Property market update: Brisbane, September 2021

While other capital cities are facing the gloomy prospect of slowing growth, the future Olympic city is proving to be remarkably strong nine months into 2021. 

In September, the city’s property market posted solid growth, and its popularity continued to skyrocket among investors and home buyers. A mismatch between low supply and elevated demand, as well as sustained record-low interest rates, have kept the city’s housing boom rolling on, according to experts.

The latest data also showed that the city’s property market is benefiting from strong interstate migration. In this case, VIC and NSW’s loss became QLD’s win. 

According to the Australian Bureau of Statistics (ABS),  Victoria lost most of its residents to Queensland during the first quarter of 2021. On the other hand, Queensland welcomed the highest number of interstate movers during the period. A huge share of internal migrants was from NSW and Victoria.

Data also showed that more than 58,000 people moved to Queensland during the six months to March 2021. Greater Brisbane actually recorded the largest net flow of people into the capital city from March 2020 to March 2021.  

BuyersBuyers co-founder Pete Wargent noted that there had been a marked shift towards Queensland’s coastal and lifestyle locations. “While state borders have not always been open, even by the end of March, there was a significant swing in population away from Victoria,” he said.

“Queensland has had relatively few restrictions over the past 18 months, and when the opportunity has presented itself, residents have headed for the Sunshine State.”

There is no question that Brisbane’s market conditions are the best they have been in a long time, and market commentators are generally optimistic that the city’s bright prospects will not change anytime soon. 

For now, let’s take a deeper look at how Brisbane’s market performed in September 2021.

Property values 

The latest Hedonic Home Value Index data by CoreLogic showed that the median dwelling value in Brisbane rose by a further 1.8 per cent over the month of September.

This brings the current median value for dwellings in Brisbane to $625,291, which is $12,914 higher than just one month ago. 

The monthly gain is slightly lower than the dwelling growth that the city experienced throughout July and August, which indicates a slight slow down in the momentum of price growth across Brisbane. 

Over the year, property prices in the Sunshine state capital have seen a 19.9 per cent increase. But despite soaring prices, Brisbane properties remain cheap in comparison to Australia’s major capital cities, namely Sydney and Melbourne.

Median values for houses in Brisbane edged up 2 per cent over the month of September. The current median value for a house in the city has now broken the $700,000 threshold and now sits at $709,136. This is the highest median house price the city has recorded and is $17,922 more than one month ago. Compared to the same period last year, Brisbane house prices have risen by 22.2 per cent. 

On the one hand, Brisbane’s unit market saw a reversal in price growth momentum in September, following an acceleration of growth in the previous month. In September, unit prices rose by only 0.6 per cent compared to the 1.4 per cent in August. Compared to September 2020, unit prices in Brisbane are now up 8.8 per cent. 

The current median unit price in Brisbane is $430,000, which is $4,223 more than one month ago.

According to data from the Real Estate Institute of Queensland (REIQ), Brisbane has welcomed five new suburbs to the million-dollar club this month. 

Stretton ($1.01 million), Wishart ($1.01 million), Morningside ($1.010 million), Windsor ($1.022 million), and Woolloongabba ($1.035 million) were the Brisbane suburbs where the median house price just moved above the $1 million mark, REIQ reported. 

What does this mean for sellers? REIQ CEO Antonia Mercorella said the market is showing no signs of slowing, and Brisbane was playing catch up on house prices.

“We’ve had quite modest growth over a number of years, so some of this is just catching up.

“Of course, then when you factor in very low-interest rates and a pandemic over the top of that, it is making property incredibly appealing.”

Meanwhile, Ray White Wilston director Alistair Macmillan commented the news is not good for prospective buyers, adding that he doesn’t anticipate things getting easier [for them] anytime soon.

“It’s very difficult to see that the market is going to retract in the coming years, certainly in the short term.

“Perhaps maybe it can’t sustain the level of growth that it has done over the previous 12 months, but certainly the notion that the market’s going to retract in the short term is not accurate.”

Supply and demand  

Brisbane saw the biggest monthly falls in property listings in September. 

According to figures from SQM Research, the city’s total residential property listings fell in September 2021 by 5.8 per cent to 19,598 from 20,804 in August. Compared to 12 months ago, listings dropped 32.1 per cent. 

The high rate of buyer demand and lockdowns is ensuring that there was a shortage of properties for sale in the first month of spring, SQM noted. 

Brisbane’s new listings (properties listed for less than 30 days) rose 4 per cent over September, with 8,074 new properties added onto the market. New listings are up 5.6 per cent over the year. 

Meanwhile, old listings (properties that have been on the market for more than 180 days) dropped 9.1 in September and were down by 50 per cent over the year. 

CoreLogic noted that at the end of September, Brisbane’s new listings trend was suffering from a lockdown hangover, which had weighed down on the rolling four-week count of listings lower. While the hangover appears to be lifting, the upwards shift is subdued, and the count of new listings remains 3.8 per cent below the five-year average.

CoreLogic’s research director Tim Lawless commented that while there is an observed increase in listings during the month, the trend in total active listings remains extremely low, continuing to reflect the rapid rate of absorption seen amidst high buyer demand.

Meanwhile, Louis Christopher, managing director of SQM Research, said that while a lift in listings is expected in October and November, it is “unlikely to create a housing slowdown prior to Christmas as low-interest rates continue to stimulate the housing market and the expected economic uplift following the end of lockdown will also likely create stimulus for housing”.

Auction rates  

The resurgence of buyer interest in the Brisbane property market has meant that auction clearance rates have consistently been near the 70 per cent range throughout September, according to CoreLogic’s weekly auction data. 

The figures are unusual for Brisbane, which is not known for auction culture like its southern capital city counterparts. “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,” Melinda Jennison, the managing director of Streamline Property Buyers, said. 

Meanwhile, Domain’s auction data showed clearance rates for houses continue to outperform units in Brisbane.

Houses that went under the hammer during the month recorded a clearance rate of 64.7 per cent with a median price of $1,110,000, a new record-high for the city. The unit market fell behind houses with a clearance rate of 45.6 per cent, with the median price at $692,500. 

Rental market 

Brisbane tenants are now facing one of the tightest landlord markets in over a decade after rents in the city surged to new record heights over the September quarter.

Driven by low vacancy rates, interstate migration and surging property prices, median weekly asking rents in the city rose by $10 in three months to $460 for houses and $410 for units, according to the latest Domain Rent Report. House rents in some hot spots, such as Brisbane west, rose by almost 8 per cent to $550. 

This marks the fifth consecutive quarter in which house rents have risen across the sunshine state capital and the first time in a year that rents for units rose faster than for houses as the shortage of affordable housing close to the city centre worsens.

Commenting on the figures, Dr Nicola Powell, chief of economics and research for Domain, said that while Brisbane’s rental market shows a “compelling portrait” for landlords and investors, the outlook is grim for some of the city’s already struggling tenants. 

“It is a challenge for household budgets as rents have risen faster than wages growth,” she said. 

Despite the rental squeeze, the city remains the third most affordable capital city in Australia for median house rents and the fourth for units. The return of investors to the market is also seen to generate more rental stock after the city reached the peak of a multi-year vacancy rate low in July this year, the report noted. 

“We have a little greater rental choice now because investors are looking to south-east Queensland, and the fact that prices are rising and the fact that there’s a major sporting event occurring [in 2032] means there will be a lot of infrastructure spending,” Dr Powell said.

CoreLogic noted that at a national level, rental prices continued to rise in September, albeit at a slower pace. On an annual basis, house rents in Brisbane rose by 10.8 per cent while units increased by 6.2 per cent.

The slowdown of rental growth was mostly attributed by the research firm to a softening of house rents in the latest quarter. According to CoreLogic, the pace has eased from 3.5 per cent in the March quarter to 1.9 per cent in the September quarter.

At the same time, growth in unit rents appears to have stabilised around 1.9 per cent  quarter-on-quarter, down from a recent peak of 2.5 per cent in the March quarter. 

According to CoreLogic, gross rental yields for Brisbane remained at 3.9 per cent throughout September, unchanged from the previous month’s level. 

Vacancy rates 

According to Domain, Brisbane’s vacancy rates remained unchanged between August and September, staying at 1.3 per cent. They have tracked sideways and have remained unchanged since May this year.  

The areas with the highest vacancy rates were Brisbane inner (4.1 per cent), Sherwood – Indooroopilly (2.4 per cent), Nathan (2.2 per cent), Mt Gravatt (2 per cent) and Brisbane inner – north (2 per cent).

Meanwhile, areas with the lowest vacancy rate were Nerang (0.2 per cent), Ormeau – Oxenford (0.3 per cent), Caboolture Hinterland (0.3 per cent), North Lakes (0.3 per cent), and Bribie – Beachmere (0.4 per cent). 

What’s next for Brisbane? 

Brisbane’s outlook is a stark contrast with the forecasts of tapering growth and potential headwinds that its capital city peers face in the coming months. In fact, new research indicates that the city’s “robust” market conditions and record sale prices aren’t going anywhere any time soon.

The latest Annual Investor Sentiment Survey by Property Investment Professionals of Australia (PIPA) showed that a staggering 58 per cent of respondents believed that Queensland offers the best property investment prospects over the next 12 months. This is up from 36 per cent last year. 

Brisbane topped the list as the best spot to buy, with 54 per cent of respondents believing the state’s capital will have the best investment prospects. 

Brisbane is also predicted to go for gold – in terms of property prices.

Experts say that there is now a “perfect storm” of positive growth drivers that will have Brisbane house prices performing strongly in 2021 and 2022, and the recent announcement of Brisbane winning the 2032 Olympic games will underpin strong infrastructure growth, economic growth, and population growth over the next decade.

Currently, Brisbane’s current median house price is less than half of Sydney’s and on par with that for Adelaide and Hobart. 

However, even before the 2032 Olympic Games come to town, real estate economist Diaswati Mardiasmo predicts that the figure will exceed the $1 million mark. The estimate comes from examining the impact on the market of previous major events that occurred in capital cities, such as the Sydney Olympics in 2000, Brisbane’s Expo 88, and the G20 Summit in 2014.

“Every single time it has happened, in the year after or the two, three years after we’ve hosted, prices have always gone up by double digits,” Ms Mardiasmo said.

Things are looking up for Brisbane, and it will be interesting to see how the city performs towards the end of the year.

In the meantime, you can keep up to date with what’s happening in the real estate market at Smart Property Investment’s News Section.