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Brisbane Property Market Update February 2021

 

This article will highlight what has been happening in the Brisbane Property Market during February 2021.

 

Like most locations around Australia the Buyer activity in Brisbane has escalated rapidly as the weeks of 2021 continue to roll around.  Each week we are seeing line ups get longer at open homes around the city.  More Buyers are active in the market and this is also reflected through the fact that most quality properties sell after the first open home with multiple offers and high prices.  This month we will explore why this is happening throughout Brisbane and what this might mean for the future.

 

With the roll out of the Covid-19 Vaccine in Australia it seems the worst of the pandemic might be behinds us.  Our economic environment seems to be a lot better right now than what governments predicted and consumer confidence has returned.

 

The level of unemployment peaked at 7.5%, far better than what was expected.  The unemployment rate is now falling with 93% of the job that were lost, now recovered.  It is expected that unemployment will return to the 4-5% range a lot sooner that what was predicted. 

 

Even the loan deferrals data up to 31 January 2021 is positive with 91% of deferred loans now resuming their repayments leaving only 0.5% of all loan facilities in deferral.

 

Domestic migration has been accelerating into south-east Queensland out of the southern states further increasing the demand for housing throughout Brisbane.  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 to the same time last year is up 45.1%.

 

Brisbane Property Market Update February 2021

 

ABS figures this month showed that building approvals and construction volumes in the higher-density unit market in Queensland seems to have bottomed out.  Attached 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% year on year.  No wonder it is a frenzy out there with more buyers and fewer properties to purchase.

 

 

Brisbane Property Market Update Listing Volumes

 

 

And of course, interest rates are low.  There are plenty of cashed up buyers in the market.  With the RBA not expected to increase rates “until 2024 at the earliest” there is a lot of confidence and people ready to spend.

 

With these positive news stories, more positive outlooks for the Housing Market are being published.  Westpac have now forecast 20% price growth for Brisbane across 2021 and 2022, a big change from their dire predictions less than 12 months ago.

 

And let’s not forget the big news this month.  Brisbane is officially the top choice for the 2032 Olympic Games!  This is game changing – it is the best opportunity Brisbane has had in generations.  It will turbocharge investment into the city and boost our economic activity.  We will see the fast tracking of major infrastructure projects, which will have a knock-on effect for the property market.  It really an exciting time for our City!

 

Brisbane Property Market Prices

 

According to the latest Hedonic Home Value Index data by Corelogic, dwelling values in Brisbane saw an overall median monthly price rise of a 1.5% over the month of February 2021.  The current median value for dwellings across Greater Brisbane is $535,618 which is once again, the highest it has ever been. 

 

The quarterly growth in dwelling values across Greater Brisbane is now 3.5% and annual growth for the last 12 months is now 5%. 

 

 

Brisbane Dwelling Values

 

Of particular interest is the fact that the upper-quartile properties are leading the growth in Brisbane.  These properties represent the most expensive quarter of the market.

 

Brisbane Property Price Growth

 

Brisbane House Prices

 

In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 1.6% across the month of February 2021.  The 12 month change in Brisbane house prices has been 5.9%.   The current median value for a house in Greater Brisbane is $593,232, the highest it has ever been.

 

Brisbane House Price Growth

 

Brisbane Unit Prices

 

The Unit Market in Brisbane saw some more positive growth in the median value this month with an increase of 1% in February 2021.  The 12 month growth for units across Brisbane is now 1.1%, so it seems this market has bottomed out and is starting to recover.   The current median unit price in Brisbane is $396,183.

 

Brisbane Unit Price Growth

 

Brisbane Rental Market Movements

 

The Vacancy Rate in Brisbane as a whole, tightened further between December 2020 and January 2021, and now sits at 1.7%.    The table below highlights where vacancy rates across Brisbane sit at the end of January 2021.

 

Region

Vacancy Rate January 2021

(change from December 2020)

Beenleigh Corridor 0.7% (-0.1%)
Brisbane CBD 5.6% (-0.4%)
East Brisbane 1.4% (-0.1%)
Inner Brisbane 3.5% (-)
Ipswich 1.1% (-)
Northern Brisbane 0.9% (-)
South East Brisbane 0.6% (-0.2%)
Southern Brisbane 1.7 (-0.2%)
West Brisbane 1.5% (-0.1%)

Source: SQM Research

 

Vacancy risk continues to recover rapidly within the Brisbane CBD this month with currently vacancies now similar to the peaks between 2016 and 2018.  This is a remarkable recovery given the extremely high vacancy risk in this area during the peak of Covid-19.  Vacancy Rates across most other parts of Greater Brisbane remain tight, and in fact are tightening even further as the demand for rental properties increases.

 

Rents in the unit market in Brisbane have now recovered and we are seeing some upward pressure on rents with an annual change in unit rents of 0.5% across the city. 

 

Housing rents continue to see growth, due to the tightening vacancy.  The annual increase in rents for Brisbane Houses is 4.2% according to Corelogic Data.

 

Brisbane Rent Growth

 

 

Anecdotally we are seeing 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

  

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

 

The Saturday inspection run in Brisbane is becoming chaotic.  Line ups at open homes are to be expected.  We are seeing some Agents extend the inspection timeframe from 30 minutes to 1 hour – purely to get the volume of people through the door.  We can’t ever remember a time when we experienced this level of demand in our City.

 

Quality properties are continuing to sell after the first inspection, when listed for sale by private treaty.  Buyers need to be prepared to submit offers on the same day as they inspect in most cases.  Thankfully, some Sales Agents are providing slightly longer timeframes for buyers to submit offers, but this usually means more buyers have time to get an offer in before the closing timeframe.

 

We have been in the running for properties alongside more than 20 other buyers under multiple offer several times this month.  This level of demand is madness!  At auctions we have attended there have been several registered bidders and properties are selling well above our appraisal range based on settled sales data.

 

Of course, in a rapidly appreciating market, relying on settled sales data is a mistake.  We are coaching our buyers through the process, so they understand how much “stretch factor” needs to be applied to the settled sales data.  Depending on the location right now, this is between 3-10%.  Whilst the median data for Greater Brisbane shows price growth over the quarter of 3.5% across the region as a whole, we know for a fact that many locations have grown significantly faster than this.  So as a buyer it is important to understand the “real-time” information for an area or you may simply keep missing out.

 

The months ahead …

 

We have no doubt that the future for Brisbane property prices looks positive.  For once we actually agree with the predictions that the economists have made.  In fact, there are some areas in Brisbane where I’d argue we could see growth exceed the forecasts over the next 2 years.

 

Property prices are driven by the balance between supply and demand.  We break down these two elements to understand, at a local level, what this dynamic looks like.  Right now the demand in Brisbane is being fuelled by so many things.  Demand for housing comes from both Owner Occupiers and Investors and right now there are different motivations from these two groups.  Our own enquiry tells us that investors are rapidly coming back into the market, but they are competing fiercely with Owner Occupiers who are still the main drivers of the current demand in Brisbane.  We expect this demand to continue to increase in the coming months.  For how long it lasts, no-one knows.   But for now, we do know that for those who own Brisbane property, the future looks bright!

 

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