Property market update: Brisbane, May 2021

This mismatch between available supply and demand, along with other factors such as record-low interest rates, improving local economy, strong interstate migration, rising consumer confidence and solid business confidence, are underpinning Brisbane property market’s growth. 

It’s not just Brisbane that’s heating up. On a wider scale, the Sunshine State seems to be enjoying solid growth. Matthew Hassan, the senior economist for Westpac, said that Queensland’s property market is tipping into boom territory. 

“Sales are running well ahead of listings, especially for houses, with stock on market down to just 3.4 months of sales in Brisbane – the long-run average is five months,” he said. 

With all this in mind, let’s take a closer look at how Brisbane’s property market performed in May 2021. 

Property values 

Brisbane’s housing boom continued in May, with dwelling values surging by 2 per cent in just one month. The figures indicate an acceleration in price growth compared with April, when property prices in the city rose by 1.7 per cent. Currently, the median value of a Brisbane home stands at $574,572, more than $16,000 higher than it was just one month ago.  

Over the past three months, Brisbane dwelling prices are up an impressive 6.2 per cent and annual price growth has hit double digits, rising by 10.6 per cent. 

In May, the Brisbane housing market performed significantly stronger than units. For Brisbane house owners, prices rose by 2.2 per cent or $19,921 in one month. The current median value for a house in the Sunshine State capital now stands at $641,727, the highest on record. Annual growth has also been strong, with the housing market recording a solid 11.9 per cent gain. 

But the city’s unit market also saw further positive growth in the short and medium-term (albeit at a slower pace), posting another increase of 1.2 per cent growth in May. Compared to the same period last year, units across Brisbane rose by 4.2 percent, indicating that the unit market has bottomed out and is now starting to recover.  The current median unit price in Brisbane is $411,664, which is $5,762 more than one month ago.

While still trailing house price growth by a wide margin, unit values have begun to show signs of life as investors started to return to the sector and strong internal migration flows to south-east Queensland, along with other factors boosting demand. 

Data shows that growth is being driven by the most expensive end of the market across the capital, rising more than double the rate of the least expensive segment of the market. This is attributed to the high level of activity in the owner-occupier non-first home buyer segment of the city’s property market.

Supply and demand  

Figures from SQM Research showed that the total listings of properties in Brisbane fell by 7.1 per cent from 25,314 in April to 23, 519 in May. At an annual rate, the number of properties for sale in the city fell by 18.4 per cent. 

Additionally, data from the research firm revealed that “old stock” or properties that have been on the market for 180 days for more, are being cleared as the number of buyers significantly outweighs sellers. The number of old listings in Brisbane had dropped 46 per cent over the past year, falling from 8,476 listings to 4,577. 

The fear of missing out (FOMO) seems to be the driving force behind buyers, as they fiercely compete for the low supply in the market. 

SQM Research's Managing Director Louis Christopher says that this market trend  is a reflection of strong selling conditions.  

“The downward trend in old listings suggests strong absorption rates, so new property listings are not completely offsetting the falls in old listings, indicating there are more buyers than sellers in the market, which is fuelling the property boom,” he explained. 

As stock levels continue to decline, asking prices for both units and houses have increased, rising by 1.1 per cent and 0.6 over the month, respectively. 

Mr Christopher said the figures showed that there are more buyers than sellers in the market and it also indicated that there has been no noticeable slowdown since the end of JobKeeper or HomeBuilder. 

Auction rates

A total of 2, 905 capital city homes were taken to auction in the last week of May. Out of the 2,884 results collated, a clearance rate of 73.5 per cent was recorded. This is the lowest recorded over the year to date, down more than two percentage points on the prior week’s final clearance rate when volumes were at a similar level at 2, 838. 

In another show of Brisbane’s housing market strength, auction clearance rates across the city have been consistently strong throughout May, closing each week above the 70 per cent mark. 

In the week ending 30 May 2021, 192 Brisbane properties went to auction over the week, with a final clearance rate of 70.0 per cent. 

Rental market 

With house prices generally rising faster than rents, gross rental yields remain under some downward pressure. The gross rental yield for Brisbane is 4.2 per cent and 5.0 per cent for regional Queensland, according to CoreLogic.

So how much do you need to rent a property in Brisbane? Data from SQM Research revealed that rent for houses in the Queensland capital stood at $486.6 while rent for units stood at $431.

Vacancy rates

Latest data from Domain showed that Brisbane’s vacancy rates are becoming extremely tight, with rents seen to surge this year. 

Vacancy rates in Brisbane stood at 1.3 per cent in May from 1.4 in April, the city’s lowest  level since the Domain data series began in 2017. Inner-city markets still offer the most choice for tenants in Sunshine State Capital, with a vacancy rate of 4.7 per cent. 

The areas with the lowest vacancy rates in Brisbane & Gold Coast are Capalaba (0.2 per cent), Caboolture Hinterland (0.3 per cent), Nerang (0.3 per cent), Coolangatta (0.3 per cent) and Wynnum – Manly (0.4 per cent).  

Meanwhile, the areas with the highest vacancy rates are Brisbane Inner (3.4 per cent), Sherwood – Indooroopilly (2.5 per cent), Brisbane Inner – West (2.3 per cent), Nathan (2.2 per cent), and  Mt Gravatt (2.1 per cent). 

Outlook

The future looks bright for Brisbane, as medium-term market conditions are expected to power the city’s growth streak this year. 

NAB had previously expected price growth of 14 per cent across all capital cities in 2021, but NAB Group chief economist stated that the bank has lifted the figures to 16 per cent increase in Brisbane. 

Westpac has also modified its property forecasts, with Brisbane real estate prices seen to surge 20 per cent between 2022 and 2023.

Additionally, indicators are pointing to investors stepping up their activity, motivated by prospects for continued capital gain and record-low interest rates. 

CoreLogic's Mr Lawless commented that while there are signs that first home buyer demand is pulling back, investors are stepping forward. 

“The resurgence of investor participation and high levels of activity in the owner-occupier non-first home buyer segment may account for the continued strength in dwelling markets despite affordability constraints,” he said. 

In a statement, RBA governor Philip Lowe said that as property prices continue to rise, banks will carefully keep an eye on borrowing. 

“There has also been increased borrowing by investors,” he said. “Given the environment of rising housing prices and low interest rates, the bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained,” the central bank governor said.  

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