September Brisbane Market Update
September is the first month of Spring, and housing markets around Australia have made further progress towards a recovery. In Brisbane, it is still slow and steady, but the trend in dwelling values is still upward.
The Corelogic hedonic home value index at the end of September confirmed a further 0.1% rise in dwelling values across wider Brisbane. This can be further assessed by houses and units which show the price growth trend for September is upward for houses, but not units. Houses recorded a 0.2% increase in values whereas units demonstrated a -0.2% decrease over the same period.
Vacancy Rates for Brisbane are, in most cases, still trending downward with some variation by suburb. The overall Brisbane Vacancy Rate is sitting at 2.5% according to SQM Research, so any suburbs which are sitting higher than this are likely to have supply issues in the current market. There are a number of suburbs that we are actively buying in which have vacancy rates below 2% which demonstrates the extremely low supply of properties available for rent.
Additionally, asking rents over the month of September according to SQM Research showed that Brisbane is the only Capital City to record an increase over the month for both houses and units. Asking rents increased 0.6% for houses and 0.9% for units which represents a 12 month change in asking rents for Brisbane houses of 3.5% and units of 1.9%.
This is good news for investors as the yield for many properties in Brisbane is a lot better than the yields that could be achieved when comparing investment properties in Sydney and Melbourne. And, of course, with the capital growth projections of around 20% over the next 3 years that have been reported by BIS Oxford Economics and the QBE Housing Market Outlook Report, the total investment return in Brisbane is likely to be superior in the immediate future.
Recent results from the Property Investment Professionals of Australia (PIPA) Investor Survey Report for 2019 showed that Brisbane is the number one state capital with the best investment prospects, with 44% of respondents indicating that our city has more positive prospects. This is ahead of Melbourne at 27%, Sydney at 14% and Adelaide at 7%. This is potentially one reason why buyer demand in Brisbane continues to grow.
Generally, when we see increasing demand, coupled with decreasing supply, there is upward pressure on prices. It seems Brisbane currently has the perfect recipe for growth. The latest SQM data confirms that the number of properties listed for sale from August to September actually fell by 4.8% over the month. New listings fell slightly, but it seems older listings that had been on the market for some time, fell away significantly. But when we compare the data for listing volumes at the end of September in Brisbane with the data from 12 months ago, it shows a massive 17% reduction in properties available for sale. Coupled with falling building commencements, this obviously creates an enormous imbalance between the underlying driver of prices in the property market being supply and demand.
And what is happening on the ground? Some new listings are being sold within days, many are going to multi-offer, record numbers are being seen at some open homes and when a property is listed for auction (which is not the most popular way to sell a property in Brisbane) we are seeing a lot more registered bidders attempting to secure their ideal property. We are still seeing prices increase in many pockets around the City, often with properties selling for more than the asking price, and whilst the overall median value is only moving marginally, suburb specific price movements are expected to be a lot greater in certain pockets.
With these underlying conditions in place, a stable economy, buyers now experiencing better access to borrowed funds and interest rates coming down, we continue to remain optimistic about the future for Brisbane property price growth.
September 2018 sales prices vs. September 2019
In the table below, Ripehouse Advisory Analysist, Will Farrell shows the shift in capital city market values, comparing the First, Median and Third Quartile sales prices for September 2018 with September 2019.
The graph below shows the retraction of the Sydney, Melbourne and Brisbane markets, while Hobart and Adelaide have made solid gains across the First Quartile, Median and Third Quartile when comparing September 2019, with the previous September.