Brisbane property market update January 2022

The main differences between Brisbane and the larger capital cities of Sydney and Melbourne relate to affordability, much tighter supply and different demographic trends. There is no longer a synchronised and broad-based upswing across all markets of Australia, and whilst Brisbane is now leading the growth, there appear to be identifiable reasons for this.

In the more expensive markets of Sydney, Canberra and Melbourne, the higher property prices cause difficulty for buyers to save a deposit towards a purchase. The median value for a house purchase in these three cities is now above the $1,000,000 mark, whereas Brisbane’s median house value has only just exceeded $800,000 this month. Whilst growth has been substantial over the last 12 months in Brisbane, our property prices are still comparatively more affordable than the other major capital city markets in Australia.

Supply continues to be an issue in Brisbane, with total listing volumes tracking 37.6 per cent lower in January 2022 compared to 12 months ago. Whilst we usually experience a seasonal trend of lower listings over December and January, this is still well below the five-year average. Moving into the early months of 2022, the number of new listings that we see coming through will determine if supply starts to creep up, thus absorbing some of the consistently strong demand that Brisbane has been experiencing. Time will tell. The table below shows the trend for total listings across all capital city markets, according to SQM Research.

Source: SQM Research

Whilst we have mentioned the demographic trend that we have been seeing through our own inquiry in recent months whereby Sydney and Melbourne are relocating to the great south-east, this has now been confirmed by others. Domain’s head of research and economics, Dr Nicola Powell, has revealed that 26 per cent of property inquiries in Brisbane over the last quarter of 2021 came from southern home hunters. This increased demand on a market already battling with very low supply is continuing to put pressure on prices. Local buyers can’t believe the rate of escalation of property prices, whilst interstate buyers still see our property market as affordable, especially compared to what they might otherwise be able to afford in Sydney or Melbourne.

Auction clearance rates from Domain have only just started to be recorded in January during the last weekend, where Brisbane recorded a clearance rate of 75 per cent. This is similar to the trends that we experienced in the lead up to Christmas throughout December, but a little lower than the auction clearance rates that we observed throughout October and November. Based on many conversations with auctioneers around Brisbane and also agents themselves, we are confident that sellers’ expectations are starting to move ahead of the market. We will continue to monitor the clearance rates for Brisbane throughout February to see if this is the case.

Despite the rapid onset of Omicron and COVID-19 in Brisbane and Queensland as a whole, and case numbers escalating rapidly throughout our city, this has had little impact, if any, on the Brisbane property market as a whole. Agents have reported that some sellers are a little more reluctant to have large numbers of people through their homes and therefore have delayed listing until we pass the peak. Others have said that sellers have had to delay their sales campaign because they have contracted COVID-19 and therefore have been in isolation. That said, this seems to be a minority of cases, but it does place slightly more pressure on an already low listing volume market.

In this month’s update, we outline the performance of the Brisbane property market across all sectors and provide our insights in terms of the months ahead.

Brisbane property market prices

The latest Hedonic Home Value Index data by CoreLogic released on 1 February 2022 for the month of January 2022 has confirmed that the median dwelling value in Brisbane increased by a further +2.3 per cent over the month. This price growth is slightly less than December, which may be a seasonal trend, or may reflect a slight slowdown in the rate of growth across Brisbane. Brisbane is still in a rapid state of growth in the current cycle. The current median value for dwellings across Greater Brisbane has now broken the $700,000 barrier at $706,594, which is $23,042 higher than just one month ago.

Annual growth for the last 12 months for Brisbane dwellings is now +29.2 per cent.

Source: CoreLogic

Brisbane’s higher value properties continue to lead the growth, as you can see in the CoreLogic data below. In the three months to December 2021, the top 25 per cent of values experienced 9 per cent growth (up from 8.1 per cent at the end of November) compared to 7.3 per cent growth in the lowest 25 per cent of property values across the city (up from 5.9 per cent last month). The middle 50 per cent of values in Brisbane saw an increase in the three months to December of 8.5 per cent, compared to 7.1 per cent growth in the three months to November. Whilst all segments of the Brisbane market are in a strong growth phase right now, the trend that we have seen emerge over the last two months is that the middle and lower value properties have been growing at a slightly faster rate than the top segment of the market, despite the highest value properties continuing to lead growth over a three-month period. This is an interesting trend and may be reflective of the fact that affordability constraints may be starting to show at the top end of the market, or alternatively, a lot of home buyers (who typically make up the top end of the market in Brisbane) may have been less active in the lead up to Christmas, thereby dampening demand to a small extent. We will follow this trend closely next month.

Source: CoreLogic

Brisbane house prices

The Brisbane housing market continues to lead the nation in terms of monthly price growth. Median values for the greater Brisbane region increased a further 2.5 per cent in the first month of 2022. The rate of growth has slowed down for the second month in a row, down from the November 2021 high of 3.2 per cent, followed by 3.1 per cent price growth across December, which may also be the result of a seasonal trend – but something to watch in the next couple of months. This is yet another new record median value for Brisbane Houses. The 12-month change in Brisbane house prices has been 32.3 per cent, which is the strongest 12-month house price growth across all capital cities throughout Australia.

The current median value for a house in Greater Brisbane is now $809,813, the highest it has ever been. This is $26,846 MORE than one month ago! Every month the median value for houses in greater Brisbane just keeps growing!

Source: CoreLogic

Brisbane unit prices

The unit market in Brisbane experienced slightly softer growth throughout January 2022 but still reached a new record high. Unit median values in Brisbane were up 1.4 per cent this month, compared to 1.6 per cent last month. The 12-month growth for units across Brisbane is now +12.7 per cent. The current median unit price in Brisbane is $458,149, which is $6,893 more than one month ago.

Source: CoreLogic

Summary of price growth in Brisbane for the year to date

The graph below charts the per cent change in property values for houses and units since January 2020 in Greater Brisbane.

The housing sector (black line) continues to outperform the unit sector in Brisbane on a month-to-month basis, a trend observed since October 2020. We can now clearly see the rate of growth starting to slow in the housing sector, a trend that may be seasonal or indicative of a slight slow down in the market growth. This is a trend we are watching.

Below, we have charted the actual median value changes for houses and units across Greater Brisbane since January 2021. You can see the median value for houses across this period increased $225,911. For units, the median value increased $64,972 throughout the same period of time.

Brisbane rental market movements

Vacancy rates at a city-wide level in Brisbane remained unchanged between November and December 2021 and are currently at 1.3 per cent. The table below highlights where vacancy rates across Brisbane sit at the end of December 2021.

Source: SQM Research

Vacancy remained relatively unchanged this month, with some slight movements across different subregions throughout Greater Brisbane, as can be seen in the table above. A reduction in vacancy in the inner-city market has been a trend observed for the last two months, suggesting that the higher density apartment market might be starting to recover. This is another trend we are following closely month-to-month.

Housing rents in Brisbane have shown an annual growth trend of 11.6 per cent growth at the end of January, which is slightly less than the annual growth of 11.8 per cent recorded at the end of December 2021. January is typically the busiest time to rent out a property, so again this might be a seasonal trend, but it does indicate rents achieved this month in Brisbane have pulled back slightly compared to recent months.

Rental incomes in the unit market throughout Brisbane have seen an annual increase of 6.7 per cent, again slightly down from 6.9 per cent last month.

Gross rental yields for dwellings across Greater Brisbane, according to CoreLogic, are lower again this month due to the consistently strong increase in property values. As at the end of January 2022, the gross yield in Brisbane is 3.6 per cent, down a further -0.1 per cent compared to last month.

Source: Corelogic

What did we see on the ground across Brisbane during January 2022?

The new year started strongly, with buyers showing up for the first weekend of open homes in high numbers. We expected with state borders opening that this was going to be the case. Demand is still strong for quality properties throughout the city.

There was a marked increase in buyer activity on the weekend after Australia Day, which is something we also seem to observe every year. Line-ups were observed on the last weekend of January 2022 at some open homes around the city. Line-ups were very common early in 2021, but rarely did we experience line-ups towards the end of the year. Open homes were still very busy towards the latter part of 2021 – but we could usually enter open homes straight away and not endure long line-ups outside. So the recent change reflects a new increase in buyer demand, especially for quality properties in and around the inner city.

Properties still have multiple buyers and therefore are still selling with multiple offers. The market remains highly competitive, and buyers need to be thinking about how to make their offer more appealing than others in these circumstances. When sellers get to choose from multiple offers presented, the terms of an offer, as well as price, become very important.

The months ahead

Based on our early observations, we expect 2022 will remain strong, and property price growth will continue in Brisbane. There are simply too many buyers competing for such limited inventory, and therefore the competition will continue to drive prices.

Unless we see a large volume of new listings come to the market in the early months of 2022, the trajectory for continued price growth remains unchanged. Market conditions are strong, and 2022 looks promising for Brisbane property.

Of course, headwinds remain in the future with potential interest rate hikes, a federal election and tighter credit availability. These things can influence markets as they arise, however at the moment, the market is buoyant and strong.