Brisbane property market update July 2021

From a property price movement perspective, Brisbane is bucking the national trend in terms of house price growth in recent months. Our city is one of few capital city markets in Australia that has maintained growth momentum in housing values. Whereas the larger markets of Sydney and Melbourne have seen price growth slowing in the last 3 months, this is not the case in Brisbane in the housing sector.  Even though the rate of growth has eased in other markets, housing values are continuing to rise substantially faster than average so market conditions nationwide are still very good.

Research director of CoreLogic, Tim Lawless, has attributed the loss of steam in the Sydney and Melbourne markets since March to several factors, one of which is declining affordability. With Brisbane’s median dwelling values at $598,615, we remain a much more affordable market compared with Sydney’s median dwelling value of $1,017,692 and Melbourne’s median dwelling value of $762.068. Even Hobert and Canberra are more expensive markets than Brisbane with their respective median dwelling values being $621,102 and $793,872 according to the latest Corelogic data released on 2 August 2021.

Of course, there is also some negative impacts on consumer sentiment due to the extended lockdowns in Sydney, and this is something we all must consider in the months ahead as we deal with the Delta variant of COVID-19 within our communities. Even so, from our experience from past lockdowns throughout the country, we are seeing a trend whereby buyer and seller activity reduces during the event, but recovers quickly to pre-lockdown levels once restrictions are lifted.

Any potential for interest rates to rise in the near future looks less likely now that the recent lockdowns have seen Australia’s economy slow down, and this is now likely to keep rates on hold for a longer period of time.  Any lift in the cash rate seems extremely unlikely for at least the next 18 months, and according to the RBA the forecast is not to see any movement until 2024 at the earliest. This is going to ensure ongoing demand for housing given the low cost of money in the current economic environment.

We are still seeing more investors enter the market with lending data now showing 26.8% of all housing finance commitments in Queensland going to investors. Whilst this is still a smaller than proportion, there is definitely a trend that is shifting higher.

Employment growth in Queensland is leading the nation with an additional 235,000 employment opportunities by June 2021 throughout the state according to ABS data. This may also be due to the lockdowns in both Sydney and Melbourne recently.  With Brisbane also entering a new lockdown due to the Delta COVID-19 variant, we will be watching to see if this has any impact on these employment trends in the future.

Looking at the mismatch between demand and advertised supply, we can still see why Brisbane markets are strong. Sales volumes have increased 44% in Brisbane over the 12 month period leading up to Jun 2021, whereas total listing volumes  had declined -25.9% across the same period according to Corelogic. This provides some clarity as to why the pace of price growth has been so strong in recent months through the city.

Let’s take a deeper look into the performance of the Brisbane market over the last month.

Brisbane property market prices

The latest Hedonic Home Value Index data by Corelogic released on 31st July 2021, has confirmed that the median dwelling value in Brisbane increased a further +2% over the month of July. This is back to the dwelling growth that was experienced in Brisbane throughout May, after only a very slight dip to +1.9% growth throughout June. The current median value for dwellings across Greater Brisbane is $598,615 which is $12,473 higher than just one month ago, and $95,991 higher since the same Corelogic results were published 12 months ago.

The quarterly growth in dwelling values across Greater Brisbane is now 6.0%, suggesting a slight pick up again since last month, and annual growth for the last 12 months is now 15.9%.

The top end of the Brisbane Market is still driving the growth as you can see in the CoreLogic Data below. This shows that the strongest growth in dwelling values occurred in the top 25% of values in the three months to June 2021, with 6.2% growth, compared to just 3.8% growth in the lowest 25% of values across the city.  

Brisbane house prices

In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 2.2% across the month of July 2021 which is CONSISTENT with the growth that we experienced in the housing sector throughout Greater Brisbane for the last 2 months. The 12 month change in Brisbane house prices has been 17.7%. The current median value for a house in Greater Brisbane is $674,738, the highest it has ever been. This is $17,187 MORE than one month ago and $98,400 more than at the beginning of 2021.

Brisbane unit prices

The Unit Market in Brisbane saw further positive growth in the median value this month, as well as a slight pick up in the momentum of that growth as well. July saw an increase of +0.8% growth for units in Greater Brisbane, compared to +0.7% last month. The 12 month growth for units across Brisbane is now +7%. The current median unit price in Brisbane is $419,142, which is $3,607 more than one month ago and $28,357 more than at the beginning of 2021.

Summary of price growth in Brisbane for the year to date

The graph below charts the % change in property values for Houses and Units since January 2021 for both houses and units in Greater Brisbane.

The trendlines here show clearly that the housing sector has not yet seen any slow down in price growth over the past 4 months. The unit sector saw a loss of price growth momentum between May and June, which seems to have recovered in July.

Both sectors are still appreciating in value, but houses have shown more superior growth since the beginning of the year, compared to units.

Brisbane rental market movements

Vacancy Rates in Brisbane remained unchanged between May and June, staying at 1.3% city-wide. The table below highlights where vacancy rates across Brisbane sit at the end of June 2021.

Source: SQM Researc 

The current vacancy rates in each region are extremely tight across the city. Even the Brisbane CBD is seeing current vacancy rates back at levels seen in March 2020 before the pandemic. Tight vacancy rates like this are putting upward pressure on rents as evidenced in the rental data below. 

Rental incomes in the unit market throughout Brisbane during July have seen an annual increase of 4.6%, up 0.8% compared to last month. 

Housing rents, are still climbing faster, with the annual increase in rents for Brisbane Houses now at 9.4% according to CoreLogic Data, which is 1% higher than a month ago.

Gross rental yields for dwellings across all of Greater Brisbane are compressing with escalating dwelling prices outpacing rent price growth. At a city wide level, gross rents have dropped slightly to 4.0% in July, down -0.1% from last month. This is still very attractive compared to Sydney at 2.5% and Melbourne at 2.8%.

What did we see on the ground across Brisbane during July 2021?

Not much has changed on the ground throughout July, compared to June. The excitement of the Olympics announcement is evident for many residents, although this may take some time to filter through in terms of how it may shape our city in the years ahead.

Buyers have still been very active throughout July and open homes have been well attended, both on Saturdays and also mid-week.  With the most recent lockdown, we expect the momentum to pause, but we do not expect at this stage that the buyers will disappear.  Like previous lockdowns, we expect the demand to match the pre-lockdown levels as soon as everything opens back up.

There is still not much selling without multiple buyers submitting offers, and most properties are still selling after the very first open home. The only exception is when there is an auction campaign in place, which usually involves a 3-4 week campaign, but recently we have seen auction campaigns reduce to as little as 7 days.

For buyers, it is a stressful and frustrating time. As prices escalate, buyers are having to either adjust their expectations or increase their budget every month if they intend to stay in the same areas. 

On the ground, it really is a frenzy in many locations across the city.  There are simply too many buyers for the available stock that is coming to the market.  Buyers are paying a premium just to secure a decent property at the moment, but with the depth of buyers, this is not something we expect to see slowing down any time soon.

The months ahead…

Our position remains the same as last month in that we do not expect any slow down in the momentum of Brisbane housing price growth in the foreseeable future. Even with the temporary lockdown, we expect that the pent-up demand will continue as soon as things open back up throughout South East Queensland. The current Delta outbreak in the city will not impact the fundamental imbalance that we have between supply and demand that is putting such strong upward pressure on prices.

Hold on for the ride everyone … Brisbane really is on fire. It is a very exciting time for our city!