Brisbane Property Market Update September 2021
This article will highlight what has been happening in the Brisbane Property Market during September 2021.
Throughout September, the residential property market in Brisbane remained robust, with growth still very strong, especially in the housing sector. This growth is being fuelled by a number of factors contributing to low supply and high demand. We will run through a few of these things in this market update.
Firstly, the availability of properties to buy (supply) is down. According to CoreLogic data, total advertised stock in Brisbane is still -28.7 per cent lower up to 29th August 2021, compared to the equivalent period last year. Although new listings over the same period are +8.3 per cent higher in Brisbane, the rapid rate of absorption means there is not a lot that is available to buy in the current market throughout our city.
Secondly, demand is very high. This continues to be supported by the expectation that mortgage rates will remain at record lows for an extended period of time. Brisbane has avoided lockdowns over recent weeks, so our local economy continues to thrive. We remain a much more affordable market, and now we are seeing investor activity rise with 29.7 per cent of all housing finance commitments throughout July 2021 going to investors, most likely driven by the higher yields and also strong capital growth prospects.
A recent Annual Investor Sentiment Survey by Property Investment Professionals of Australia (PIPA) confirmed that a staggering 58 per cent of respondents believed that Queensland offers the best property investment prospects over the next 12 months. This is a huge increase off the back of last years’ results where a smaller 36 per cent of investors thought Queensland offer the best investment prospects.
According to data released by realestate.com, year on year investor enquiry has increased the most in Brisbane, up 186 per cent compared to the previous 12-month period.
According to their report, the regions within Greater Brisbane which experienced the highest spike in investor inquiry include Logan, Moreton Bay, Ipswich, and north Brisbane. It was suggested that relative affordability and tight rental markets appear to be piquing investor interest in these areas. This is especially true when comparing Brisbane to other east coast capital city markets.
Net migration into Queensland throughout 2020 was almost double the decade average, meaning more people needing somewhere to live. Initially, this puts pressure on the rental market, but through our own inquiry, we are also seeing a lot of people who want to relocate, buying now before they make the move in the future.
According to ABS data, we had more than 58,000 people move to Queensland during the six months to March 2021. The data also showed that there was a shift to regional NSW and regional Queensland, but apart from this, Greater Brisbane actually recorded the largest net flow of people into the capital city from March 2020 to March 2021. Perhaps the drivers include people wanting more sun, less traffic, and a more affordable lifestyle.
With Household Wealth across Australia rising 5.8 per cent in the June 2021 Quarter, to a record-high of $13.4 trillion, there seems to be a lot of money available to spend once the national economy opens up. As the vaccinations continue to roll out, and pathways out of lockdowns being planned, it seems that the future remains bright for Australia on the other side of COVID-19. That said, the Queensland borders are still shut, and at some stage, we will need our own pathway forward so that we can operate as one national economy again in the future.
Let’s take a deeper look into the performance of the Brisbane market throughout September 2021.
Brisbane Property Market Prices
The latest Hedonic Home Value Index data by CoreLogic released on 30 September 2021 has confirmed that the median dwelling value in Brisbane increased a further +1.8 per cent over the month of September. This is slightly lower than the dwelling growth that was experienced in Brisbane throughout July and August, which suggests a slight slow down in the momentum of price growth across the city. The current median value for dwellings across Greater Brisbane is $625,291, which is $12,914 higher than just one month ago.
The quarterly growth in dwelling values across Greater Brisbane is 5.9 per cent, indicating a slight slowdown since last month, and annual growth for the last 12 months is now 19.9 per cent.
The top end of the Brisbane Market is still driving the growth, as you can see in the CoreLogic data below. This shows that the strongest growth in dwelling values occurred in the top 25 per cent of values in the three months to August 2021, with 6.9 per cent growth in that market segment (no change in this growth compared with the three months to the end of July) compared to 4.3 per cent growth in the lowest 25 per cent of values across the city (again no change in this growth since the end of July). Whilst both the highest value and lowest value segments of the market continue to show growth over the last three months, the rate of growth at the top end continues to outperform when comparing the month-on-month trends.
Brisbane House Prices
In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 2 per cent across the month of September 2021, which is slightly below the 2.1 per cent growth in August. Prior to that, monthly growth was trending at 2.2 per cent throughout May, June, and July, so there has been a slight reduction over August and again during September. The 12-month change in Brisbane house prices has been 22.2 per cent. The current median value for a house in Greater Brisbane has now broken the $700,000 threshold. It is currently $709,136 – the highest it has ever been. This is $17,922 MORE than one month ago!
Brisbane Unit Prices
The Unit Market in Brisbane saw reversal in the momentum of price growth this month, after a pick up in the momentum of growth throughout August. September saw an increase of +0.6 per cent growth for units in Greater Brisbane, compared to +1.4 per cent last month. The 12-month growth for units across Brisbane is now +8.8 per cent. The current median unit price in Brisbane is $430,000, which is $4,223 more than one month ago.
Summary of Price Growth in Brisbane for the Year to Date
The graph below charts the per cent change in property values for Houses and Units since January 2020 for both houses and units in Greater Brisbane.
The trendlines here continue to show that the housing sector is outperforming the unit sector on a month-to-month basis. This has been the case every month since October 2020. Whilst the housing sector has experienced fairly consistent growth of between 2 per cent and 2.2 per cent over the last five months, the unit sector has experienced more erratic price growth on a month-to-month basis.
Below we have charted the actual median values for Houses and Units across Greater Brisbane since January 2021. You can see Houses have clearly outperformed Units when breaking the growth down into different asset types in Brisbane.
Brisbane Rental Market Movements
Vacancy Rates at a city-wide level in Brisbane remained unchanged between July and August, staying at 1.3 per cent. They have tracked sideways remaining unchanged since May this year. The table below highlights where vacancy rates across Brisbane sit at the end of August 2021.
|
Region |
Vacancy Rate August 2021 (change from July 2021) |
|
Beenleigh Corridor
|
0.5% (-0.1%) |
|
Brisbane CBD
|
4.6% (+0.1%) |
|
East Brisbane
|
1.3% (-) |
|
Inner Brisbane
|
2.3% (+0.1%) |
|
Ipswich
|
0.8% (-0.1%) |
|
Northern Brisbane
|
0.7% (-) |
|
South-east Brisbane
|
0.8% (+0.1%) |
|
Southern Brisbane
|
1.4% (-) |
|
West Brisbane
|
1.2% (-) |
Source: SQM Research
The Brisbane CBD remains slightly elevated, which was a trend that emerged last month. This contrasts with the trends we have been witnessing in the months prior. Otherwise, vacancy remains tight across the city. There is still not enough stock to provide rental accommodation to tenants who need a home, especially in the middle and outer ring locations of Greater Brisbane. This continues to put upward pressure on rent prices throughout the city, more so for houses than units.
Housing rents have experienced annual growth in Brisbane of 10.8 per cent according to CoreLogic Data, which is a further +0.7 per cent more than a month ago.
Rental incomes in the unit market throughout Brisbane have seen an annual increase of 6.2 per cent up +0.6 per cent compared to last month.
Gross rental yields for dwellings across all of Greater Brisbane according to CoreLogic remained at 3.9 per cent throughout September. This is the same as last month, so there was no further record-low this month.
What did we see on the ground across Brisbane during September 2021?
One thing we are noticing on the ground is the level of competition at auctions at various locations around the city. Most of the properties that are selling by auction are achieving a very good price as buyers compete in a transparent environment to secure properties throughout Brisbane. It seems buyers are becoming a bit more comfortable with the auction bidding process, which traditionally has not ever been the most common way to buy properties here in Brisbane.
We are hoping to see a few new listings coming to the market now that school holidays are over and the spring selling season is in full swing. Many agents are a bit more optimistic about what is coming soon, so perhaps there might be more to choose from in the near future?
Buyer demand still is very strong, and the depth of buyers in some areas remains extremely high. When you put forward an offer on a property, and you are one offer amongst 20-30 other offers, you know you are targeting a high-demand home! It looks like the multiple offer situation is here to stay for some time yet for properties that are listed for sale on the major real estate portals.
The speed of the market remains fast also, with most quality properties still selling after the first weekend on open homes. The only instance where this does not appear to be the case is when vendor expectations are ahead of the market – which sometimes starts to happen when prices are escalating so rapidly. When a vendor receives multiple offers but does not accept any of them, it is a sign that they may need to adjust their expectations.
The months ahead
Based on our current level of buyer inquiry, as well as the number of active buyers still out on weekends inspecting, bidding, and making offers of properties available for sale, we do not see any slow down in sight for Brisbane at this stage.
For price growth to really slow down, we need to see a huge increase in the number of properties available for sale, or a huge decline in the number of active buyers in the market. We can not see either of these scenarios playing out in the near future and, therefore, we expect the trend in property price growth to remain positive and strong for the foreseeable future.
For some, this rapid price growth seems unsustainable. But for others who have been waiting patiently for this growth since the last strong price growth cycle in Brisbane, we remain more optimistic. With such a bright future for Brisbane, with its pipeline of infrastructure projects and an Olympic Games to look forward to, the property market looks set to benefit into the future.