Property market update: Brisbane, December 2021

Speaking on Brisbane’s stellar performance, CoreLogic’s research director Tim Lawless explained that the city (along with Adelaide) shows less of an affordability challenge relative to the larger capitals, as well as better support for housing demand. He noted that Queensland, in particular, showed strong interstate migration.

Once dismissed by big-city dwellers as a backwater region where people spend their vacations and get a tan, the Queensland capital has emerged as a property hotspot for both homebuyers and investors.

This is evidenced by the 20-year high in interstate migration, which saw southern buyers (mainly Sydneysiders and Melburnians) make a permanent move north – pushing up suburb medians to new peaks.

CoreLogic’s latest data showed that the city (along with other strong capital performers) is breaking away from the capital city pack in terms of growth.

In recent months, Brisbane and Adelaide saw further momentum while other capitals were flagging and caused a two-speed property market to emerge. CoreLogic head of research Eliza Owen said the diverging trend among capital cities lies in the supply and demand dynamics.

The expert highlighted that Brisbane managed to have more steam in its growth engine in recent months due to the city’s relatively low level of stock, which was keeping competition between buyers intense.

“Over the past months, there [have] been 14,000 properties for sale but at this time of the year, Brisbane would usually have 24,000,” she said.

For comparison, she pulled up supply figures of its southern counterparts. “That’s very different to what’s happening in Sydney and Melbourne, where they are back to pre-COVID stock levels,” she said.

Mr Lawless concurred with his colleague, stating that advertised stock on the Brisbane market remains “remarkably low”, meaning demand continues to significantly outstrip supply.

REIQ chief executive Antonia Mercorella said the phenomenal property price growth was the culmination of several factors driving insatiable demand.

“Queensland hasn’t experienced this sustained level of demand and accelerated growth before, but after years of modest growth, prices here are playing catch-up,” Ms Mercorella said.

“Even as our median prices rise, our state is still demonstrating greater bang for [the] buck, with investors looking to make their real estate dollar go further and southerners making the move keen to lap up our state’s incredible liveability factor.

“It’s not surprising that Queensland property is still extremely attractive, given our state’s enviable lifestyle coupled with a sense of safety and relative freedoms during the pandemic, and of course, our comparatively great affordability compared to our southern city counterparts.”

The jaw-dropping year of growth was further annexed to the milestone news that the Queensland capital snatched the winning Olympic bid for 2032, thrusting the once-sleepy capital on the international stage.

And while Brisbane has been tipped to slow down as part of a broader slowdown across the country’s property market, experts predict the city will see continued growth throughout the year while placing their bets on the Queensland capital to be the best capital market performer for 2022.

“If you look at the bank forecasts, they’re all picking Brisbane to be the best capital city performer, even in the lower growth environment,” Ms Owen noted. “Those tailwinds of internal migration and lower prices are likely to keep [the] momentum going.”

Will the Sunshine State capital hold on to its top spot in 2022? Or will the year prove to be less exciting for the city’s property market observers?

For now, let’s see how Brisbane performed in December 2021.

Property values

Brisbane had another bumper month for property values, with both houses and units outperforming any other capital city in December, CoreLogic data showed.

Dwelling prices in the city rose 2.9 per cent pace over the month, the city’s fastest growth recorded through the whole of 2021 and at par with the pace seen in November.

The rise in value over November and December marked the biggest monthly gains in almost three decades, according to CoreLogic.

The monthly gain pushed the annual growth rate upwards to 27.4 per cent and the quarterly growth up by 8.5 per cent.

The current median value for dwellings in Brisbane is $683,552, which is $22,353 higher than just one month ago.

The Brisbane housing market continues to lead the nation in terms of monthly price growth, rising by 3.1 per cent during the period, down just slightly from the November peak of 3.2 per cent price growth.

Brisbane’s house values have increased by a staggering 30.4 per cent in the past year, with the median price now $783,000, the highest it has ever been. This also represents a $25,773 monthly increase in average house prices.

Meanwhile, the growth in the unit market in Brisbane accelerated to 1.6 per cent in December, compared to the 1.1 per cent increase last month.

The 12-month growth for the city’s unit sector is now 12.7 per cent. The current median value for apartments in the city currently stands at $451,256, which is $7,275 more than one month ago.

According to CoreLogic, a typical Brisbane house is now about $207,000 more expensive than it was at the start of January, while units experienced a total price increase of $60,000 during 2021.

Supply and demand

The seasonal slowdown during the Christmas season further exacerbated the imbalance between supply and demand in the city, with fewer real owners putting their property on the market in December.

Data from SQM Research showed that total residential listings in the city fell in December by 9.4 per cent from 19,305 in November to 17,487.

Over the year, total stock levels are down by 34.4 per cent, making Brisbane the biggest annual decliner among capital cities.

New listings or properties that have been on the market less than 30 days saw a 29.9 per cent decline over the month from 8,561 to 6,000. Over the year, new listings in the Queensland capital are down by 10 per cent.

Old listings or property listings over 180 days also edged by 0.1 per cent during the month from 2,479 to 2,476. Year-on-year, old listings are down by 60.8 per cent.

Commenting on the figures, managing director of SQM Research Louis Christopher said that sellers are in no rush to sell due to the continued shortage of listing across the country, with some even increasing their asking prices for the month.

“Unless we have a surge in listings for the start of the property season in February it is looking like a very soft landing for the housing market in 2022,” he concluded.

CoreLogic stated that Brisbane’s phenomenal growth is partly driven by the continued low supply in the city. According to Mr Lawless, the number of homes available to purchase has been a key factor underlying the trend in housing values.

“Capital cities where advertised stock levels are above average or close to normal, such as Melbourne and Sydney, have shown a more obvious slow down relative to cities with persistently low advertised supply, like Brisbane and Adelaide,” he explained.

The property data provider revealed that advertised supply in Brisbane stood around 35 per cent below the five-year average at the end of 2021.

At the other end of the scale, Melbourne’s inventory levels were above the five-year average, while Sydney listings were only 3.9 per cent below average.

On the demand side, interstate migration, along with overseas interest, continues to be high thanks to the city’s desirable lifestyle and its relative affordability compared to cities like Sydney and Melbourne.

Interstate migration into Queensland, growing at its fastest rate since late 2003, has also remained a tailwind for demand.

According to data from the Australian Bureau of Statistics (ABS), Brisbane’s population grew by 1.9 per cent during 2019-2020, recording the highest growth rate of all capital cities.

In the March 2020 quarter, Queensland recorded the most arrivals across the country at 24,000. The state had a repeat performance in 2021, recording the highest arrivals in March this year at 28,500.

Queensland gained the most people, about 7,000, from net interstate migration over the March 2021 quarter, while Victoria lost the most at almost 5,000, followed closely by NSW at 4,500 people.

Looking ahead, Ms Mercorella expects demand to bounce back following the slowdown in market activity during the holiday break.

“With interstate borders reopening and international border opening to come, chances are we could see a flurry of activity and an uptick in demand well into the new year,” she said.

Auction markets

Brisbane emerged as an auction powerhouse in 2021 after the city became a safe haven for southern buyers as the Sunshine State capital escaped the worst of the pandemic disruption.

But the city’s auction market activity tapered down in December, with the Christmas slowdown, Omicron breakouts and border reopenings in other states causing fewer buyers to be out property hunting in Brisbane.

According to CoreLogic, Brisbane’s auction clearance rate fell back to 73.6 per cent across 578 properties that went under the hammer during the first two weeks in December.

Despite the decline in the number of property turnovers through auctions, the figures were still above the city’s track record as buyers and sellers alike adapted to the speedy market.

And while the results were only recorded after the first half of the month, the week up to 12 December was Brisbane’s busiest week for auctions since CoreLogic’s records began in 2008.

Meanwhile, Domain’s auction data showed Brisbane’s auction clearance rates throughout December, clocked in 72 per cent and 75 per cent across the three weeks up until Christmas.

If you want to be updated about what’s happening across auction markets in the country, make sure to follow our weekly updates on Smart Property Investment’s News section.

Rental market

Domain’s December 2021 Rental Report revealed rental prices for Brisbane houses have again skyrocketed to record heights.

Data showed that house rents in the city rose on average by $20, or 4.3 per cent, over the quarter to $480. Over the year, rents in the sector increased by 12.9 per cent, cementing what is now the longest period of continuous house rent growth in the city’s history.

Brisbane’s house rents have achieved a record-breaking six consecutive quarters of rising asking rents, according to Domain.

This also makes Brisbane’s house rents more expensive than Melbourne ($445), Perth ($460) and Adelaide ($450). Canberra remains the nation’s most expensive hub for tenants, with an average weekly rent of $675.

Meanwhile, unit rents increased another $10, or 2.4 per cent, over the quarter to a new record high of $420 a week. Compared to the same period last year, unit rents are up 5 per cent.

At the end of December, gross rental yields for houses and units in Brisbane stood at 4.17 per cent and 5.16 per cent, respectively.

The report noted that the city’s house rents had risen more than double the rate of units over the past year, a trend that is not seen to change any time soon.

Domain highlighted that asking rents have risen at a faster annual pace for rentals with more bedrooms, both for houses and units, reflecting tenants’ desirability for space from those able to work from home.

The trend in rental growth also provides an insight into demand demographics. The report stated that people in the height of their working years are the biggest interstate group relocating to Brisbane; many have young families with them, relocating for career opportunities, university education, affordability, and lifestyle.

Domain chief of research and economics Nicola Powell said the high rate of migration is putting pressure on the house rental market and may lead to the March 2022 quarter hitting yet another price milestone.

“Tenants could be staring down the barrel of weekly house rents of $490 or $500 over the next quarter,” Dr Powell said.

As December and January marks the rental changeover period, the expert said that Brisbane landlords could renegotiate and move their rents to match the market rate.

She added that with the reopening of the international border on the horizon – which is seen to bring with it a high volume of overseas migrants – further demand could be put on the country’s rental and sales market.

CoreLogic’s data showed that over the year, rents in Brisbane houses and units rose by 11.8 per cent and 6.9 per cent, respectively.

Gross rental yields for dwellings in Brisbane stood at 3.7 per cent due to lower rental growth relative to a high rate of capital gain.

Vacancy rates

Brisbane’s vacancy rates increased by one basis to 1.3 per cent in December from 1.2 per cent in November. Despite the increase, the figures are still historically lower than in previous years.

Domain noted that the increase is typically seen during the month, as vacancy rates tend to rise with the high supply at the end of the year due to the rental changeover period in December.

Vacancy rates in the city are down from the 1.8 per cent recorded in the same period last year.

The areas with the highest vacancy rates in the Brisbane and Gold Coast region were Brisbane Inner (3.7 per cent), Sherwood – Indooroopilly (2.6 per cent), Nathan (2.5 per cent), Brisbane Inner – West (2.3 per cent), and Sunnybank (2.2 per cent).

Meanwhile, the areas with the lowest vacancy rates were Nerang (0.2 per cent), Gold Coast – North (0.3 per cent), North Lakes (0.3 per cent), Coolangatta (0.3 per cent), Ormeau – Oxenford (0.4 per cent).

Dr Powell forecasts the Queensland capital will continue operating as a landlord’s market in 2022.

What lies ahead for Brisbane in 2022?

Based on current forecasts from major industry commentators, Brisbane seems to be the pick of the litter when it comes to capital city price growth in 2022.

Mr Lawless sees the Sunshine State capital as one of the best-performing capital cities throughout the year, stating: “The [Brisbane] market is yet to show any evidence of a slowdown in the pace of appreciation, bucking the slowing trend that is evident across most of the other capital cities.”

He added: “Advertised stock levels remained well below average at the end of the year, keeping a heightened sense of urgency amongst buyers. Ongoing low advertised supply levels are another factor supporting higher housing values.”

However, he acknowledged that there are headwinds in the coming year that will ease conditions through 2022, including higher mortgage rates, a gradual normalisation in listing numbers, and the possibility of further tighter credit.

While Ms Mercorella views forecasts as “simply crystal ball gazing”, she pointed out that Brisbane’s market is still going strong with 12-month growth averages indicating markets are rising right across the board.

“With interstate borders reopening and international border opening to come, chances are we could see a flurry of activity and an uptick in demand well into the new year,” she stated.

Mr Christopher also weighed in with his prediction and posits Brisbane will be the biggest winner for 2022 as he expects growth of between 8 per cent and 14 per cent.

Dr Powell also sees long-term growth for the city, thanks to its securement of hosting the 2032 Summer Olympics.

“Brisbane won the Olympic bid for 2032, and the government needs to deliver that, so you’ll see commitments to infrastructure actually being delivered,” she said.

“And you’ll see investors following the infrastructure investment, so what you tend to find with big-ticket events such as the Olympics, the growth in property is in the lead-up to the event.”

She said that infrastructure would become a budget priority for the government, which in turn will have a positive domino effect on job creation, population growth, and migration and consequently put additional demand on housing.

On that note, an expert cautioned prospective investors eyeing a purchase in the Queensland capital not to assume the whole city is gold. Read our article on why Pete Wargent, the co-founder of BuyersBuyers, thinks investors shouldn’t bank on Olympics glory.

Meanwhile, the big banks all agree on a 2022 growth figure that is close to 10 per cent for Brisbane this year, the highest estimate for any of the capitals.

Westpac was the most optimistic among the bunch, updating property forecasts for dwelling values in the city will surge 10 per cent between 2022 before dialling back by 1 per cent in 2023.

ANZ sees an annual gain of 9 per cent in 2022 in Brisbane before correcting by 4 per cent in 2023 as the post-pandemic boom moves on to the next stage of the property cycle.

Meanwhile, CBA now expects Brisbane house prices to grow by 9 per cent this year before plunging by 8 per cent in 2023 when the Reserve Bank hikes interest rates.

Lastly, NAB is forecasting Brisbane house prices to record a 5 per cent over across 2022 as the impact of low rates and strong income support are rolled back.

To read more in-depth forecasts on what’s in the cards for the property market this year, check out our seven property predictions for 2022.

If you’re a first-time buyer looking to enter Brisbane’s real estate market, check out Smart Property Investment’s brand-new white paper, Why 2022 is the right year to invest for beginners.

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