Property market update: Brisbane, June 2021

But 2021 is proving to be Brisbane’s year, as the Queensland capital continued to deliver solid monthly results in June. A mismatch between low supply and elevated demand as well as sustained record-low interest rates have kept the 2021 housing boom rolling on. 

Data shows that the record population growth in the state also continues to fuel demand for housing. The latest figures showed that interstate migration into Queensland exceeded 30,000 in 2020, the first time since 2005 and the fastest population growth rate of all capital cities around Australia. Brisbane’s popularity is only expected to continue rising, after making it to the top 10 in the Global Liveability Index, joining Adelaide, Perth and Melbourne. 

While the outlook for Brisbane looks bright, experts warned that signs of a slowdown in growth may be on the horizon.

For now, let’s take a closer look into what the current figures are and where things could be heading in the Brisbane market. 

Property values 

Brisbane property market’s growth mirrored the national market’s expansion this month, posting an increase of 1.9 per cent in June. This is slightly lower than the dwelling growth seen throughout May, when property values in the Queensland capital rose by 2.0 per cent. 

According to CoreLogic, the recent monthly gain brings the median dwelling values in the city to $586,142, which is $11,570 higher than just one month ago, and $64,456 higher since the start of 2021. On a quarterly basis, the growth in dwelling values across the city is now 5.7 per cent and annual growth for the last 12 months now stands at 13.2 per cent. 

Median values for houses in Brisbane edged up by 2.2 per cent over the month of June. The current median value for a house in the city is  now at $657,551, the highest on record. This is $15,824 more than one month ago and $154,403 more compared with the same period in 2020. 

Brisbane’s unit market saw further positive growth in June, albeit at a slower pace. Median value of units rose by 0.7 of a percentage point to $415,536, which is $3,782 more than one month ago and $28,116 more than 12 months ago.

Units closed out the financial year with an increase of 5.3 per cent, while houses boasted double-digit annual growth of 14.8 per cent, equating to an almost $100,000 surge in values. 

While Brisbane’s property market is home to several standout performers in terms of price growth, the Sunshine State’s regional areas have continued to be in high demand throughout 2021, particularly with interstate buyers looking for a lifestyle change in areas such as the Sunshine Coast and the Gold Coast. 

Supply and demand  

Following the general trend throughout the year, the property market boom in Brisbane has been fuelled by a shortage of housing supply that has been unable to match elevated buyer demand. 

While the number of new listings added to the market in June was almost at the same level in May, total listings fell by 4.0 per cent over the month, according to figures released by SQM Research. National residential property listings dropped to 236,218 in June 2021 from 245,953 in May 2021. 

The slump in supply despite the high number of properties coming to the market indicated that properties are still being bought up faster than the new ones can be listed.

Data also showed that older stock (or properties that have been on the market for 180 days or more) which had previously been hard to sell is now being snatched up by buyers that are competing to get their hands on any property. Old listings across the country declined by 6.1 per cent in June 2021 and they are down by 46.9 per cent over the year, with declines recorded in all capital cities. 

In Brisbane, total property listings fell by 4.0 per cent from 23,519 in May to 22,579 in June. On a year-to-date basis, listings fell by a staggering 21.6 per cent from 28,814 in June 2020. Old listings in the city fell by just 0.1 of a percentage point over the month from 8,366 to 8,357.  

Louis Christopher, managing director of SQM Research, said the recent figures indicate that there are more buyers than sellers in the national property markets. 

Auction rates 

The auction market’s activity was seemingly unperturbed by the chilly weather and the snap lockdowns in several parts of the country throughout June. And if you’re looking to put a bid on a house, you’re likely to face fierce competition. 

According to the national data from real estate agency Ray White, there were 3.6 average active bidders competing for each auction in the last week of June. It’s stronger than the last time the property market was rising, back in late 2019 and the beginning of the COVID-19 pandemic in early 2020 that shuttered the real estate market by March. Each week this year has hovered between 3.2 and 3.8 bidders on average. 

Meanwhile, the combined capital city final auction clearance rate improved against higher volumes at the end of the month. In the week ended 27 June 2021, CoreLogic reported that there were 2,960 homes taken to auction across the combined capitals, higher than the 2,400 auctions held over the previous week. The final clearance rates held up over the week to come in at 75.4 per cent, slightly higher than the 74.1 over the week prior.

In Brisbane, 173 properties went under the hammer during the week ended 27 June 2021, with a final clearance rate of 59.5 per cent, according to CoreLogic.

Domain reported that clearance rates in Brisbane moved between 57 per cent and 88 per cent across the month.

Rental market 

Brisbane’s rental market reached new highs in the June quarter, according to a report by Domain. 

Data showed that house rents in the city have increased for four consecutive quarters to $450 a week. Meanwhile, rents have held steady at $400 per week since the end of 2020. The figures mark the strongest rate of annual rent growth in almost 14 years and in almost a decade for the unit market, increasing by $50 and $20 per week, respectively. 

Meanwhile, CoreLogic data showed that gross rental yields in Brisbane now stand at 4.1 per cent, edging by 1.0 percentage point from May. 

So, how much do you need now to rent a property in the Sunshine State capital? According to SQM, the record-low vacancy rates across major capital cities are creating increasingly tight rental market conditions and, consequently, are driving up rents. In June, rent for houses in Brisbane stood at $516.4 while rent for units stood at $390.1.

Vacancy rates

Vacancy rate held steady over the month in Brisbane at 1.3 per cent, the lowest level since Domain records started in 2017 and is now lower than pre-pandemic levels reported in February 2020. Over the year, it has declined from 2.5 per cent. 

The areas with the highest vacancy rates in Brisbane and the Gold Coast were Brisbane Inner (3.4 per cent), Brisbane Inner – West (2.2 per cent), Sherwood – Indooroopilly (2.2 per cent), Nathan (2.2 per cent) and Mt Gravatt (2 per cent). Meanwhile, the areas with the lowest vacancy rate are Capalaba (0.2 of a percentage point), Coolangatta (0.2 of a percentage point), Nerang (0.2 of a percentage point), Mudgeeraba – Tallebudgera (0.3 of a percentage point) and Ormeau – Oxenford (0.3 of a percentage point).  

Domain noted that the snap lockdowns and heightened restrictions in many states are likely to put a dent in the rental market’s confidence. Recently, Queensland announced it will be extending mask and social distancing restrictions for another week after the state recorded three new community cases of COVID-19. Based on what unfolded in Melbourne, vacant rental listings may increase in regions with a high proportion of people working in the hospitality and tourism sectors, Domain stated. 

Vacancy rates are also likely to remain particularly weak in areas with a higher proportion of short-term rentals as ongoing outbreaks affect interstate travel and sentiment towards travelling to COVID hotspots. This will particularly affect the market, given the outbreaks have occurred during school holidays. 

Outlook

So, what lies ahead for Brisbane’s property market for the second half of 2021?

There is a general consensus among experts that the current rate of growth is unsustainable and will inevitably slow in the coming months. 

CoreLogic’s research director, Tim Lawless said, the record-low interest rates are fuelling an increase in buyer demand, which is not being sufficiently met and driving up home values. 

“We are seeing that monthly rate of growth starting to ease off, and I think we can put that down to worsening affordability in a market that is rising so much faster than household incomes,” he said.   

SQM’s Mr Christopher also sees a slowdown in the pace of the housing market over the long term. He also noted that the strong upturn in Australia (like with most markets around the world) has been driven largely by ultra-low interest rates and easier lending standards. “In time, there will be a change in these monetary settings which will trigger a downturn,” he said. 

On one hand, conditions continue to be favourable, specifically for Brisbane. Having managed to avoid the kind of COVID outbreaks that have caused longer lockdowns in Melbourne and Sydney, property in the Sunshine State continues to be a very enticing prospect for interstate buyers. 

Additionally, there has been no slowdown in sales activity in the top segments of the city’s market, so demand continues to outweigh supply in these sectors. With this said, Brisbane potentially still has a lot of steam left which will keep prices rising in the near future.