Brisbane continues to be the fastest growing capital city

According to Corelogic Data released on 4th January 2022, The Queensland capital continues to lead price growth throughout the nation, reaching a new cyclical high in the last quarter of 2021.

The strong price growth is partly driven by continued low supply in Brisbane. The number of properties available for sale in the period up to 5th December 2021 was -27.2% lower than the equivalent period last year according to Corelogic data. This contrasts with other capitals such as Sydney and Melbourne, where listing numbers are equivalent to or greater than the same time last year.

Source: Corelogic

Looking at auction clearance rates from Domain throughout December, we saw Brisbane perform between 72% and 75% across the 3 weeks up until Christmas.

This is much higher than previous years, but a little lower than the recent trends we observed throughout October and November.

This could be due to fewer buyers in the market throughout December, or sellers' expectations starting to move ahead of the market. Time will tell as the early auction clearance rates for 2022 become apparent.

In terms of longer-term demand, one contributor is population growth and in the 2021 financial year, interstate migration to south-east Queensland surged to the highest level since the early 2000s with overall population growth reaching +45,900 which came at the expense of other states whose population numbers declined – especially Victoria.

With job opportunities still rising according to the Department of Employment, there is also continued positivity in sight. The total number of job advertisements in Queensland, seasonally adjusted, is up 57% from pre-Covid levels. This is certainly reassuring for our local economy as we move into the early months of 2022.

Unlike other capital cities around Australia, despite recent price growth that has been experienced, Brisbane remains one of the more affordable options for property buyers. We are also amongst the highest yielding capital cities as well.

With a pending federal election this year we expect housing affordability to become a hot topic for the major political parties in the months ahead. We also have the threat of Omicron and Covid-19 with case numbers escalating rapidly throughout Brisbane and South-East Queensland now that borders have opened.

In this month's update, we outline the performance of the Brisbane property market across all sectors and provide our insights in terms of the months ahead.

Brisbane Property Market Prices

The latest Hedonic Home Value Index data by Corelogic released on 4th January 2022 for the month of December 2021, has confirmed that the median dwelling value in Brisbane increased by a further +2.9% over the month.

This price growth is the same rate of price growth when compared to what we observed in Brisbane last month. Confirming Brisbane is still at its peak rate of growth in the current cycle, with no slow down yet to be observed in dwelling price growth.

The current median value for dwellings across Greater Brisbane is $683,552 which is $22.353 higher than just one month ago.

The quarterly growth in dwelling values across Greater Brisbane is now up 8.5%. Annual growth for the last 12 months for Brisbane Dwellings is now +27.4%.

Source: CoreLogic

Brisbane's higher value properties remain at the forefront for price growth; In the three months to November 2021, the top 25% of values experienced 8.1% growth (up from 7.3% at the end of October) compared to 5.9% growth in the lowest 25% of property values across the city (up from 5% last month).

The middle 50% of values in Brisbane saw an increase in the three months to November of 7.1%, compared to 6.1% growth in the three months to October.

All segments of the Brisbane market are in a strong growth phase right now, but the top end of the market is still growing at the fastest pace when we look at 3-month trends segregated by price point.

Looking at the data even closer, we can see that when we compare the last two updates for this data, the trend is showing that the top 25% of values demonstrated 3-month growth that was up 0.8% (ie: the 3-month trend between the end of October and the end of November 2021 showed a further increase of 0.8% in this price segment), the middle 50% of values was up 1% and the bottom end of the market was up 0.9%.

This is a trend worth watching closely, especially if the Brisbane market moves into a price point where affordability constraints start to have an impact.

Source: CoreLogic

Brisbane House Prices

The Brisbane Housing Market continues to lead the nation in terms of monthly price growth.

Median values for the greater Brisbane region increased a further 3.1% in the month of December 2021, down just slightly from the November 2021 high of 3.2% price growth. This is yet another new record median value for Brisbane.

The 12-month change in Brisbane house prices has been 30.4%, which is the strongest 12-month house price growth across all capital cities throughout Australia.

The current median value for a house in Greater Brisbane is now $782,967, the highest it has ever been. This is $25,773 MORE than one month ago! Every month the median value for greater Brisbane just keeps growing.

Source: CoreLogic

Brisbane Unit Prices

The Unit Market in Brisbane picked up again throughout December 2021. Unit median values in Brisbane were up 1.6% this month, compared to 1.1% last month. The 12-month growth for units across Brisbane is now +12.7%.

The current median unit price in Brisbane is $451,256 which is $7,275 more than one month ago.

Source: CoreLogic

Summary of Price Growth in Brisbane for the Year to Date

The graph below charts the % change in property values for Houses and Units since January 2020 in Greater Brisbane.

The housing sector continues to outperform the unit sector in Brisbane on a month-to-month basis. This has been a trend observed since October 2020. We can clearly observe a divergence in the rate of growth on a month-by-month basis in the different property types.

Below we have charted the actual median value changes for Houses and Units across Greater Brisbane for the full year of 2021. You can see the median value for Houses across the year increased $199,065. For units, the median value increased $58,079 throughout the same period of time.

In simple terms, the growth in the dollar value of Houses has been 3.43 times the growth in the dollar value of Units throughout Greater Brisbane throughout 2021.

Brisbane Rental Market Movements

Vacancy Rates at a city-wide level in Brisbane tightened slightly between October and November and are currently at 1.3% (down from 1.4% last month).

Source: SQM Research

Vacancy changes only very slightly this month across every sub-region throughout Greater Brisbane as can be seen in the table above. These tight vacancy rates are continuing to put upward pressure on rents throughout the city.

Housing rents have demonstrated annual growth in Brisbane of 11.8% according to Corelogic Data, which is up only slightly, a further +0.1%, compared to one month ago.

Rental incomes in the unit market throughout Brisbane have seen an annual increase of 6.9% up only +0.1% compared to last month also.

Gross rental yields for dwellings across all of Greater Brisbane according to CoreLogic remained have slipped slightly lower again this month due to property values rising faster than rents. As at the end of December, the gross yield in Brisbane is 3.7%, down a further  -0.1% compared to last month.

What did we see on the ground across Brisbane during December 2021?

There was definitely a slow down in buyer activity in the weeks leading up to Christmas in December 2021. This is a seasonal trend that is observed as people tend to focus on the festive season and family events.

Despite the slightly reduced demand, there were still enough buyers who were active in the market to cause multiple offers on most properties. It was the depth of buyers that was the change we observed throughout the month. So instead of competing with 15-20 buyers when submitting offers on properties, it was more commonly only 4-6 other buyers.

It was a nice reprieve after such a competitive year.

Most listing activity on the main real estate online portals stopped mid-month with the last busy Saturday for inspections and auctions being 18th December in 2021.

The months ahead...

Now that State and International borders are open, we do expect to see a renewed spike in the demand for Brisbane property.

This may place additional pressure on prices in the absence of a corresponding increase in new properties being listed for sale – especially in the short term.

Of course, we also have the rising threat of Covid-19, with the rapid increase in infection numbers occurring daily as it spreads throughout South-East Queensland. With strong rates of vaccination, we are hopeful that this will have little impact on the health of those exposed, but also on our economy that has continued to thrive without extensive lockdowns slowing things down.

We expect there to be short term inconveniences associated with increase in case numbers, but at this stage we do not expect that this will impact supply or demand in the local property market here in Brisbane.

The first few months of 2022 are expected to see continued strong price growth, especially in the housing market. There will come a time in the near future when the housing growth rates peak, and buyers may turn to the more affordable option of units to stay within their desired suburbs.

We expect 2022 to be another exciting year for Brisbane property and price growth should continue based on the supply and demand metrics currently at play. For how long this lasts, not one really knows,  but when we see either a fall of in demand or an increase in supply on the ground, this will be the first sign of a market shift.