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

Brisbane Property Market Update November 2021 and Brisbane has now cemented its place as the fastest-growing capital city market throughout Australia. During November, Brisbane led the way in terms of dwelling price growth, ahead of all other capitals, but even more so in the housing market compared to the unit market.

And there are few surprises as to why this has happened. 

Housing affordability is less pressing in Brisbane, and we have had fewer lockdowns due to Covid-19. Additionally, we have continued to see a positive rate of migration, especially from those moving interstate. This continues to fuel the housing demand throughout the city.

Listing volumes are also a lot lower in Brisbane with -33.9% fewer properties available for sale in the 4 weeks up to 28th November 2021, compared with the five-year average. This is different from Sydney, where listing volumes are more in line with the long-term average, and Melbourne, where listing volumes are actually +7.9% above the long-term average. These differences in supply dynamics are certainly playing a part in the upward price growth momentum in Brisbane.

With the stimulus from the federal government boosting construction, new builds in fresh estates are thriving, but this is having little impact on the low supply levels of established properties in locations where there is a scarcity of land and high demand.   These are the locations where we are seeing maximum price growth.

A number of predictions have been made in relation to the direction of the Brisbane market both next year and into 2023.  According to some of the big banks and also SQM Research, the outlook for 2022 looks positive, regardless of the projected scenario. 

Brisbane Property Market Update November 2021

Source: SQM Research

Looking further ahead towards 2023, the predictions for Brisbane property values range from price falls of -1% (Westpac) to price falls of -8% (Commonwealth Bank). Obviously, as we look further into the future, the assumptions are also less reliable.  Therefore, we prefer to report on the outlook once we have more certainty about when there will be any potential increase in interest rates as well as other impacts that could influence the demand for property such as changes to credit policies and the economic recovery as a whole. 

This month we did see tighter credit conditions come into effect with new applications for finance now being assessed with an interest rate buffer of 3% above the current mortgage rates, which is an increase of 0.5% from where it was prior.  We are yet to see any impact associated with this change throughout Brisbane.

There is definitely no slowdown in the demand for property in Brisbane at this time. In fact, sales volumes have been 51.5% higher in the 12 months up to October 2021 compared to the same period last year. There is a high volume of property transactions occurring, which is evidence of the confidence that buyers have in the Brisbane market.

There has been a shift in the composition of buyers recently with lending data now showing that first home buyers have dropped to 26.9% of all loan commitments.  Instead, we are seeing an uplift in investment buyers with investors now making up 32.8% of all lending commitments across Queensland.

Whilst fixed interest rates have started to climb, the Reserve Bank has been clear in that a number of conditions need to be met before the official cash rate does increase.  Specifically, they have confirmed that the inflation rate needs to be sustained within the 2-3% range before any changes will be made.  The latest inflation figures showed a rebound in the last quarter, although the factors contributing to this result (ie: higher commodity prices and supply chain issued) may be mitigated over time.  Additionally, with international borders reopening, wages growth may be suppressed, another factor that may delay any sustainable change to inflation.  Time will tell, but when the official cash rate does start to rise (and it will at some point) then it is likely that the rate of any increases will be gradual so that any impacts on the economy can be assessed.

With the vaccine roll-out in place, we also now find ourselves in a position where international migration will again be possible.  This will add further ongoing demand to housing markets.

In this month’s update, we outline the performance of the Brisbane property market across all sectors.

 

Brisbane Property Market Update November 2021 – Prices

The latest Hedonic Home Value Index data by CoreLogic released on 1st December 2021, has confirmed that the median dwelling value in Brisbane increased by +2.9% over the month of November.  This price growth is a further +0.5% growth compared to the growth observed in Brisbane last month, which is evidence that in Brisbane, the momentum of price growth continues to accelerate.  The current median value for dwellings across Greater Brisbane is $662,199 which is $20,102 higher than just one month ago.

The quarterly growth in dwelling values across Greater Brisbane is now up 7.4%.  Annual growth for the last 12 months for Brisbane Dwellings is now +25.1%.

Brisbane Property Market Update November 2021

Source: CoreLogic

Brisbane’s higher value properties are still driving the growth as you can see in the CoreLogic Data below.  In the three months to October 2021, the top 25% of values experienced 7.3% growth (up from 6.7% at the end of September) compared to 5% growth in the lowest 25% of property values across the city (up from 4.2% last month).  Even the middle 50% of values in Brisbane saw an increase in the three months to October of 6.1%, compared to 5.7% growth in the three months to September.  All segments of the Brisbane market are in a strong growth phase right now, but the top end of the market is growing at the fastest pace.

Brisbane Property Market Update November 2021

Source: CoreLogic

 

Brisbane Property Market Update November 2021 – House Prices

The Brisbane Housing Market is on fire!  We saw median values for the greater Brisbane region increase 3.2% in just one months throughout November, up from 2.8% growth throughout October.   This is a new record high for monthly growth figures recorded for Brisbane in the current property boom.  The 12-month change in Brisbane house prices has been 27.9%.   The current median value for a house in Greater Brisbane is now $757,194, the highest it has ever been. This is $25,802 MORE than one month ago!  Every month this seems to keep growing and growing.

Brisbane Property Market Update November 2021

Source: CoreLogic

 

Brisbane Property Market Update November 2021 – Unit Prices

The Unit Market in Brisbane retracted slightly again in its rate of growth throughout November 2021. Units were up 1.1% this month, compared to 1.3% last month. The 12-month growth for units across Brisbane is now +11.4%. The current median unit price in Brisbane is $443,981 which is $6,895 more than one month ago.

Brisbane Property Market Update November 2021

Source: CoreLogic

 

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 for both houses and units in Greater Brisbane.

Brisbane Property Market Update November 2021

It is obvious that the housing sector is continuing to outperform the unit sector in Brisbane on a month-to-month basis.  This has been a trend observed since October 2020 and has become especially apparent in the last 2 months where we can clearly observe a divergence in the rate of growth in the different property types. 

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 has increased $173,292 over the last 11 months, whereas the median value for units has increased $50,804 across the same period of time.  In simple terms, the growth in the dollar value of Houses has been 3.4 times the growth in the dollar value of Units throughout Greater Brisbane during 2021.

Brisbane Property Market Update November 2021\

 

Brisbane Rental Market Movements

Vacancy Rates at a city-wide level in Brisbane remained stable between September and October, at 1.4%.  The table below highlights where vacancy rates across Brisbane sit at the end of October 2021.

Region Vacancy Rate September 2021
(change from August 2021)
Beenleigh Corridor 0.6% (-)
Brisbane CBD 4.9% (-)
East Brisbane 1.4% (-)
Inner Brisbane 2.4% (-0.1%)
Ipswich 0.8% (-)
Northern Brisbane 0.8% (+0.1)
South East Brisbane 0.7% (-0.1%)
Southern Brisbane 1.5% (-)
West Brisbane 1.2% (-)

Source: SQM Research

Vacancy remained relatively unchanged this month across every sub-region throughout Greater Brisbane.  These tight vacancy rates are continuing to put upward pressure on rents throughout the city. 

Housing rents have demonstrated annual growth in Brisbane of 11.7% according to CoreLogic Data, which is up a further +0.4% compared to one month ago.

Rental incomes in the unit market throughout Brisbane have seen an annual increase of 6.8% up +0.3% compared to last month. 

Gross rental yields for dwellings across all of Greater Brisbane according to CoreLogic remained have slipped slightly lower this month due to property values rising faster than rents.  As at the end of November, the gross yield in Brisbane is 3.8% , down -0.1% compared to last month. 

Brisbane Property Market Update November 2021

 

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

In the first couple of weeks of November, our team noticed a huge jump in the prices that some buyers were prepared to pay for properties. This eased a little towards the latter part of the month.  Perhaps some buyers made a last-ditch effort to throw everything on the table, fatigued from missing out several times throughout the year, in an attempt to move into a new home before Christmas?

Whatever the reason, buyers were stretching to buy.  We often thought that there would be valuation risk with some prices that were being achieved.  But for many buyers who have stronger equity positions or additional cash, a valuation shortfall is less problematic.

Of course, prices achieved are now the new baseline for property values in Brisbane so as the market moves aggressively upwards, we have to readjust our expectations for what a specific budget will buy.

Open homes are still well attended, although the number of groups through has been declining compared to a few months prior.  The actual demand is quite property-specific, with multiple offers still being achieved for most private treaty sales. 

Auctions that we attended throughout the month were also very well attended with a strong number of registered bidders competing for quality properties.

 

The months ahead …

As we head into the festive season we do expect the number of active buyers to reduce as people focus more on Christmas shopping rather than property shopping.  At the same time, we also expect that the number of properties that become available for sale will also drop off sharply as we head into December. This is a seasonal trend that we do not expect will be any different this year.

With the planned State border openings in December, we do expect that the buyer depth will return quickly early in the New Year as those who are relocating become buyers who will compete with the already heightened demand here in Brisbane.  

Of course, not all people who relocate will buy, so we also expect a further tightening in vacancies early in 2022.  With Brisbane already experiencing a tight rental market, it is likely that tenants will find it even more difficult to secure a property as more people compete for limited stock.

At some stage, we do expect that the rate of growth in Brisbane will start to slow, and this is likely to occur at some stage throughout 2022, perhaps once house prices increase to a level where affordability constraints become an issue. Additionally, further tightening of credit policies and increases in fixed interest rates could slow some of the housing activity or even an increase in listings which is a trend already observed in Sydney and Melbourne.

That said, there are no signs of any of the above at this stage, so hold on for the ride everyone.  Brisbane property growth is leading the nation and we expect this may continue in the months ahead.

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