Property market update: Brisbane, October 2021

The arrival of the spring selling season was expected to take out some serious heat from the Sunshine capital’s property market, as the seasonal surge of listings was expected to ease some of the supply constraints and consequently reduce price pressures.

However, Brisbanite sellers did not catch the spring selling fever, as listings in the city continued to be low throughout the month.

Meanwhile, demand for Brisbane properties is still extremely high, particularly for detached houses throughout the inner- and middle-ring suburbs, as well as lifestyle areas.

The surge in the number of buyers who are actively looking to purchase a property in Brisbane is also attributed to the worsening affordability in other capital cities, particularly in Melbourne and Sydney, where property prices have skyrocketed throughout 2021. Compared to its southern cousins, Brisbane continues to be a more affordable and attractive option for first time home buyers, according to experts.

The continued trend of demand outstripping supply, in tandem with a slew of other persisting factors (low exposure to COVID, high interstate migration, elevated consumer sentiment, historically low interest rates) is considered as the main reasons why Brisbane did not break its stride in October.

And while experts are seeing trends and policy shake-ups that could potentially be a thorn to the city’s side, most experts believe that there is plenty of growth ahead for the Sunshine capital.

In the meantime, let’s take a closer look at how the Brisbane market performed throughout October 2021.

Property values

Despite the strong gains in dwelling values across Brisbane, it’s important to note that not all areas throughout the city are performing at the same level.

CoreLogic’s latest data revealed that the median dwelling value in the city has risen by 2.54 per cent over the month of October, the largest monthly increase since November 2003 and the highest monthly gain during the current upswing.

The latest monthly gain is also 0.75 per cent higher than in September, indicating that the price growth in the city is starting to gain momentum once again. Compared to the same period in 2020, the city’s dwelling values have risen by 22.30 per cent.

Currently, the median value for dwellings across Brisbane is $642,097, which is $16,806 higher compared to last month.

Data shows that the top end of the market is still driving the city’s price growth. In the quarter to September 2021, the top 25 of values saw a 6.7 per cent growth, while the lowest 25 per cent of values across the city saw a 4.2 per cent increase, according to CoreLogic.

And while both the highest value and lowest value segments of the market continued to show growth over the last three months, the pace of growth at the top end continues to outperform when comparing the month-on-month data.

In the city’s housing market, median values edged up by 2.8 per cent over the month, higher than the 2 per cent growth seen in September. This is the highest monthly growth recorded for Brisbane houses over the course of the recent property boom.

The 12-month gain in Brisbane property house prices has been 24.8 per cent, with the current median value at $731,392. This is the highest average house price in the city has ever been and $22,156 more than one month ago.

Meanwhile, the city’s unit market, which has lagged behind its detached housing counterpart for the majority of the pandemic, also saw a further pick-up in October. Units saw an increase of 1.3 per cent during the month, double the 0.6 per cent growth seen in September.

Over the year, units across Brisbane have seen price growth of 10.4 per cent and the current median unit price is $437,086, which is $7,086 more than one month ago.

Supply and demand

While spring selling season is truly in the air, as listings and auction volumes across the country rose in October, the strong demand for Brisbane properties has kept stocks on the city’s market low, according to new data.

Brisbane recorded the lowest gain among capital cities in total residential listings in October, notching a 4.6 per cent during the month from 19,598 in September to 20,506, SQM’s data showed.

Over the year, the Sunshine capital is the biggest decliner, with listings falling 32.1 per cent from 30,213 in October 2020.

Old stocks or property listings over 180 days fell by 2.1 per cent in October 2021 and are down by a staggering 63.1 per cent over the year. Meanwhile, new listings in the city rose by 3 per cent over the month and by 1.5 per cent over the year.

CoreLogic figures also showed that Brisbane bucked the trend of rising listings across the country as spring season came. According to the latest CoreLogic data, the total volume of listed properties available for sale in Brisbane was 31.3 per cent lower for the four weeks ending 3 October 2021, compared to the same period last year. Over the year, new listings were 2.3 per cent higher in Brisbane.

There are multiple factors that have contributed to an increase in demand in the city, according to analysts.

Migration data suggests that the Sunshine State has been particularly popular since the onset of COVID-19, providing a tailwind for housing demand.

Melinda Jennison, the managing director of Streamline Property Buyers, said the demand is coming from buyers looking to buy outside the bigger capital cities. “Buyer inquiry is still strong, especially from property investors who are priced out of the more expensive southern capital cities,” she said.

However, she noted that the demand is not equal for all properties. “Of course, the buyer depth varies throughout different suburbs around the city. Whilst the market is strong, even C-Grade properties are selling fast as buyers are making compromises just to get into the market.”

She added: “There seem to be multiple buyers for every property in Brisbane right now. The further away from the CBD that we look, generally, the buyer depth starts to thin out more and more. Obviously, there is a related scarcity factor in that trend, which is something buyers need to be aware of when hoping to achieve both short-term and more sustained long-term capital growth.”

Auction rates

Adding to the narrative of strong demand are Brisbane’s solid auction clearance rates throughout October.

According to Domain, auction clearance rates have remained historically high for the city, being recorded at 60 per cent through to 88 per cent every week throughout the month.

Meanwhile, CoreLogic’s weekly auction data showed clearance rates in the city were recorded at 76 per cent through to 80 per cent in October.

The figures are described as “unusual” for the city, considering that Brisbane is not known for its auction culture like Melbourne and Sydney. While the city cannot compete with its southern cousins in terms of volume, the city’s auction clearance rates are giving a strong showing.

“It seems this trend [of auctions] is gradually changing as both buyers and sellers become more confident in this way of transacting property,” Ms Jennison said.

For more updates, expert industry insights and stories about Australia’s auction markets, follow our weekly updates in our News section.

Vacancy rates

Vacancy rates in Brisbane declined over the month, according to Domain, dipping from 1.3 per cent in September to 1.2 per cent in October, hitting a multi-year low.

With Queensland set to further ease border restrictions in mid-November, the city’s rental market is seen to further tighten as fully vaccinated returning residents and interstate travellers will be allowed to fly into the state.

The areas with the highest vacancy rates in Brisbane and Gold Coast were Brisbane Inner (4.1 per cent), Nathan (2.4 per cent), Sherwood – Indooroopilly (2.1 per cent), Jimboomba (2.1 per cent) and Brisbane Inner – West (2 per cent).

Meanwhile, the areas with the lowest vacancy rates were Nerang (0.1 per cent), Capalaba (0.3 per cent), Coolangatta (0.3 per cent), Mudgeeraba – Tallebudgera (0.3 per cent) and Caboolture Hinterland (0.3 per cent).

Rental market

The tight vacancy rates are driving up rental prices in Brisbane, according to CoreLogic.

Brisbane house rents have seen an annual growth of 11.4 per cent, which is up a further 0.6 per cent compared to one month ago.

Meanwhile, rental incomes in the unit market have seen an increase of 6.5 per cent over the year in October, up 0.3 per cent compared to September.

Gross rental yields for dwellings across all of Brisbane, according to CoreLogic, was unchanged at 3.9 per cent throughout October and comparable to last month.

To have more insight about how rental markets around the country are performing, check out our latest report on rental prices and where are the most expensive (and affordable) suburbs to rent in across Australia’s capital cities.

What’s next for Brisbane’s property market?

Market analysts continue to be bullish about Brisbane’s growth prospects, despite market chatter about factors that could impede its further upswing.

In October, markets were shaken up after APRA announced it would boost the lending buffer in a move to cool market risks, which will decrease the borrowing capacity of new buyers. However, local market observers think Brisbane will be unaffected by the recent crackdown.

“This is likely to have a much higher impact in the regions where there is the largest gap between property prices and incomes,” according to Ms Jennison. Citing the latest income data, she pointed out that the majority of areas with the largest gaps between prices and income levels are located in Melbourne and Sydney.

“Because Brisbane is a much more affordable market as a whole, there is likely to be less risk that the recent changes will impact the market in the foreseeable future,” she said.

Commenting on the future price growth trends, Ms Jennison said they do not expect prices to stabilise some time yet. “Whilst the demand for more affordable property remains strong, we expect to see property values continue to rise.”

But the local expert also expects a slow down in the weeks leading up to Christmas, when listing volumes are expected to decline and buyers will likely focus more on Christmas shopping rather than property shopping. On the upside, she predicts the market will pick up steam and rebound coming into 2022.

Over the long term, the outlook for the city’s growth also remains positive. Recently, both Westpac and ANZ have also updated their property price forecasts in response to Brisbane’s resilience in the face of extended lockdowns.

Westpac senior economist Matthew Hassan sees the Brisbane property market growing 22 per cent in 2021 and 10 per cent in 2022.

Price growth momentum is expected to slow considerably through 2022, as stretched affordability combined with macro-prudential tightening measures and, later in the year, the anticipation that the RBA will begin a tightening cycle in early 2023 begins to affect buyer confidence, he explained.

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