From market darling to worst performing capital: Brisbane's rapid reversal

The Brisbane market has clearly lost any of its previous momentum.  

Cotality recorded a 1.5 per cent fall in dwelling values in September, the largest monthly decline of any capital city, taking Brisbane 5.4 per cent below its May peak.

That sounds confronting in isolation, but there is context to factor in.

Brisbane values are still 5.9 per cent higher than a year ago and 0.1 per cent higher year-to-date. The market has gone from very strong growth at the start of the year to almost flat across 2026, rather than suddenly unwinding all of the gains that came before it.

The national picture is also getting softer. Sydney fell 1.4 per cent in September, Adelaide 1.3 per cent, Perth 1.2 per cent, Canberra 1.1 per cent, Melbourne 0.7 per cent and Hobart 0.5 per cent, while Darwin was the only capital to rise, up 0.4 per cent.  Over the quarter, Sydney remains the weakest, having fallen 4.9 per cent, with Brisbane and Perth both down 4.7 per cent.

Over 12 months the picture is very different. Brisbane is still up 5.9 per cent, behind Darwin, Perth, Hobart and Adelaide, while Sydney, Melbourne and Canberra are already negative annually.

The big development right at the end of the month was another interest rate rise. The cash rate increased by a further 25 basis points to 4.60 per cent, its highest level since November 2011. This will have a dampening effect on buyers as borrowing capacity reduces again and the market adjusts to higher repayments. Markets have also been pricing in a significant chance that rates may need to move higher again.

At the same time, consumer confidence has taken another hit. The Consumer Sentiment Index fell 5.2 per cent over the month to 84.4 points, which sits uncomfortably in pessimistic territory, and is 11.6 per cent lower than it was a year ago.

When borrowing capacity is being squeezed and people are worried about what comes next, many buyers simply stop rushing. They watch, negotiate harder and some do nothing. That is exactly what the other market indicators are showing.

Brisbane home sales over the latest three months were tracking 27.2 per cent below a year ago, the largest annual fall in sales activity among the capitals. Median days on market has increased to 35 days, compared with 19 days a year earlier. Total listings were 53.3 per cent higher than the same time last year, yet new listings were only 5.4 per cent higher.

That gap is telling.

It shows us that a lot of the extra stock is older property sitting around for longer, rather than simply a flood of new listings. We are also seeing properties withdrawn when sellers cannot achieve the price they want.

The increase in listings does not automatically mean there is a wave of distressed sellers. In many cases vendors simply have a price in mind, and if the market will not meet it, they choose not to sell.

Brisbane’s four-week auction clearance rate was also just 32.8 per cent at the end of August, the lowest of the capitals reported by Cotality. Again, that says a lot about the gap between buyer and seller expectations.

The latest PIPA Annual Investor Sentiment Survey adds another interesting layer. In Brisbane, 23.7 per cent of respondents reported selling at least one investment property over the year, up from 19.7 per cent the year before. Nationally, only 44.1 per cent of investors believed the next 12 months was a good time to invest in residential property, although Brisbane was still nominated by 16.2 per cent of respondents as the best place to invest.

The survey also shows how strongly policy changes are influencing investor behaviour. Investor buying intentions have fallen significantly and many long-term property owners are now choosing to sell. Increased holding and compliance costs, land tax and government charges were among the main reasons nominated.

Brisbane investors have traditionally represented an important segment of demand, particularly in the unit and more affordable housing markets. If fewer investors are competing for established property, that takes a lot of heat out of prices in the short term.

It is also worth putting the latest “profitable sales” headlines into perspective.

Cotality’s Pain and Gain Report found that 99.8 per cent of Brisbane resales in the June quarter made a nominal profit, with a median gain of $525,000. But the median hold period for a profitable Brisbane resale was 8.2 years.

The result reflects the very significant wealth creation Brisbane property owners have experienced through the previous cycle.

Brisbane dwelling values

Cotality’s median Brisbane dwelling value is now $1,048,880, down from $1,080,142 at the end of August.  Values fell 1.5 per cent in September and 4.7 per cent over the quarter, compared with declines of 1.0 per cent and 2.7 per cent respectively a month earlier.  Annual growth has also slowed sharply, from 10.8 per cent in August to 5.9 per cent in September.

The value-segment data shows the slowdown has now spread right across the market.

Brisbane’s lower quartile was down 2.0 per cent over the three months to August, the middle 50 per cent fell 2.9 per cent and the upper quartile fell 2.8 per cent. In our previous update those same segments were +0.5 per cent, -0.6 per cent and -1.2 per cent.

That is a significant shift, particularly at the lower end.

More affordable property had been holding up better as borrowing capacity became increasingly important, but even this part of the market is no longer immune from weaker sentiment.

PropTrack is showing the same direction, although the magnitude is different. Its September Home Price Report recorded Brisbane dwelling prices down 0.2 per cent for the month and 4.1 per cent higher over the year, with a median value of $1.033 million.

Different methodologies will produce different numbers, but both datasets are telling us the same broad story, namely that Brisbane prices are falling even if they’re still above where they were a year ago.

Brisbane house values

House values fell 1.5 per cent in September according to Cotality, taking the median estimated house value to $1,146,078. That is $34,474 lower than the $1,180,552 recorded at the end of August.

The quarterly fall has deepened from 2.9 per cent in August to 4.9 per cent in September, while annual growth has slowed from 10.3 per cent to 5.3 per cent.

PropTrack again recorded a smaller monthly move, with Brisbane house prices down 0.3 per cent in September and up 3.0 per cent over the year.

Its median Brisbane house value was $1.173 million. The exact figures differ, but the direction does not.  Houses have lost momentum quickly as higher borrowing costs reduce what buyers can afford to pay.

Brisbane unit values

Units have also moved lower, although they continue to hold up better than houses on an annual basis. Cotality recorded a 1.4 per cent monthly fall in Brisbane unit values, with the median now $834,627, down from $854,721 in August. The quarterly decline widened from 2.0 per cent to 4.2 per cent, while annual growth slowed from 13.2 per cent to 8.5 per cent.

PropTrack reported Brisbane unit prices down 0.2 per cent in September and still 7.1 per cent higher over the year, with a median value of $829,000.

Again, both datasets show the more affordable unit segment of the market retaining more annual growth, even though the monthly direction has now turned negative.

Brisbane’s rental market

Brisbane’s rental market remains a very different story to the sales market.

SQM Research recorded Greater Brisbane’s vacancy rate at 0.9 per cent in August, unchanged from July. Cotality data shows annual house rent growth holding at 6.7 per cent, while annual unit rent growth strengthened slightly from 5.6 per cent in August to 5.9 per cent in September.

Gross yields are also edging higher as rents rise and values soften.

House yields increased from 3.3 per cent to 3.4 per cent, while unit yields increased from 4.1 per cent to 4.2 per cent.

That improves the numbers slightly for investors, although higher interest rates, insurance, maintenance and other holding costs still make cash flow challenging.

Still facing a housing shortage

Brisbane is clearly in a slowing phase and there may be more softness ahead while buyers adjust to higher rates and weaker confidence. But a slowing market is not automatically a crashing market.

For a more serious correction, we would expect to see a much bigger rise in forced selling, weakening employment, falling migration and a more substantial deterioration in underlying buyer demand.

There is also a natural brake on how far established values can fall over time, and that is replacement cost.

Construction costs have risen substantially in recent years and competition for labour and materials is unlikely to disappear, particularly with major rail, hospital and Olympic-related infrastructure projects ahead.

If established housing becomes too cheap relative to the cost of building new property, development becomes increasingly difficult to make financially viable.

Projects are delayed or cancelled, fewer new homes are delivered, and that eventually puts a floor underneath established property values.

This is not a time to pretend everything is rosy, because it isn’t. But it is also not a time to assume Brisbane’s long-term property story has disappeared because the market has had a difficult few months.

The structural shortage of housing has not been fixed.

For buyers who are thinking about getting into the market, this is actually a very good time to get organised and get finance ready.

Understand where you want to buy, know what represents value and what doesn’t, and be in a position to move when the right property comes along.

Sentiment will shift at some point, and when it does, buyer activity can return much faster than most people expect.