Units fuelling continued Brisbane property price growth

The Brisbane property market has continued to demonstrate strong growth throughout October 2024, despite an easing of momentum in certain sectors.

Brisbane’s appeal for long-term growth remains high, underpinned by consistent demand, limited supply, and strong economic factors such as population growth and employment.

With only six brief downturns in dwelling values over the past 40 years, Brisbane’s stability presents a reliable capital growth opportunity​.

Recent data from CoreLogic highlights that Brisbane’s median dwelling values rose by 0.7 per cent in October, bringing the quarterly increase to 2.4 per cent and the annual growth to 13.0 per cent.

Brisbane has outperformed larger capitals, with other cities such as Sydney and Melbourne experiencing either slight declines or more modest increases. Over the last 30 years, Brisbane house values have surged by an impressive 454.8 per cent, with nearly 98 per cent of that growth occurring in the past decade alone​.

Supporting demand are Queensland’s strong population growth and employment figures, with a 2.7 per cent rise in population and a 4.6 per cent increase in jobs year-on-year, according to the CommSec State of the States report.

This influx has driven consistent demand, particularly in Brisbane’s more affordable segments, attracting both investors and first home buyers.

Investor activity continues to climb, with 40.5 per cent of Queensland’s housing finance commitments attributed to investors, and 27.5 per cent from first home buyers​. These cohorts make up the largest portion of property buyers across the state, which is one of the reasons why the more affordable end of the market is currently outperforming.

Based on the PropTrack Housing Affordability Index, Queensland’s score indicates relatively high affordability compared to states like New South Wales and Victoria.

This affordability is a key factor driving continued interest and demand from buyers, as more individuals and families are drawn to the Sunshine State for its combination of lifestyle and comparatively accessible property prices.

Brisbane’s median values are higher than those in other capital cities, except Sydney, and therefore the appeal lies in the size and quality of property that a given budget can secure.

Buyers can often find better value for money in Brisbane compared to markets where median values may be lower but offer less in terms of property size and quality.

Listing trends reflect Brisbane’s ongoing supply shortage. While new listings rose 1 per cent from September, total listings in October were still 4.2 per cent lower than the previous year, underscoring the limited supply. Annual dwelling commencements are also down 18.2 per cent compared to the decade average, contributing to a restricted flow of new properties to the market​.

Auction clearance rates provide further insight into demand. Brisbane’s October clearance rate stood at 60.1 per cent, while registered bidders averaged 2.7 per auction, with 68.3 per cent actively bidding. Compared to September, this represents a decline in the number of bidders per auction and yet the clearance rate was slightly higher month-on-month, reflecting an active market but slightly cooling buyer depth​.

Brisbane dwelling values

Brisbane’s dwelling values continued to climb, with a 0.7 per cent increase in October, following a 0.9 per cent rise in September. This quarterly growth of 2.4 per cent aligns Brisbane as one of the top-performing capital cities in Australia, alongside Perth and Adelaide, which saw larger quarterly increases of 4.1 per cent and 3.7 per cent, respectively​.  Brisbane’s annual growth of 13.0 per cent highlights its strength in comparison to other capitals like Melbourne, which recorded a decline of 1.9 per cent over the same period​.

The breakdown by segment reveals that Brisbane’s most affordable properties continue to experience the highest demand and value growth, with 4.5 per cent price movement in the lowest 25 per cent of property values in the 3 months to September 2024, as affordability pressures shift more buyers to this market segment.

Comparatively, the higher end of the market showed slower growth, with 2.1 per cent growth in the top 25 per cent of property values in Brisbane over the same period, underscoring the broader trend of value-driven interest in Brisbane’s property landscape​.

Brisbane house, unit values

House values in Brisbane saw a steady increase of 0.7 per cent in October, maintaining a quarterly gain of 2.1 per cent. While this is a slight deceleration from the previous month’s 0.8 per cent gain, Brisbane’s housing market continues to outpace larger capitals like Sydney and Melbourne. Brisbane’s median house price now stands at $974,025, representing a significant rise of 11.9 per cent over the past 12 months​.

The Brisbane unit market remains stronger than the house market, recording a 1.0 per cent increase in October, bringing the quarterly growth to an impressive 3.5 per cent. Year-on-year, unit prices have risen by 18.8 per cent, making them an attractive alternative to houses for both first-time buyers and investors seeking affordability and strong gross rental yields.

The median unit price in Brisbane now sits at $669,254, appealing to investors who benefit from the current gross yield of 4.5 per cent in the unit sector. Brisbane’s unit market performance remains a key area of growth, reflecting increasing demand in well-located, inner-city areas.

Brisbane’s rental market

The Queensland capital’s rental market continues to reflect high demand and limited supply, with vacancy rates steady at 1.1 per cent. However, rent growth has started to decelerate, with house rents showing a 4.4 per cent annual increase, down from 5.4 per cent in September. Unit rents recorded a slight dip, decreasing by 0.3 per cent over the three months ending October.

Gross yields currently stand at 3.5 per cent for houses and 4.5 per cent for units, highlighting the higher rental returns associated with Brisbane’s unit market.

Despite the slowing rental growth, Brisbane’s tight rental market suggests that vacancy rates will remain low, and demand is likely to keep rents stable in the short to medium term​.

Property market stability into 2025

Overall, Brisbane’s property market continues to perform strongly, bolstered by consistent demand, restricted supply and attractive returns, particularly in the unit segment.

The October data points to a slight cooling in momentum again, however, Brisbane’s fundamentals remain solid. Factors such as strong population and job growth, combined with constrained listings and limited new supply, continue to drive demand across the housing and unit markets.

Looking forward, Brisbane’s supply-demand imbalance and the expectation of an interest rate cut in early 2025 may further bolster market activity.

Additionally, reports from agents indicate some listings may be postponed until the new year, anticipating a rise in buyer interest with potential rate cuts. With a new state Liberal Government in Queensland, significant legislative changes are unlikely, providing further market stability​.

Overall, Brisbane’s real estate market remains well-positioned for continued growth, albeit at a moderated pace, as it navigates evolving economic conditions. This ongoing environment of low supply and sustained demand reinforces Brisbane’s standing as a stable, high-potential market for both long-term investors and homebuyers.