Property market update: Brisbane, July 2021

As the country faced a new outbreak of COVID-19, Brisbane has yet again proven its ability to perform well under pressure compared with other capital city markets.

Data from different research firms shows that the Queensland capital delivered solid growth during the month and is on track to deliver double-digit growth at the end of the year.

From a dwelling price movement perspective, the city is bucking the national trend in terms of house price growth in recent months, according to Melinda Jennison, the managing director of Streamline Property Buyers.

She noted that Brisbane is one of the few capital markets in the country that has sustained growth momentum in housing values. Unlike Sydney and Melbourne (which have seen price growth slowing in the last three months), Brisbane has not shown similar patterns. 

And with Brisbane set to be an Olympic city in 2032, the long-term outlook for its property market is optimistic. Experts predict that hosting the 2032 Olympics and Paralympics will have a big impact on the property market’s movement, with the premier world sporting event described as a “game changer” for Queensland. 

For now, let’s look at how Brisbane performed in July 2021.  

Property values 

The latest data from CoreLogic showed that median dwelling value in Brisbane increased a further two per cent over the month of July. The figures indicate that the rate of price growth in the city is back to the same level observed in May. 

Year-on-year, dwelling values in Brisbane have risen by 17.7 per cent.  The current median value for dwellings across Brisbane is $598,615 which is $12,473 higher than the previous month and $95,991 than the same period in 2020.

Despite the recent price gain, Brisbane remains 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. 

The data from the research firm also showed that the higher end of the Brisbane market is underpinning growth. The strongest growth in dwelling values occurred in the top 25 per cent of the market in the quarter to June, with 6.2 per cent growth, compared to the 3.8 percent growth witnessed in the lower 25 per cent.

In the city’s housing market, median values rose by 2.2 per cent over the month, consistent with the growth rate experienced in the housing sector for the last two months. The 12 month change in Brisbane’s house prices is at 17.7 per cent.

The current median value for a house in the city stands at an all-time record high of $674,738, $17,187 more than one month ago and $98,400 more than at the start of the year. 

Brisbane’s unit market also saw further positive growth in July, rising 0.8 per cent over the month, accelerating from the 0.7 per cent in June. The annual rate of growth for units across the city is now at 7 per cent, with the median price now at $419, 142. The figure is $3,607 more than compared to a month ago and $28,357 more than at the beginning of 2021.

The latest Domain House Price Report published on 29 July 2021 showed house prices in Brisbane rose by double digits over the past year to record highs, lifting by 13 per cent over the 12 months until June 2021 and breaking a 13 year record. This recent growth caused median values to rise by $78,000 compared to the same period last year. 

According to the report, house prices in the city rose by 5 per cent over the June quarter, driving up the median value to $678,236.

Meanwhile, in the city’s ongoing tale of two markets, unit prices were almost unchanged with prices rising 2.1 per cent over the past year to $394,287.

Nicola Powell, the Domain chief of research and economics, said the Sunshine State's capital was perfectly positioned for a proverbial ‘coming of age’, with near record-high interstate and expat migration largely underpinning the latest growth.

“What’s interesting around hosting the Olympics is that the impact on housing values isn’t going to be during the Olympics of 2032; it’s going to be far more stretched than that because in the lead up it’s such a significant event for Australia and Brisbane so we’ll see significant investment,” Dr Powell said.

The expert added that the capital’s continued affordability compared to its peers, particularly Sydney and Melbourne,  is one of the driving forces in the city’s price cycle.

 Supply and demand  

The mismatch between demand and advertised supply continued to underpin Brisbane’s strong market conditions  in July. 

The latest figures released by SQM research showed that listings in Brisbane rose in July 2021 by 2.8 per cent to 23, 203  from 22,571 in June 2021.

Over the year, property listings in the city trended downwards, declining by 23.9 per cent compared to June 2020.

In another sign that demand in the city is still robust, old listings (or property listings over 180 days) fell by 13.2 per cent over the month and 55.8 per cent over the year to 3,550 in July. 

Meanwhile, new listings in Brisbane rose by 2.6 per cent over the month and 4.6 per cent over the year to 8,573. 

According to Corelogic, 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 25.9 per cent across the same period.  

The overall trend of declining properties up for sale in the Sunshine State's capital is putting upward pressure on property prices as demand outstrips supply, according to the research firm. 

Auction rates 

Despite localised lockdowns put in place to control the new COVID 19 outbreak across the country, auction market activity continued to be strong in July. 

Data from Corelogic showed that in the week ending 1 August 2021, 178 Brisbane properties went under the hammer. Out of the 177 results collected, the final clearance rate stood at 72.3 per cent.

As Queensland continues to be on alert for new community cases of the Delta strain of COVID-19 (after ending its week-long snap lockdown on August 8), the city’s auction market faces uncertainty.

But Corelogic’s CoreLogic’s Eliza Owen argues that auctions have generally improved with each lockdown. 

“Many real estate agents are now running both physical and online auction formats in parallel, making it easier for prospective buyers to participate in the auction event should restrictions be implemented. Buyers may also have become more adept with these formats.

“With agents finding ways to navigate the auction market amid social distancing restrictions, the clearance rate is more likely to reflect market sentiment than be directly impacted by a shorter-term lockdown,” she said.

Rental market 

Data shows that the low vacancy rate in Brisbane’s property market has driven up rental prices across the city.

According to CoreLogic data, rental incomes in the unit market throughout Brisbane during July have seen an annual increase of 4.6 per cent,  up 0.8 per cent compared to June 2021. 

Housing rents are still rising faster compared to units,  with the annual increase in rents for houses in the city now at 9.4 per cent, 1 per cent higher than a month ago.

Gross rental yields for dwellings across Brisbane are compressing as the rising dwelling prices continue to outpace rent price growth. At a city-wide level, gross rents have fallen slightly to four per cent in July, edging down by 0.1 per cent from the previous month.

Despite the modest easing, the city’s gross rental yields are still very attractive compared to Sydney (2.5 per cent) and Melbourne (2.8 per cent). 

Vacancy rates 

Brisbane’s rental vacancy rates hit a multi-year low in July, which are seen to drive up asking rents further. 

The Sunshine State capital’s vacancy rate was unchanged between June and July at 1.3 per cent and 1 per cent lower compared to the same period last year, according to a report released by Domain. 

The areas with the lowest vacancy rates in Brisbane and Gold Coast were Coolangatta (0.3 per cent), Nerang (0.3 per cent), Ormeau – Oxenford (0.3 per cent), Gold Coast – North (0.3 per cent) and Capalaba (0.4 per cent). 

Meanwhile, areas with the highest vacancy rate were Brisbane Inner (3.6 per cent), Sherwood – Indooroopilly (2.4 per cent), Brisbane Inner – West (2 per cent), Nathan (2 per cent), and Mt Gravatt (2 per cent). 

The low vacancy rates will give landlords in Brisbane a solid case to hike asking rates, with tenants already facing a significant increase in house rent over the June quarter, Domain said. 

Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella said that Queensland’s rental market was hit by a ‘perfect storm’ in the Q2 of 2021. Data from REIQ for the June quarter showed that 22 out of 35 local government areas recorded or matched their lowest vacancy rate in the last eleven years.

Brisbane City notched one of the higher declines in vacancy rates, falling from 2.1 per cent to 1.7 per cent. Cairns saw a similar rate of decline, falling from 1.1 per cent to 0.7 per cent.

 “With more people taking the opportunity of working remotely and not having to commute regularly to their offices, they are succumbing to the lure of moving to a region where they can enjoy a sea or tree change lifestyle,” Ms Mercorella said.

Outlook 

Looking ahead, Brisbane is expected to continue delivering solid growth in the coming months.

Experts are also optimistic that the temporary lockdown in the city will not have a significantly negative effect on the market’s activity. The current Delta outbreak is also not seen to have an impact on the fundamental imbalance between supply and demand that is putting such strong upward pressure on prices.

In terms of long-term outlook, experts are optimistic that the Olympics in 2032 is tipped to fuel further growth for Queensland. 

Ray White chief economist Nerida Conisbee said that Brisbane is on the brink of a “golden decade” of property prosperity, calling the Olympics a “huge drawcard”.

“Queensland is currently seeing the strongest population growth in Australia, with particularly high movement of people out of southern states to South-East Queensland. This strong growth is expected to continue which will have widespread impacts across all price points,” Ms Conisbee said.

Corelogic’s research director Tim Lawless gave a more modest forecast. He noted that while the Olympics “should”  “should” work as a positive influence, the flow-on effects are likely to be gradual and centred around significant infrastructure upgrades and a medium-term uplift in jobs.

 Domain’s Ms Powell said that the impact of hosting the Olympics on housing values will be more ‘stretched’ than expected. 

 “What’s interesting around hosting the Olympics is that the impact on housing values isn’t going to be during the Olympics of 2032; it’s going to be far more stretched than that because in the lead up it’s such a significant event for Australia and Brisbane so we’ll see significant investment,” Dr Powell said.

“It will grow the infrastructure and the associated job creation, and with that, it will bring economic prosperity … and what we could see is a bit of a turnaround in unit growth as well, she added. 

To gain a deeper insight on how hosting the Olympics is seen to impact Brisbane’s property market, read here.