Brisbane's property boom may be slowing, but experts say the fundamentals remain strong

Brisbane property prices are almost 40 per cent higher than Melbourne — a city almost twice the size — and are now even within a stone’s throw of the notoriously expensive Sydney.

As the national property boom draws to a close, bookended with rising rates and last month’s Federal Budget announcements, questions are being asked about the outlook for the bigger markets.

Yet despite the stellar growth, and the sector nationally cooling, buyers agents remain cautiously optimistic about the future of the market in the Sunshine State.

“A slowdown in the market doesn’t necessarily translate to a fall in the market,” said Stephen McGee, Director, National Property Buyers Brisbane. 

“I don’t think the market is going to collapse in general.”

Mr McGee said there was some current “hysteria” about the market slowing down, but he considered it a return to normal.

“In my opinion, we are going into what I would call a normal market, where buyers are selective again,” Mr McGee told Australian Property Investor Magazine.

“When it comes to good properties in good locations, all of the fundamentals will still keep the market going forward, although not at the same pace.

“For those buyers agents and selling agents who have been in the industry for a long time will see what’s happening and recognise it and I don’t think it represents a cause for alarm,” he said.

Data from analyst Cotality shows that over the past decade no capital city has grown faster than Brisbane.

Over the past 10 years it has grown by a whopping 120.2 per cent, ahead of even Perth, which soared 109.8 per cent.

Median Sydney home prices grew 57.5 per cent over the past decade, while Melbourne grew just 34.7 per cent.

The median price of a Brisbane home, $1.13 million, is now 39 per cent higher than Melbourne, at $813,000, and just 13.8 per cent below Sydney’s median of $1.28 million.

According to the Australian Bureau of Statistics (ABS), Brisbane has a population of 2.83 million, around half that of Melbourne, at 5.44 million and Sydney (5.64 million).

Regional Queensland property powerhouse

Not only has Brisbane grown faster than any other capital over the past decade, but regional Queensland has also shot the lights out.

Analyst Cotality calculates the median dwelling prices for the capital cities, as well as the regional median, being all areas outside the capital in each state.

Over the ten years to the end of May, regional Queensland saw median dwellings soar 117.7 per cent, more than the regional medians of all other states.

Regional Queensland was followed by regional Tasmania, where prices surged 115.1 per cent, and Western Australia, where the median home price grew 108.2 per cent.

Next was regional New South Wales at 99.7 per cent, followed by regional South Australia (98 per cent) and regional Victoria (81.9 per cent).

While prices have soared in the north, the rate of growth was not as strong as other parts of the state, with no North Queensland regions in the top ten for price growth over the past year, according to data from analyst Cotality.

In regional Queensland, the highest growth over the 12 months to end of May was in the Darling Downs, in the state’s south-east, with prices in Maranoa growing 25.1 per cent to $602,000.

It was followed by the Central Highlands, in Central Queensland, where prices grew 22.4 per cent to a median of $401,780; followed by Toowoomba, about 150km west of Brisbane, where 21.1 per cent annual growth took the median price to $859,970.

In North Queensland, Jennifer Smith of NQ Buyers Agent, said the market remained robust, underpinned by key fundamentals such as acute housing shortages, record-low vacancy rates and historically low levels of available stock.

“At the same time, construction costs continue to rise amid tight and increasingly expensive labour markets,” she told API Magazine.

“The cost of both materials and labour has driven up the price of new builds, placing additional pressure on established housing.

“Lifestyle-driven population growth and ongoing regional relocation trends remain key demand drivers.”

Ms Smith said relative affordability remained key.

“As population growth across Queensland continues to push up prices in South East Queensland, Northern Queensland maintains a clear advantage in relative affordability, further underpinning demand,” she said.

In Townsville the market had shifted from being driven “primarily by investors” to “one now led by first home buyers, relocators, downsizers, and upsizers”.

Cairns remained “a highly sought-after lifestyle destination, with supply constrained by geographical limitations”.

“Looking ahead, market conditions across Northern Queensland are expected to remain relatively tight, with ongoing supply constraints, steady population growth, and elevated construction costs continuing to support prices,” Ms Smith said.

“While the pace of growth may moderate from recent peaks, particularly at the more affordable end, underlying demand remains strong.”

Brisbane unit market

Brisbane’s enormous growth had put houses out of the price range of many buyers, but Mr McGee said there were still opportunities, especially when it came to apartments and townhouses.

“You can’t get into any good suburb around a 30 kilometre ring of the CBD for under a million,” he said.

“But you can still get good units in a 12 kilometre radius of the CBD in the high $800,000’s.

“Townhouses also, it is possible from the mid-$800,000s upwards.”

Brisbane still had “all of the key indicators of a sustainable market”, Mr McGee said.

“It still has population growth, low unemployment, climate and the big one — a lack of housing.”