Activity throughout Brisbane in June remained high in the residential property market, which is not a surprise. Brisbane is now amongst the top ten most liveable cities in the world according to the Economist Intelligence Unit (EIU), and rightly so. Our city offers an amazing sub-tropical lifestyle where even in winter the sun shines and our outdoor lifestyles bustle. Keep reading to understand the Brisbane Property Market Update for June 2021.
It is no wonder that the demand for property across the city is still strong. At a national level, the headlines suggest that the momentum for property price growth is starting to slow, but in the Brisbane housing sector, this is not the case.
With net interstate migration into Queensland exceeding 30,000 in 2020 (the first time since 2005), this was by far the fastest population growth rate of all capital cities around Australia. Employment also surged to a record high in Queensland with the unemployment rate for the State now sitting at 5.4%. There are still some further improvements that we hope to see here in the coming months. With an increase in total job advertisements in Queensland of +154% over the year, there may be further uptake in the months ahead.
After seeing a spike in demand throughout February and March, the REA Insights Weekly Demand index has been fairly steady since April 2021 across Queensland. This Index measures the number of people who are highly engaged with buy listings on realestate.com.au compared to a baseline which is calculated as being the 52-week static average for the 2019 year.
Interestingly, the number of people who are highly engaged with unit listings has been higher across Queensland compared with house listings. This is in contrast to what we have observed by being on the ground at inspections where anecdotally we are seeing more buyers attending open homes for houses than units – especially in Brisbane.
In terms of apartment supply forecasts for Brisbane, the table below shows where we are in the pipeline of new developments.
With long time frames for planning, marketing, and construction for large apartment projects, the next wave of supply is still some time away for Brisbane. In the meantime, the market will tighten further, particularly after borders re-open and international migration resumes.
For property investors, the latest tax office figures have confirmed that there are fewer landlords who are negatively gearing their properties. This is because with interest rates so low, in many cases the rental income from the investment is sufficient to pay down the investment debt. This builds up the equity position in a property and provides a good buffer for any future potential increase in interest rates.
And with the Australian economy rebounding so quickly, there are now some economists who believe that interest rates could rise before 2024. Whilst there is no suggestion this is likely from the RBA, it is always a possibility. It does look like interest rates might have reached their lowest point.
So the outlook is definitely still bright for Brisbane. Let’s see how our local market performed over the last month.
Brisbane Property Market Prices
The latest Hedonic Home Value Index data by CoreLogic released on 30 June 2021, has confirmed that the median dwelling value in Brisbane increased 1.9% across June. This is just slightly lower than the dwelling growth in Brisbane throughout May (+2.0%) which some might assume means that the price growth is losing some momentum throughout Greater Brisbane. The current median value for dwellings across Greater Brisbane is $586,142 which is $11,570 higher than just one month ago, and $64,456 higher since the CoreLogic results were published at the beginning of the year on 4 January 2021.
The quarterly growth in dwelling values across Greater Brisbane is now 5.7%, suggesting a slight slow down since last month, and annual growth for the last 12 months is now 13.2%.
However, it is important to always break down the dwelling data into the housing and unit sectors as each of these types of dwellings has performed differently over recent months.
Brisbane House Prices
In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 2.2% across June 2021 which is CONSISTENT with the growth that we experienced in the housing sector throughout Greater Brisbane last month. The twelve month change in Brisbane house prices has been 14.8%. The current median value for a house in Greater Brisbane is $657,551, the highest it has ever been. This is $15,824 MORE than one month ago and $154,403 more than 12 months ago.
The breakdown of the median data into the price segments of the market in Brisbane provides further insights into the price spread of houses around our City. The graph below shows house values for the 25th and 75th percentile prices in Brisbane, compared to other locations around Australia. This shows a graphic representation of how affordable the Brisbane market still is compared to Sydney, Melbourne and ACT, with our 75th percentile value (ie: the top 25% of house prices) sitting BELOW the 50th percentile value (ie: overall median value) of Melbourne, and ACT and below the 25th percentile value of Sydney.
Brisbane Unit Prices
The Unit Market in Brisbane saw further positive growth in the median value this month, although a slow down in the momentum of that growth is evident within this sector. June saw an increase of 0.7% growth for units in Greater Brisbane. The twelve month growth for units across Brisbane is now 5.7%. The current median unit price in Brisbane is $415,536, which is $3,782 more than one month ago and $28,116 more than 12 months ago.
When we compare the Unit prices in Brisbane with other capital cities we find that our median Unit price is equivalent to the lowest 25th percentile of unit values in ACT and Hobart, and much lower than the 25th percentile for Melbourne and Sydney. Again, this demonstrates how affordable Brisbane units are compared to units throughout other capital cities around Australia.
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 3 months, however, the unit sector has started to see a loss of price growth momentum over the last month.
Both sectors are still appreciating, but houses have shown a more superior growth since the beginning of the year.
Brisbane Rental Property Market Update and Movements
Vacancy Rates in Brisbane tightened further throughout June moving from a city-wide vacancy rate of 1.4% in April to 1.3% in May. The table below highlights where vacancy rates across Brisbane sit at the end of May 2021.
|Region||Vacancy Rate May 2021
(change from April 2021)
|Beenleigh Corridor||0.6% (+0.1%)|
|Brisbane CBD||3.9% (-0.5%)|
|East Brisbane||1.1% (-)|
|Inner Brisbane||2.2% (-0.2%)|
|Northern Brisbane||0.7% (-0.1%)|
|South East Brisbane||0.6% (+0.1%)|
|West Brisbane||1.2% (-0.1%)|
Source: SQM Research
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 have seen an annual increase of 3.8%, up 1.2% compared to last month.
Housing rents are still climbing faster, with the annual increase in rents for Brisbane Houses now at 8.4% according to CoreLogic Data, which is 1.1% higher than a month ago.
Gross rental yields for dwellings across all of Greater Brisbane have now started to fall with escalating dwelling prices outpacing rent price growth. At a city-wide level, gross rents have dropped slightly to 4.1%, down -0.1% from last month. This is still very attractive compared to Sydney at 2.6% and Melbourne at 2.8%.
What did we see on the ground across Brisbane during June 2021?
The Brisbane Property Market Update June 2021, like previous months, has seen the number of buyers continued to exceed the number of sellers, causing most properties to sell with multiple offers throughout the month. The depth of buyers in some pockets of the city is greater than in other pockets, and we are starting to see slightly decreased buyer depth at the lower end of the market.
Towards the top end of the market, however, the buyer depth is still very strong and houses within that top 25th percentile are moving very quickly. Auctions we attended were mostly sold, except for a small number of cases where the vendor’s expectations have now moved ahead of the market. This often happens when prices are escalating rapidly. Clearance rates, according to Domain, moved between 57% and 88% across the month in Brisbane, but every auction we attended had multiple registered bidders – even if it ended up passing in.
It is possible that some buyers are starting to get buyer fatigue and this is causing them to make some very strong offers that are well ahead of the market. We have been seeing this – especially in the middle and top price points. For those that continuously miss out, it is not uncommon to reach a point where getting into the market is more important than trying to buy well. This causes prices to rise as well because, with every new recorded sale, this becomes the new baseline that other buyers make an assessment from.
The months ahead …
Our position has not yet changed on the market outlook and we are still optimistic that Brisbane has a lot of steam left which will keep prices escalating into the near future. We have not yet seen a slow down in the number of buyers in the middle and top segments of the market, so demand still outweighs supply in these sectors. We are watching closely for signs that demand is slowing or supply is increasing – but right now neither of these things are happening. For this reason, we expect this price growth momentum to continue, more so for houses than units in Brisbane. We hope you have found our Brisbane Property Market Update June 2021 helpful.