This article will highlight what has happened in the Brisbane Property Market Update in March 2022.
The Brisbane property market has performed strongly again throughout March 2022, maintaining its position as the fastest-growing capital city property market in the country. House price growth continues to outpace unit price growth, however, the gap is closing between the different product types. This article will explore what has been happening in the Brisbane Property Market throughout March 2022.
Supply in Brisbane remains tight, and off the back of the floods, it is possible that this trend will continue in the months ahead. Total advertised stock levels are -25.9% lower than they were 12 months ago. This is also more than 40% below the previous five-year average level. Even new listings are lower compared to the equivalent period last year.
When we compare listing volumes in Brisbane with those in Sydney and Melbourne, it is apparent that higher stock levels in the other major capital city markets have normalised. This can be explained by a larger volume of properties coming on the market in Sydney and Melbourne, in combination with a drop in buyer demand. This is very different to what we are experiencing in Brisbane.
Sales volumes in Brisbane are still very high. Compared to 12 months ago, Brisbane has seen an increase in the number of transactions across the city of 62.8%. This is indicative of the high demand that has dominated our market in the period of time.
Change in Sales Volumes, 12 Months to March 2022 (Source: CoreLogic)
When we break down the sales volumes into a shorter period of time, analysing the last quarter instead of the last 12 months, according to CoreLogic, sales activity is 39% lower than a year ago in Sydney and 27% lower in Melbourne, however sales volumes have increased in Brisbane over the same period. This is important to consider because our market is at a different stage in the cycle to these other major capital cities. It is another reason why we should never assume that Australia is “one property market”.
Over the month of March, auction clearance rates in Brisbane plummeted in the two weeks after the floods (42% and 53%) and then recovered. This can be explained by a sudden lack of buyer confidence as the city went into shock in relation to the impact that the heavy rain event had in many parts of the city. However, in the weeks that followed buyer confidence slowly returned and clearance rates according to Domain we back up to 64% on the last weekend of March.
When we look at the trend of interstate migration, it is clear where the housing demand is coming from for Queensland. Throughout the September quarter, net migration into Queensland reached a new record high, equating to about 1,263 new residents every week. The graph below shows where most of those people were coming from.
Employment growth in Queensland has also been spectacular over the last 12 months. This is indicative of an improving economy off the back of the lockdowns and impacts relating to Covid-19 over the last 2 years.
The issue in Brisbane is where everyone is going to live if the population keeps growing rapidly? We already have extremely low vacancy rates and listing volumes remain well below the long-term trends. The environment of low supply and high demand is likely to remain unchanged for some time yet, which will continue to support price growth in both dwelling values and rents.
Of course, we have to consider that inflation is rising, interest rates will increase at some stage in the near future and consumer confidence has taken a turn for the worse over recent months. These factors will potentially have an impact on demand for some buyers, but at this stage, we are seeing no impact on the market because of this.
Market Prices – Brisbane Property Market Update March 2022
The latest Hedonic Home Value Index data by Corelogic released on 1st April 2022 for the month of March 2022, has confirmed that the median dwelling value in Brisbane increased by a further +2.0% over the month. This price growth is more than what we experienced in February. Whilst last month we reported that a slowdown in the rate of growth across the city was starting to occur, this data suggests that this is no longer the case, with growth increasing again this month. The current median value for dwellings across Greater Brisbane is now $749,293 which is $26,860 higher than one month ago.
Annual growth for the last 12 months for Brisbane Dwellings is now +29.3%.
Brisbane’s middle segment of the market is still the top growth segment, ahead of the top end of the market in terms of quarterly price growth for all dwellings. This is a trend we have now observed for the last 2 months.
Each month we are tracking the trend in the change to price growth by market segment and we can now confirm that all segments of the market in Brisbane have passed their peak growth rate according to the data above. Whilst all segments are still experiencing strong price growth, the rate of growth is starting to slow.
The rate of price growth is decelerating the most at the top end of the market, and the least at the bottom end of the market across the city.
Brisbane House Prices – Brisbane Property Market Update March 2022
The Brisbane Housing Market is still the top performing Housing Market across all capital city locations throughout Australia. Median values for the greater Brisbane region increased a further 2.1% throughout February 2022. The rate of growth increased again compared to February where the growth rate for housing in Brisbane was 1.9%. With this increase in the momentum of price growth once again we have now seen another new record median value for Brisbane Houses achieved this month. The 12-month change in Brisbane house prices has been 32.1%%, which is still the strongest 12-month house price growth across all capital cities as well as rest of state regions throughout Australia according to Corelogic data.
The current median value for a house in Greater Brisbane is now $856,731 the highest it has ever been. This is $28,556 MORE than one month ago! Houses in Brisbane continue to become more expensive every month.
Brisbane Unit Prices – Brisbane Property Market Update March 2022
The Unit Market in Brisbane grew strongly again throughout March 2022, reaching another new record high. Unit median values in Brisbane were up 1.6% this month, compared to 1.5% last month, so the momentum is picking up in this segment of the market given we have now seen three months of consecutive price growth increases in the unit sector. The 12-month growth for units across Brisbane is now +15.1%. The current median unit price in Brisbane is $479,562 which is $11,169 more than one month ago.
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 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. The rate of growth was slowing in the housing sector until this month where it can be observed that it has again picked up.
In the Unit sector (blue line) we have now seen three months of consecutive price growth increases which indicates that this segment of the market is gaining momentum in Greater Brisbane.
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 the last 15 months has increased $272,829. For units, the median value increased $86,385 throughout the same period of time.
Rental Market Movements – Brisbane Property Market Update March 2022
Vacancy Rates at a city-wide level in Brisbane fell again between January and February 2022. They are now at 0.9% which is just below the record low of 0.8% experienced in April 2006. The table below highlights where vacancy rates across Brisbane sit at the end of February 2022.
|Region||Vacancy Rate December 2021
(change from November 2021)
|Beenleigh Corridor||0.4% (-)|
|Brisbane CBD||2.6% (-0.6%)|
|East Brisbane||1.1% (+0.1%)|
|Inner Brisbane||1.6% (-0.4%)|
|Northern Brisbane||0.6% (-)|
|South East Brisbane||0.6% (-0.1%)|
|Southern Brisbane||1.0% (-0.1%)|
|West Brisbane||0.8% (-0.1%)|
Source: SQM Research
Vacancy rates in the Inner-City market have made a fast recovery, perhaps in part due to interstate and international borders reopening. We have not seen levels this low in the CBD since 2013, before the influx of new higher density developments being built in this region. Off the back of the Brisbane floods last month, we expect that vacancy rates will tighten further, creating uncertainty for tenants who are looking to relocate throughout all of the Greater Brisbane region.
Housing rents in Brisbane have shown an annual growth rate of 11.6% at the end of March. This is the highest rate of growth in rents across all capital cities throughout Australia.
Rental incomes in the unit market throughout Brisbane have seen an annual increase of 6.8%.
Gross rental yields for dwellings across Greater Brisbane according to CoreLogic are 3.5%, down a further 0.1% since last month. In the Housing sector, gross rental yields in Brisbane are sitting at 3.3% and in the unit sector the gross yields are now at 4.7%.
What did we see on the ground across Brisbane during March 2022?
After the floods at the end of February we have definitely observed a reduction in the number of buyers who are in the market. However, we have not yet seen a reduction in the quality of the buyers which means that the buyers who are still looking to secure a home or an investment property in Brisbane are still willing to pay strong prices. This is further evidenced by the continued growth in property prices.
Whereas previously we may have experienced 10 or 15 offers on a property, we are now seeing 4 or 5 offers. This is a general observation only, because our team have also been involved in multiple offer situations where there have still been 15 buyers submit offers. Obviously, the quality of the property and its location will drive the demand so property selection will have an influence on the level of competition from other buyers.
We have also started to see Agents and Auctioneers working harder at many auctions. Clearance rates have fallen from their February highs which is also indicative of an increasing gap between buyers and sellers. In most cases there are still a number of registered bidders at property auctions, so when a property passes in with multiple bidders it is often a sign of sellers’ expectations starting to get ahead of the market, or buyers starting to pull back slightly. Again, this is property dependant, because we have also observed a number of properties sell easily at auction over the last month, well above the price at which the property is announced on the market.
These general observations confirm that buyers are starting to become a bit more selective in terms of what they buy. In the peak of 2021, everything was selling for a premium. Now buyers are becoming a bit more picky and choosy, and only those properties that are highly desirable are attracting the same level of buyer competition.
The months ahead …
There are definitely some headwinds for Property Markets around the country. We have an up-and-coming Federal Election which creates a level of uncertainty for many. We have inflationary pressures whereby a higher cost of living will possibly weigh on housing demand. We also have the risk of rising interest rates at some stage in the future. That said, in Brisbane we still have relative affordability compared to the larger markets of Sydney and Melbourne and we are also in a very low supply environment which is very different to Sydney and Melbourne.
For further optimism, we also have an improving economy and low unemployment levels which could lead to income growth helping to maintain housing demand. The announcements from the recent budget have also meant more incentives for first home buyers. Additionally, overseas migration will be positive for maintaining housing demand as well. In Brisbane the rate of interstate migration also remains strong, putting further pressure on the market in the months ahead.
We have been observing a shift in the demand towards attached dwellings throughout the city, mainly townhouses, which is a segment of the market that we believe will perform strongly. This is because buyers are priced out of houses in the inner and middle ring suburbs of Brisbane due to the recent price growth that has been observed, and therefore will compromise on the property type. Demand in this segment of the market is very strong.
Overall, despite the recent floods, international unrest and other downside risks that have been outlined above, we maintain our view that the property market as a whole in Brisbane remains strong. The fundamentals are still in favour of price growth across all market segments in the foreseeable future.