Slow and steady is the best way to describe the performance of the Brisbane property market so far in the nationwide recovery in property markets around the country since May this year. The current data shows that for the second consecutive month, Brisbane property values have increased, which confirms what we have been reporting from being on the ground every day. Let’s explore what this means for property buyers.
Corelogic data released on 31st August 2019 shows that Brisbane dwelling values increased a modest 0.2% across the month, the same price growth that was reported in the previous month.
Underlying demand continues to remain strong with more homebuyers recently entering the Brisbane market as well as increased investor interest – especially from the southern states. Every property that we have purchased over the last 3 months on behalf of clients (that was not off-market or for sale by auction) has resulted in a “Multi-Offer” situation where more than one buyer had submitted an offer to buy the property at the same time. These properties were also all new listings … have been on the market for less than 7 days by the time they went under contract. This is a further demonstration of very high demand from buyers for quality properties that are well located.
Brisbane still presents as a very attractive investment option for investors due to our strong rental yields and relative affordability in comparison to Melbourne and Sydney.
Rental rates increased again in Brisbane over the month of August with gross rental yields in the greater Brisbane region at 4.6%, up from 4.4% this time last year. Overall, our vacancy rates are also trending downward which shows there are less properties left vacant for extended periods of time – another positive for investors.
Of course it is necessary to consider the vacancy rates on a suburb by suburb basis as this trend does depend on more local drivers in an area.
We are still finding that well-priced, good quality properties across Brisbane are more scarce at the moment, and there are fewer of them being offered for sale. Of course, this limits the “supply” side of the equation in determining property price growth. Coming into Spring, we are expecting more properties to become available for sale and this is further supported by early indications that vendors are gearing up for the spring selling season because property stylists – who dress the homes for sale- have reported a marked increase in business.
At the moment, we are still monitoring unit supply with a certain level of caution – especially in the inner city market. The two precincts in the inner north (Fortitude Valley, Newstead and Bowen Hills) and the inner south (South Brisbane and West End) have accounted for 49% of inner city medium and high density building approvals (just over 14,000 units) over the past five and a half years according to the Residential Property Market Report (2019) by CBRE. Since 2016, these precincts have accounted for a 70% increase in stock with 10,500 units completed.
Whilst the development cycle in the inner city unit cycle has effectively come to a halt, there are a further 14,500+ units currently either under construction or with a development approval in place. Whilst it is likely that many of these are on hold at present, property buyers need to understand how another wave of hyper development may impact on property values in this region, as well as surrounding areas such as Wooloongabba, Dutton Park and even the CBD where new or upgraded rail stations will be developed as a result of the cross-river rail project which is currently under construction.
The shift in Brisbane dwelling values is consistent with price movements in Sydney and Melbourne in August as well. We believe that buyer demand and confidence is responding well to the positive effect of a stable federal government, as well as lower interest rates and the easing in credit policy. We remain optimistic about the months ahead