Predictions of a Brisbane decline may prove to be premature
Brisbane's real estate market has cooled but it's still the third-best performing capital city with demand indicators suggesting there's still plenty of fuel in the tank.
Suggestions of Brisbane’s property market demise being imminent may be exaggerated.
Although the knee-jerk reaction to a slowdown in price growth points to a gradual downward trajectory, competition is actually showing signs of intensifying.
The Brisbane property market has continued to show price pressure and steady growth throughout September 2024, despite signs of slowing momentum.
Sales volume trends, which serve as a key indicator of buyer demand, have remained strong in Brisbane.
Over the last 12 months, sales volumes increased by 7.3 per cent, reflecting continued interest in Brisbane’s property market despite broader economic headwinds such as higher interest rates and cost of living pressures.
Listing volumes, on the other hand, tell a different story.
New listings in Brisbane in September were 0.7 per cent lower than in August, and total listings were down 7 per cent month-on-month.
This reduction in supply continues to drive competition among buyers, which is putting upward pressure on prices. Total listings in Brisbane are down 11.9 per cent compared to September 2023, contributing to the ongoing issue of demand consistently exceeding supply in the market.
Brisbane still third fastest growing market
As one of the standout performers among Australian capital cities, Brisbane has demonstrated sustained demand, particularly in the unit market, while the housing sector remains strong but is experiencing a more moderate pace of price increases. This dynamic is largely driven by ongoing supply shortages, coupled with persistent strong buyer demand.
Compared to other capital cities, Brisbane’s performance remains impressive. According to CoreLogic data, Brisbane recorded a 0.9 per cent increase in dwelling values for September, contributing to a quarterly growth rate of 2.7 per cent.
While this is slightly below the 2.9 per cent recorded in August, it reflects a consistent growing market, especially when compared to the national average growth rate of 1.0 per cent for the same period. Annual growth in Brisbane dwelling values is 14.5 per cent, placing the city among the highest performers, with only Perth (24.1 per cent) and Adelaide (14.8 per cent) surpassing it in terms of yearly gains.
Auction activity remains an essential barometer of market sentiment, and the data for September highlights an active but slightly cooling market.
The average auction clearance rate in Brisbane was 58.1 per cent, down slightly from the previous month, while the average number of registered bidders per auction increased to 3.7. Of these bidders, 66.7 per cent were actively participating, reflecting the strong competition for properties.
As auction activity stabilises but the average number of registered bidders rises, it indicates that vendors' expectations may be slightly outpacing the market, or at the very least, their expectations on price are increasing more rapidly than those of buyers.
Property investors active in Queensland
When considering the participation rates of different buyer demographics, investors continue to play a significant role in Queensland’s housing market.
Investors currently make up 38.9 per cent of housing finance commitments, while first-home buyers account for 26.3 per cent.
This investor activity is partly driven by the attractive rental yields available in Brisbane’s unit market, where gross rental yields are currently 4.6 per cent, compared to 3.5 per cent for houses.
These strong gross yields, combined with capital growth potential, make Brisbane a compelling market for investors.
In terms of sales performance, CoreLogic highlights that Brisbane remains the most profitable capital city for property resales, with 99.1 per cent of sales in the June 2024 quarter delivering a nominal gain.
Brisbane dwelling values
Brisbane’s dwelling values have shown consistent growth throughout 2024, and September was no exception. The 0.9 per cent increase in median dwelling values for the month reported by CoreLogic reflects continued confidence in the market.
This brings the quarterly growth to 2.7 per cent, down slightly from the 2.9 per cent recorded in August. On an annual basis, Brisbane’s dwelling values have surged by 14.5 per cent, underscoring the city’s strong performance compared to other Australian capitals.
The median dwelling value in Brisbane now stands at $881,091. This marks a significant appreciation in property values since the onset of the pandemic, during which Brisbane’s dwelling values have increased by 66.4 per cent.
A breakdown of dwelling values by market segment provides further insight into the dynamics at play.
The most affordable 25 per cent of properties in Brisbane have experienced a 5 per cent increase in value in the three months up to August, while the most expensive 25 per cent have seen a more moderate1.8 per cent increase.
Brisbane’s housing market continues to demonstrate solid performance, with median house values rising by 0.8 per cent in September. This brings the quarterly growth rate for houses to 2.4 per cent, down slightly from the 2.5 per cent recorded at the end of August.
The median value of a house in Brisbane now stands at $973,534. This represents a substantial increase in value, driven by both local demand and interest from interstate buyers who see Brisbane as offering better value for money compared to Sydney and Melbourne.
It is worth noting that the pace of growth in house values has begun to slow, with affordability becoming a key concern for many buyers, particularly in locations where a higher portion of household income is required to service a loan.
The ongoing shortage of new housing supply, coupled with rising construction costs, has exacerbated the supply-demand imbalance in Brisbane’s housing market.
The unit market in Brisbane continues to be a standout performer, with median unit values rising by 1.2 per cent in September. This marks a quarterly growth rate of 4.2 per cent, significantly higher than the 2.4 per cent recorded for houses over the same period. Annually, unit values have surged by an impressive 19.4 per cent, reflecting the growing appeal of units as a more affordable entry point into the Brisbane property market.
The median value of a unit in Brisbane is now $661,925. This strong performance is largely due to the increasing demand for well-located, affordable units in the city’s inner suburbs, where house prices have risen beyond the reach of many buyers. The relative affordability of units, combined with their strong rental yields, makes them an attractive option for both first-home buyers and investors.
Brisbane’s rental market remains highly competitive, with a vacancy rate of just 1.1 per cent. Gross rental yields in Brisbane are currently 3.5 per cent for houses and 4.6 per cent for units, making the unit market a more attractive option for investors seeking higher returns.
Despite the recent moderation in rent price growth, the ongoing supply-demand imbalance in Brisbane’s rental market suggests that rents will continue to rise, albeit at a slower pace than in previous years.
What’s next for Brisbane real estate?
Looking ahead, the market will be influenced by the upcoming Queensland state election, with further talk of potential changes to rental legislation on the horizon.
The housing industry’s peak bodies have expressed concern over the possibility of rent controls, warning that such measures could undermine investor confidence and exacerbate the current housing shortage.
With school holidays now over, the lead-up to Christmas is expected to be an active period for both buyers and sellers as many look to finalise transactions before the festive season.
Overall, Brisbane’s property market continues to offer strong opportunities for capital growth and rental returns, and has an Olympics on the horizon, but careful consideration will be needed to navigate the evolving market dynamics in the months ahead.
