
Quarterly growth in this market segment now stands at 5 per cent for Greater Brisbane, with annual growth currently at 17.4 per cent. This data confirms that the unit market in Brisbane is outperforming the housing market in terms of capital growth performance on a monthly, quarterly and annual basis.
To put this rate of growth into perspective, over the last four weeks, a median-priced Brisbane unit has increased in value by $12,422. Extended to a three-month reading, the median unit price has risen by $31,620.
This growth rate is noteworthy, especially considering that historically, the housing market has typically outperformed the unit market in Brisbane.
Pace of price inflation worsens for renters
The narrative surrounding Brisbane's rental market remains consistent, with vacancy rates fluctuating between 1 per cent and 0.9 per cent on a monthly basis since January this year. According to SQM Research, the vacancy rate in March stood at 1 per cent citywide.
With vacancy rates so tight, it’s unsurprising to see an uptick in the annual change in house rents across Brisbane.
Last month, the annual change was 7.6 per cent, while this month it has risen to 7.9 per cent.
However, we are witnessing some moderation in the rate of change in rents in the unit segment of the market.
For instance, last month, the annual change in rents for units was 11.2 per cent, whereas this month, it has eased slightly to 10.5 per cent. Despite this, the rate of change remains strong, especially considering many tenants may be reaching affordability limits throughout the city.
The gross yields for houses and units in Brisbane remained unchanged, with gross yields for houses currently sitting at 3.6 per cent while for units it is 5 per cent.
Strong property demand continues
The core elements shaping Brisbane’s property market have remained consistent for several months. We’re seeing limited choices for buyers paired with strong demand.
Despite challenges like higher interest rates, low consumer confidence, affordability issues, and ongoing cost-of-living pressures, house and unit prices in Brisbane are still on the rise.
The rental market is also tight, with low vacancy rates leading to swift rent hikes.
Individuals seeking housing, whether to buy or rent, may face hurdles in Brisbane in the near future. These conditions are unlikely to change unless more properties become available for sale or rent.
Long-term supply, particularly from new construction, faces obstacles. Restrictions on developable land by councils, increased costs for developers due to economic conditions and higher construction expenses, and developers’ struggles to meet pre-sales targets all contribute at a time when the 2023 Olympics are putting further pressure on prices and infrastructure in some areas.
Dwelling approvals, especially for attached dwellings, have been declining and are not expected to change soon. Therefore, we shouldn’t anticipate a significant increase in supply through new construction projects, therefore maintaining current market dynamics in Brisbane.
Population shifts in Southeast Queensland, driven by international migrants, are influencing demand. These migrants may prefer different property types, potentially explaining the heightened demand for higher density units. This, along with affordability constraints, may be why the unit market is outperforming the housing market in Brisbane.
Despite discussions about prolonged high interest rates due to persistent inflationary pressures, most buyers seem to have factored in the associated costs when making property decisions.
For buyers, navigating Brisbane's current market conditions is tough. Competition is fierce, and the fear of missing out is palpable. Limited property availability and intense competition are frustrating for buyers.
We expect these conditions to persist based on Brisbane’s current market fundamentals.