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Snap lockdown likely to build up Brisbane demand

Brisbane’s snap lockdown is giving agents, investors and prospective homebuyers time to take a breath, but pent-up demand is likely to drive a fast market rebound once the city is reopened.

Brisbane Story Bridge with city in background
Brisbane's property market has been tipped to get a big boost from the 2032 Olympics. Photo: Shutterstock

Brisbane’s snap lockdown is giving agents, investors and prospective homebuyers time to take a breath, but pent-up demand is likely to drive a fast market rebound once the city is reopened. 

With the excitement of winning the right to host the 2032 Olympics still reverberating around the city, Brisbane’s lockdown is doing little to dampen buyer enthusiasm and is likely to have little impact on price growth if it is lifted as expected on August 8. 

Plans can finally be set in concrete for Brisbane’s Olympic transformation, which will include the fast tracking of important infrastructure which will benefit the residents for many years to come.  

This is an extremely exciting time for Brisbane and the city that it will now become in the years ahead. 

From a property price movement perspective, Brisbane has bucked the national trend in terms of house price growth in recent months.   

Our city is one of few capital city markets in Australia that has maintained growth momentum in housing values.   

Whereas the larger markets of Sydney and Melbourne have seen price growth slowing in the last three months, this is not the case in Brisbane in the housing sector.   

Even though the rate of growth has eased in other markets, housing values are continuing to rise substantially faster than average so market conditions nationwide are still very good. 

Research director of Corelogic, Tim Lawless, attributed the loss of steam in the Sydney and Melbourne markets since March to several factors, one of which was declining affordability.   

With Brisbane’s median dwelling values at $598,615, we remain a much more affordable market compared with Sydney’s median dwelling value of $1,017,692 and Melbourne’s median dwelling value of $762.068.   

Even Hobart and Canberra are more expensive markets than Brisbane, with their respective median dwelling values being $621,102 and $793,872 according to the latest Corelogic data. 

Of course, there are also some negative impacts on consumer sentiment due to the extended lockdowns in Sydney, and this is something we all must consider in the months ahead as we deal with the Delta variant of COVID-19 within our communities.  

Even so, from our experience from past lockdowns throughout the country, we are seeing a trend whereby buyer and seller activity reduces during the event, but recovers quickly to pre-lockdown levels once restrictions are lifted. 

Any potential for interest rates to rise in the near future looks less likely now that the recent lockdowns have seen Australia’s economy slow down, and this is now likely to keep rates on hold for a longer period of time.  

Any lift in the cash rate seems extremely unlikely for at least the next 18 months, and according to the RBA the forecast is not to see any movement until 2024 at the earliest.   

This is going to ensure ongoing demand for housing given the low cost of money in the current economic environment. 

We are still seeing more investors enter the market with lending data now showing 26.8 per cent of all housing finance commitments in Queensland going to investors.   

While this is still a small proportion as compared to owner-occupiers, there is definitely a trend that is shifting higher. 

Employment growth in Queensland is leading the nation with an additional 235,000 employment opportunities by June 2021 throughout the state according to ABS data.  

This may also be due to the lockdowns in both Sydney and Melbourne recently.  With Brisbane also entering a new lockdown due to the Delta COVID-19 variant, we will be watching to see if this has any impact on these employment trends in the future. 

Looking at the mismatch between demand and advertised supply, we can still see why Brisbane markets are strong.   

Sales volumes have increased 44 per cent in Brisbane over the 12 month period leading up to Jun 2021, whereas total listing volumes  had declined by 25.9 across the same period according to Corelogic.  

This provides some clarity as to why the pace of price growth has been so strong in recent months through the city. 

Let’s take a deeper look into the performance of the Brisbane market over the last month. 

Brisbane Property Market Prices 

The latest Hedonic Home Value Index data by Corelogic has confirmed that the median dwelling value in Brisbane increased a further 2 per cent over the month of July.  

This is back to the dwelling growth that was experienced in Brisbane throughout May, after only a very slight dip to 1.9 per cent growth throughout June.   

The current median value for dwellings across Greater Brisbane is $598,615, which is $12,473 higher than just one month ago, and $95,991 higher since the same Corelogic results were published 12 months ago. 

The quarterly growth in dwelling values across Greater Brisbane is now 6.0 per cent suggesting a slight pick up again since last month, and annual growth for the last 12 months is now 15.9 per cent. 

The top end of the Brisbane market is still driving the growth, with the strongest lift in dwelling values occurring in the top 25 per cent of properties in the three months to the end of June, with 6.2 per cent growth, compared to just 3.8 per cent growth in the lowest 25 per cent of values across the city.    

Brisbane House Prices 

In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 2.2 per cent across the month of July 2021 which is consistent with the growth that we experienced in the housing sector throughout Greater Brisbane for the last 2 months.  

The 12 month change in Brisbane house prices has been 17.7 per cent.   

The current median value for a house in Greater Brisbane is $674,738, the highest it has ever been.  This is $17,187 MORE than one month ago and $98,400 more than at the beginning of 2021. 

Brisbane Unit Prices 

The Unit Market in Brisbane saw further positive growth in the median value this month, as well as a slight pick up in the momentum of that growth as well.  July saw an increase of 0.8 per cent growth for units in Greater Brisbane, compared to 0.7 per cent last month.   

The 12 month growth for units across Brisbane is now 7 per cent.   The current median unit price in Brisbane is $419,142, which is $3,607 more than one month ago and $28,357 more than at the beginning of 2021. 

Brisbane Rental Market Movements 

Vacancy rates in Brisbane remained unchanged between May and June, staying at 1.3 per cent city-wide.  

Current vacancy rates in each region are extremely tight across the city. Even the Brisbane CBD is seeing current vacancy rates back at levels seen in March 2020 before the pandemic.   

Tight vacancy rates like this are putting upward pressure on rents, with rental incomes in the unit market during July having seen an annual increase of 4.6 per cent, up 0.8 per cent compared to last month.   

Housing rents are still climbing faster, with the annual increase in rents for Brisbane Houses now at 9.4 per cent according to Corelogic Data, which is 1 per cent higher than a month ago. 

Gross rental yields for dwellings across all of Greater Brisbane are compressing with escalating dwelling prices outpacing rent price growth.   

At a city wide level, gross rents have dropped slightly to 4.0 per cent in July, down 0.1 per cent from last month.  This is still very attractive compared to Sydney at 2.5 per cent and Melbourne at 2.8 per cent.

What did we see on the ground across Brisbane during July? 

Not much has changed on the ground throughout July, compared to June.  The excitement of the Olympics announcement is evident for many residents, although this may take some time to filter through in terms of how it may shape our city in the years ahead. 

Buyers have still been very active throughout July and open homes have been well attended, both on Saturdays and also mid-week. 

With the most recent lockdown, we expect the momentum to pause, but we do not expect at this stage that the buyers will disappear. 

Like previous lockdowns, we expect the demand to match the pre-lockdown levels as soon as everything opens back up. 

There is still not much selling without multiple buyers submitting offers, and most properties are still selling after the very first open home. 

The only exception is when there is an auction campaign in place, which usually involves a 3-4 week campaign, but recently we have seen auction campaigns reduce to as little as 7 days. 

For buyers, it is a stressful and frustrating time.  As prices escalate, buyers are having to either adjust their expectations or increase their budget every month if they intend to stay in the same areas.   

On the ground, it really is a frenzy in many locations across the city.  There are simply too many buyers for the available stock that is coming to the market. 

Buyers are paying a premium just to secure a decent property at the moment, but with the depth of buyers, this is not something we expect to see slowing down any time soon.

The months ahead

Our position remains the same as last month in that we do not expect any slow down in the momentum of Brisbane housing price growth in the foreseeable future.   

Even with the temporary lockdown, we expect that the pent-up demand will continue as soon as things open back up throughout South East Queensland.   

The current Delta outbreak will not impact the fundamental imbalance between supply and demand that is putting such strong upward pressure on prices. 

Hold on for the ride everyone … Brisbane really is on fire.  It is a very exciting time for our city!

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