Brisbane property market update - November 2020

The latest lending figures show that owner-occupier lending has risen to historical highs, excluding refinancing. In Queensland, first home buyer numbers are up 70 per cent year-on-year. The value of housing finance commitments (excluding refinancing) increased 40.2 per cent in Queensland over the September quarter, accounting for around 31 per cent of the uplift in finance nationally.  

Investor lending remains relatively modest overall, looking at nationwide data, although based on our own level of inquiry, there is definitely a lot of investor interest in Brisbane at the moment.

Over the month, we also saw mortgage lending get a little easier once again, with assessment rates from many banks being reduced. This, alongside the interest rate cut on Melbourne Cup Day, has resulted in an increased borrowing capacity for many property buyers.

Also, consumer confidence is the strongest it has been in seven years.

Housing loan deferrals are also falling, down from more than 900,000 loans at the peak of the pandemic to under 300,000 now, a decline of almost 70 per cent. This is also providing reassurance for property markets, with the risk of forced selling due to mortgage-holders unable to make their repayments rapidly diminishing.

Finally, Queensland had some good news on the employment front, adding back 206,000 jobs in only five months to see total employment higher now than a year ago. And of course, vaccine tests are proving to be increasingly effective and there is talk of a nationwide rollout early in 2021.

Last month, we reported that Brisbane property prices were showing signs of growth and we are pleased to confirm that this positive growth trend is continuing. Let’s explore what is happening in our local property market.

Brisbane property market prices

According to the latest Hedonic Home Value Index data by CoreLogic, dwelling values in Brisbane saw an overall median monthly price rise of a 0.6 per cent over the month of November 2020. The quarterly growth in dwelling values across Greater Brisbane is now 1.5 per cent and annual growth is sitting at 3.2 per cent.  

Of particular interest is that all segments of the Brisbane market appear to have had similar growth over the last quarter with upper quartile values 1.5 per cent higher compared with a 1.6 per cent lift seen in the lower quartile values, according to CoreLogic data.

This month is the first since the onset of the pandemic where all capital cities demonstrated positive price growth, with Melbourne the only capital city location still reporting negative growth for the quarter. 

In the Brisbane housing market, we saw median values for the greater Brisbane region increase 0.7 per cent across the month of November 2020. The current median value for a Brisbane house is now $568,629, the highest it has ever been.

The unit market in Brisbane saw some positive growth in the median value once again with an increase of 0.2 per cent for the month of September 2020. The current median unit price in Brisbane is now $388,661, which is still 1 per cent lower than 12 months ago.

Brisbane rental market movements

The vacancy rate in Brisbane as a whole remained consistent at 2 per cent between the end of September and the end of October 2020. There are many areas in Greater Brisbane where vacancy rates are extremely low. The table below highlights where vacancy rates across Brisbane sit at the end of October 2020.

Source: SQM Research

You can see from the table above, that vacancy risk is still high in the inner-city region where there is a large number of higher-density units. Rents in the unit market in Brisbane have now seen price falls of -1.9 per cent from 31 March to 31 November, a remaining consequence of supply and demand side factors. 

See below the change in rents for Brisbane units and houses from 31 March to 31 November 2020.

What are we seeing on the ground across Brisbane?

Every Saturday throughout November appeared to be busier than the last, with buyer numbers continuously increasing. Most properties that we viewed that were listed for sale by private treaty went to multiple offer after the first open home. Buyers could not believe just how fast quality properties were selling and a lot of buyers have become increasingly frustrated that they keep missing out.

At auctions, we have seen strong prices being achieved. If properties have passed in, in many instances there is a contract in place with a conditional buyer soon after.

Most properties are now selling outside of our appraisal range. Appraisals are based on historical recorded sales and this data is lagging based on the current contract values. If buyers are relying on sales that occurred three to four months ago to come to a price to pay for a property, they will in most cases simply miss out. The market is on the move and buyers must be prepared to pay more than was required just a few short months ago.

The months ahead…

The outlook for the Brisbane housing market appears to be strong looking forward into 2021.

The demand is rising due to interstate migration, the broad range of stimulus measures and positive changes to market sentiment. Economic conditions are improving with the virus containment, and it has never been cheaper to borrow money.

While we are seeing buyer numbers rise, we are also seeing stock remain low. Listing volumes decreased again in November in Brisbane according to SQM Research, down a further 3.8 per cent, which demonstrates a decline of -12.5 per cent annually. Tight levels of inventory, combined with rising buyer numbers, creates urgency among buyers, which in turn adds to the upward pressure on property prices.

The recovery trend is well and truly in full swing in Brisbane, and we expect 2021 will deliver some strong capital growth returns for Brisbane property.

Melinda Jennison, managing director, buyer’s agent and qualified property investment advisor (QPIA®) at Streamline Property Buyers