How is bursting Brisbane's population shaping the property market?

Brisbane’s Olympic-city status is catching global attention and attracting migrants looking for jobs, while domestic and interstate buyers flock towards the city’s affordability.

This rampant population influx is squeezing stock levels and vacancy rates, and driving property prices higher.

Brisbane’s population growth drove another 1 per cent rise in property prices in January and 14.8 per cent in the past year.

Vacancy rates in greater Brisbane suburbs too dropped below 1 per cent in January, down from a peak of 4.1 per cent eight years ago with some suburbs sinking close to zero.

Brisbane City Council projects the city’s population to grow from about 1.26 million people in 2021 to 1.55 million by 2041, and Queensland’s 2.6 per cent spike in population growth in the year to June 2023 follows an ongoing trend.

“Over the three years to June 2023, Queensland’s population grew by nearly 300,000, the largest swell in the country, and of those, 120,000 people came from interstate – making us the number one destination for migration in Australia,” Antonia Mercorella, CEO, Real Estate Institute of Queensland, told API Magazine.

“While these are indeed exceptional numbers on the demand side, our grossly insufficient levels of housing supply have certainly not emerged overnight.”

Recent population growth levels in part explains why the number of people seeking shelter in Brisbane outnumbers dwelling availability.

Property Council of Australia’s Queensland Executive Director, Jess Caire, confirmed to API Magazine that over recent decades Queensland’s population growth has outpaced delivery of infrastructure and increased demand for new land and housing in South East Queensland.

“Housing availability is now at crisis point, with demand only set to increase as people from interstate and overseas move to the region, and Queensland gears up for the Brisbane 2032 Olympic and Paralympic Games,” Ms Caire said.

Population growth outstripping supply

Taking in 138,470 people over the 12 months to June last year, Queensland attracted a combined record net overseas migration of 84,000, and interstate migration of 32,260, and was the third fastest population rise nationwide, behind Western Australia (3.1 per cent) and Victoria (2.7 per cent).

“The South East Queensland Regional Plan projects the region’s population will grow by 86,400 people per annum, to 5.94 million in 2046,” Ms Caire said.

Queensland is also the only state to have gained population through net interstate migration in every quarter since June 1981, with 20,480 migrants arriving from NSW just last year.

We’re all hearing stories of Queenslanders sleeping in cars and tents.

- Antonia Mercorella, Real Estate Institute of Queensland

Nerida Conisbee, Chief Economist, Ray White Group, said that as long as Queensland’s population growth continues conditions will remain strong.

Too few homes were being built, with the state having needed 55,000 homes last year but managed to build only 32,000, she said.

“That’s concerning for renters, and small area analysis of suburbs containing a lot of affordable apartments is now showing a sell-off of rental apartments to owner occupiers.

“It will be a strong year (for capital growth) especially if we add in interest rate cuts.”

Interstate buyers target mid-priced suburbs

George Kafantaris, Managing Director, CBS Property Group, Brisbane said most enquiries have been from interstate - more than international buyers - and interest typically comes through buyers agents rather than the buyer themselves.

“We’re also seeing that a very strong enquiry level is not just from prospective interstate owner occupiers but also interstate investors wishing to purchase in Queensland, with a very strong interest in the $600,000 to $1.2 million price bracket.”

Mr Kafantaris said a typical listing in the Ipswich suburb of Ripley, 40 minutes south west of Brisbane, is a four-bedroom house on a 394 square metre squared block located near a new town shopping centre, secondary college and local park, and could sell for around $650,000, the median price in Ripley for house of that size,. It could attract a rental yield of about $540 per week, up 8 per cent in the past 12 months.

CoreLogic data shows median rents in Ripley have grown from $360 per week in 2016 to the current mid-$500s since late 2023.

In the 2021-2022 period, Ripley’s population grew 21 per cent by 2,700 people, which was the highest growth rate of Brisbane suburbs in that period, followed by Chambers Flat–Logan Reserve and in Brisbane’s south, Pallara-Willawong, both by 19 per cent.

The areas with the highest density in June 2022 were inner Brisbane suburbs Fortitude Valley and West End (both 8,100 people per square kilometre) and Kangaroo Point (7,900).

As property values and rents continue to rise in Brisbane, housing demographic company, .id (Informed Decisions) predicts that by 2041, Brisbane North will grow by 41,000 people, Brisbane West by 21,000 and Brisbane East by 36,750.

“Indooroopilly is forecast to account for 34 per cent of the region’s population growth, while half of the SA2s will grow primarily through infill at approximately 10 dwellings per annum with future growth seen in greenfield developments at Victoria Point, Redland Bay, Cleveland, Wynnum and Manly,” Informed Decisions data shows.

SA2s are an Australian Bureau of Statistics area with a population of between 3,000 and 25,000 people with an average population size of approximately 10,000 people.

Hotspot markets emerge

Domain’s House Price Report for the December 2023 quarter also identified seven suburbs in Brisbane’s middle ring as the ones to watch in 2024, where median house prices had shown growth between 10 and 22 per cent in the year prior.

Taigum in Brisbane North had a median house price of $605,000 with an annual change of 22. 2 per cent and a five-year change of 21.1 per cent. Located just over 14 kilometres from the Brisbane CBD, Domain’s data shows the average days-on-market for a three-bedroom house valued at $583,000 is 40 days, and a four-bedroom house for $820,000 is 24 days.

The suburb currently showing the lowest median price growth of 10 per cent, at $550,000, is Bethania, however, over the past five years prices there have grown 59.9 per cent. A 40-minute drive north to the Brisbane CBD and one hour drive south to the Gold Coast, the average days on the market for a three-bedroom house is 32, with a median price of $541,000.

Vacancy rates still low

Real Estate Institute of Queensland (REIQ) January data shows much of the Greater Brisbane area hovers around the 1 per cent vacancy mark, including Logan at 1.2 per cent, the Brisbane LGA and Caboolture (1.1 per cent), Ipswich, Pine Rivers and Redland (1 per cent), Moreton Bay (0.8 per cent) and Redland’s Mainland (0.7 per cent) were tighter still, while Redcliffe had the lowest rate in the region at 0.5 percent.

“We know there are a lot of economic benefits that come with welcoming others into the state from interstate and overseas.

“The major downside comes when we’re all hearing of stories of Queenslanders sleeping in cars and tents, so it’s understandable it can create a level of frustration in the community given our housing supply is already clearly under strain,” Ms Mercorella said.

“What we’ve seen over the course of the year is a rental property pool that’s insufficient and under incredible strain.

“It’s not necessarily that rentals are impossible to find everywhere in our state, it’s the imbalance between the sheer demand and shortage of supply of rentals at certain price points and locations that’s out of kilter.

“Many are finding it’s a lot less hassle to renew their existing lease than to risk re-entering the fast-moving market, especially if they are attached to their area,” Ms Mercorella said.

Olympian-scale housing challenge

Federal government projections suggest Queensland’s population will grow by more than 16 per cent by 2032 when the Brisbane Olympic torch is lit.

“Housing supply has not kept up with the pace of demand, which is illustrated in the rate of building approvals; there were 33,755 new dwellings approved across the state, falling well short of the 40,000 or more per annum we need just to meet south East Queensland demands,” Ms Mercorella said.

Ms Caire agreed, saying that while the private sector provides the vast majority of housing across the state, the government needs to pull all the levers to increase housing supply in Queensland to meet the targets required to deliver the homes so desperately needed.

The private sector, however, are falling short according to ABS figures on investor loans in December 2023.

A year-on-year decline can be seen in the purchase of new dwellings or existing dwellings, and of land. The only increase was the building of new dwellings, which REIQ’s figures confirm are still falling short of population growth needs.