Property market update: Brisbane, February 2021

While Brisbane started 2021 on a strong footing, the latest data proves that it ended February in the same vein. Westpac’s Housing Pulse report for February 2021 reported that Brisbane dwelling prices are veering into “boom market” territory, predicting over 10 per cent growth this year.

“Queensland’s upswing has accelerated over the last three moths and is starting to tip into boom territory,” says the Westpac report author, senior economist Matthew Hassan.

Additionally, the Real Estate Institute of Queensland’s latest quarterly report revealed conditions superseded those witnessed pre-pandemic, with Brisbane houses currently in the “rising phase of the price cycle”.

Data showed that Brisbane was less vulnerable to financial stresses caused by the pandemic-driven economic downturn in 2020, as it took a relatively smaller hit from lower immigration caused by COVID-19 lockdowns. It also benefited from people relocating there for lifestyle reasons. 

In fact, Knight Frank’s Wealth Report 2021 found that Brisbane was one of the highest-performing Australian cities of last year, behind only Perth and the neighbouring Gold Coast.

So, what were the highlights across Brisbane’s property market throughout February 2021?

Property values 

CoreLogic reported that dwelling prices across Brisbane jumped by 1.5 per cent over the month to a median of $535,618. The February increase is the steepest rise since November 2007, when the monthly growth rate was 1.72 per cent. The recent monthly increase also means that the market is up 3.5 per cent for the quarter and 5.0 percent for the year. 

Similar to other cities, growth in values has been skewed towards houses in Brisbane. Median values in the city’s housing market rose 1.6 per cent on a monthly basis to a median of $593,232 – their highest value ever. Year-on-year data also impressed with the 12-month change in Brisbane house prices at 5.9 per cent.  

While growth was modest, the unit market also saw a monthly increase of 1.0 percent to a median of  $396,183. The 12-month growth for units across Brisbane is now at 1.1 per cent, which suggests this market too has bottomed out and is approaching a recovery trend. 

CoreLogic’s head of residential research Australia, Eliza Owen, said there were several key factors pushing prices up.

“The main drivers are record-low mortgage rates and relatively low levels of stock on the market, and that’s something that’s driving an upswing across most areas of Australia,” she said.

But Ms Owen pointed out that South-East Queensland’s true strength lies in the strong internal migration in the region.  

“The Gold Coast and Sunshine Coast have been top destinations for internal migration for years now.

“In an environment where there’s no international migration, that internal movement is really benefiting markets relative to other parts of the country,” she said. 

Moreover, Ms Owen said prices were expected to keep rising for the rest of the year.  

“In terms of prices steadying or falling across Queensland, I wouldn’t expect to see that until we get a significant uplift in the amount of stock on the market which is unlikely as people aren’t really moving as much at the moment,” she said.

Supply and demand

A major factor driving up prices in Brisbane’s property market is the mismatch between the supply and demand, as buyer demand continues to outstrip the number of available properties up for sale. 

Data from Domain revealed a surge in prospective buyers attending open houses in Brisbane, with a rise of  69.4 per cent over the month. There were also 43.9 per cent more people at open homes than during the same time period last year. 

This strong show of demand is counteracted by a low supply of advertised properties for sale. Data from SQM showed that residential property listings edged down in February by 4.2 per cent, declining to  24,636 from 25,720  in January. Compared to the same period last year, listings fell by 14.7 per cent from 28, 867 total listings in February 2020. 

The demand to purchase properties in Brisbane is also high due to the strong migration seen by the region in recent times. The most recent available data from the Australian Bureau of Statistics (ABS) showed that prior to the pandemic, Queensland’s population was increasing by 5,423 people per quarter due to interstate migration. During the first three months of 2020, this rose to 6,286 and continued its upward trajectory reaching an astounding 6,750 in the June quarter of 2020.  

ABS figures this month showed that building approvals and construction volumes in the higher-density unit market in Queensland seems to have bottomed out. The latest dwellings data has shown a slight increase in activity, whereas the data for detached house approvals is surging. This, in part, has been driven by the HomeBuilder grant stimulus. The figures suggest that the current supply shortage off the back of peak oversupply in 2016, may start to slowly recover in the years ahead, but time will tell. 

Stock levels are still very low in Brisbane, with total listing volumes down nearly 30 per cent year-on-year. 

But new listing numbers could see a more substantial lift in March, with CoreLogic’s real estate platform data showing agents are becoming more active. Towards the end of February CMA reports, which are used by real estate agents to prepare a property for listing, were up 19.5 per cent compared to the same period last year.s. Historically there has been a strong correlation between real estate agent activity across the RP Data platform and new listings, despite a two week lag. 

Auction rates  

Clearance rates across Brisbane have been tracking around record highs in February. 

Auction activity has been strong in Brisbane with 116 auctions in the week ending February 28th, returning a clearance rate of 74.1 per cent. Over the same week last year, a 60.5 per cent clearance rate was reported for 136 properties that went under the hammer in the  city.  

The recent monthly data indicates that people are bringing their homes to a market that is snapping up more than three-quarters of dwellings offered for sale, encouraged by record low interest rates and an economy recovering from the pandemic.

Home prices across the country are expected to surge as eager buyers pushed clearance rates significantly higher in February, with almost three in four properties auctioned in Brisbane sold during the month.

Rental market 

Unprecedented rates of interstate and overseas migration have spurred Brisbane’s strongest rental market performance in a decade, with the city recording record-high median prices that are partially outperforming Melbourne.

Rents in the unit market in Brisbane have now recovered and rents posted a modest annual increase of 0.5 per cent across the city.  Meanwhile, housing rents continue to see growth, due to the tightening vacancy. The annual increase in rents for Brisbane houses is 4.2 per cent, according to CoreLogic data. Gross rental yields in Brisbane were recorded at 4.4 per cent  at the end of February

There are strong rent increases in the inner-city locations, especially in the premium housing sector. Large shifts in the rents achieved when properties are advertised are being demonstrated. Property management firms that we work with are also confirming this trend.

In its latest report, CoreLogic highlighted the extreme disparity in the country’s rental market. While rental markets in cities like Perth and Dawn have enjoyed solid growth due to extremely low supply and increasing demand, other cities were seeing a different scenario unfold.  In Sydney and Melbourne, unit rental markets have plunged over the last year. 

Vacancy rates

Every capital except Sydney and Melbourne recorded a drop in empty listings from February 2020. 

Brisbane's vacancy rate edged down from 1.6 per cent to 1.4 per cent over the month. At an annual rate, vacancy rates fell from 2.1 per cent in the same period last year. 

Domain senior research analyst Dr Nicola Powell noted that the majority of the capital cities remain tight and remain competitive for tenants and forecasted that rents could continue to rise. 

The areas with the highest vacancy rates in Brisbane & Gold Coast were Brisbane – Inner (4.3 percent), Sherwood – Indooroopilly (3.7 per cent), Brisbane Inner- West (2.9 per cent), Nathan (2.5 per cent) and Mt Gravatt (2.3 per cent). 

Outlook

Outlook for Brisbane’s property market continues to be on the positive side, as domestic migration is seen to continue pushing up buyer demand and consequently, property prices. It seems this trend is set to continue, at least for the foreseeable future. REA Insights shows that demand for housing is at record highs in Queensland, and compared with the same time last year is up 45.1 per cent.