Brisbane property prices continue to fall — is it bad news or not?
Brisbane property values fell again this month, evidenced by falls across both houses and units, according to CoreLogic data. But other data by PropTrack suggests less severe falls. The question to ask is, are prices across the city really tumbling, or is the composition of what properties are selling changing?
Rents are still on the way up in Brisbane. Property investors are starting to see the opportunity to buy well. Competition is lower, yields are strengthening, and there are favourable long-term growth prospects. Home buyers are also getting on with it, with more activity from buyers in this area as well. In this report, we take a look at what’s been happening through the month of October, both on the ground and also through the reported data.
Market supply
The release of the federal budget outlined the National Housing Accord. This is aimed at addressing the supply and affordability issues in relation to housing. One million new homes have been proposed. These are to be constructed over five years from 2024. This housing accord also encourages institutional investment in housing (including superannuation funds), although much of the detail in relation to this proposal remains unknown. The budget also reaffirmed existing housing policies, but this is not likely to be any substantial impact in boosting housing supply as a result of these announcements in the near future.
The reality is that this proposed new supply is no different to the housing that has been delivered over the last five years. So there appears to be little change from what has been delivered in the past anyway.
During September, new listings were down -13.3 per cent, according to PropTrack data compared to the previous month. This is a decline of -6 per cent compared to 12 months ago.
The same data has reported that total listings are now up 12.3 per cent in Brisbane compared with 12 months ago. We have now seen five consecutive months where total listings have been increasing, which means that the choice for buyers is starting to improve overall, despite total listings still being down compared to the long-term trend.
Market demand
The median days on market in Brisbane has almost doubled in the last 12 months, according to CoreLogic data. In September 2021, properties were listed online for just 15 days. Now, properties are taking 28 days to sell. At the same time, sales volumes are down just -2.4 per cent across Brisbane over the same period of time.
The uncertainty around rising interest rates and inflation continues to be the main cause of the lack of buyer confidence right now. Buyers appear to be active, but many are still nervous and uncertain. It appears that many are trying to time the bottom of the market. Watching and waiting. This is a strategy fraught with error, because there is no real way to determine when this might actually be.
History has shown us that markets can turn very quickly, and as soon as buyer confidence improves, competition levels spike. This is when buyers find themselves back in a competitive environment.
Dwelling values in Brisbane
According to the Hedonic Home Value Index by CoreLogic, Brisbane median dwelling values declined by 2 per cent throughout October. This equates to a quarterly fall of 5.4 per cent, even though the annual gain is still up 8.4 per cent. The median value for a dwelling in all of Greater Brisbane is now $728,615.
Sales at the top end of the market appear to be declining at a faster rate than sales at the bottom end of the market in Brisbane, according to the quarterly change in the stratified hedonic dwellings index from CoreLogic (three months to September).
This data does not separate houses and units. We know the unit market in Brisbane has been less impacted by median price changes recently, and units are going to fall within the lower price brackets within the combined dwellings data. This is why understanding the data is always so critical before making too many assumptions.
Also, depending on what data you rely on, there can be discrepancies in what is reported. For example, the PropTrack Home Price Index showed Brisbane dwellings declined more slightly throughout October. This data reported a more modest change of only -0.9 per cent.
Brisbane house prices
Median house values in Brisbane declined -2.2 per cent in October, according to CoreLogic. The median value for a house in Greater Brisbane is now $817,684. Houses are still 8 per cent higher today compared with 12 months ago.
Brisbane unit prices
Unit values in Brisbane, according to CoreLogic, declined 0.9 per cent throughout October. The changes in unit values have been less dramatic than changes in house values. The annual change in Brisbane unit values is now 10.7 per cent. This confirms that units are currently outperforming the housing market throughout Brisbane. The median value for a unit across greater Brisbane is now $494,785.
Brisbane rental market
Vacancy rates in Brisbane remained unchanged at 0.7 per cent, according to SQM Research. One of the reasons that vacancy rates are so low is that the supply of rental properties has been declining over recent years. The latest lending figures show that the share of overall lending to property investors has been below the long-term average since mid-2017. This has contributed to the supply challenges in the rental market in Brisbane.
New rental listings, according to PropTrack data, show that in September 2022, listing volumes were 21 per cent below the decade average. In Brisbane, the year-on-year change in new rental listings is down 12.6 per cent. Additionally, total rental listings in Brisbane are down 22.7 per cent. This data also shows that the year-on-year change for the number of potential renters per listing has jumped 25.9 per cent in Brisbane.
Fewer property investors have been entering the market at a time when more and more people have been relocating to South-East Queensland, causing demand to peak. This imbalance is causing rents to escalate, which means tenants will find it quite difficult to find accommodation for the foreseeable future.