Is the worst behind us, or is there more pain to come?
Brisbane has seen another month of price falls based on median settled sales data. Is the worst now behind us, or is there more pain to come? The answer depends on a few things. It depends if you are a buyer, a seller, a landlord, or a tenant! Our team has put together a Brisbane Property Market Update September 2022 for you.
Interest rates have risen 250 basis points across the last 6 months which is the fastest tightening cycle since 1994. This has definitely had an impact on buyer demand.
According to Proptrack, there are now 29.4% FEWER potential buyers per realestate.com.au listing for houses in Brisbane. This is compared to the recent peak. For Brisbane Units, there are now 12.6% fewer potential buyers per listing, compared to the peak. This confirms that the drop in demand has been more severe for Houses compared to Units across Brisbane.
The change in the number of potential buyers per listing for Houses now, compared to the pre-pandemic period is +79.8%. For units, the buyer activity in Brisbane for the same period has increased 126%. This is according to Proptrack data.
This confirms that buyer demand has slipped over recent months. But it remains strong looking historically to the period prior to the Covid-19 pandemic.
Whilst demand is lower according to these indicators, we started to see more people turn up to property inspections again throughout September, compared to July and the Brisbane Property market Update August 2022. Perhaps this is due to buyers having fewer choices in the market.
New listings have been reducing in Brisbane for the last 3 months (see below). At the same time, total listings have been increasing.
What does this mean?
- Sellers are less motivated to list their properties for sale (especially in the last 2-3 months) – probably because they are uncertain about the price that they might achieve
- There is NOT a trend of high levels of forced selling!
- Some sellers are less willing to meet the market, OR, buyers are becoming more selective about what they will buy, which is why days on market are trending higher as evidenced by increasing levels of older stock
Domain auction clearance rates have been improving across Brisbane since July. The monthly average clearance rates in July were 39.8%. By August this increased slightly to 40.25% and for the 4 weeks in September, the average auction clearance rate in Brisbane increased to 53%. The graph below also shows that the clearance rates in Brisbane have bottomed out.
Source: CoreLogic
Rising interest rates have also been impacting the amount of money prospective buyers can borrow. Even with cash rate increases of 225 basis points, borrowers’ maximum loan size was reduced by around 20%. With a further .25% rate rise in October, this is now further reduced. This means that the pool of buyers who are able to purchase higher-valued properties is reducing.
The median value price falls in Brisbane are being led by the more premium end of the market as can be seen in the graph below.
Source: CoreLogic
Dwelling Values
Brisbane Property Market Update—September 2022
Across September, according to the CoreLogic Hedonic Home Value Index, Brisbane Dwelling values declined -1.7%. Like most other major capital city markets, this demonstrates a loss of momentum in the pace of price falls compared to last month. The median value for a Dwelling in Brisbane is now $746,017 which is $16,267 LESS than last month.
Brisbane remains a more affordable market than Sydney, Melbourne, Hobart, and Adelaide when we assess the Dwelling to Income Ratio of capital cities throughout Australia. This is despite being one of the highest growing capital city markets over the last 18 months. It is perhaps another reason that the Brisbane market has been less impacted during the current downturn.
Source: CoreLogic
House Values
Brisbane Property Market Update – September 2022
Housing values are leading the downturn in Brisbane as evidenced by a greater month-on-month decline in this sector, compared to units.
For the last 3 consecutive months, median Brisbane House Values have declined. The rate of decline has recovered slightly in September, compared to August. Units have seen a decline for the last 2 months, although there have been relatively minor median value changes in this segment of the market.
For the month of September, CoreLogic Hedonic Home Value Index data confirmed that Brisbane Houses declined a further 2%, with quarterly falls now at -5.1%. The median value for a House in Greater Brisbane is now $841,923. This is down by $50,210 from the market peak in June when median House values were $892,133.
Source: CoreLogic
Unit Values
Unit Values are a lot more resilient in Brisbane in the current downturn. This is perhaps because they are a lot more affordable, compared to Houses. Also the oversupply of units that we saw in the years following peak construction in 2016 has now corrected and there is a lack of quality unit stock being built – hence lower levels of supply.
Throughout September, Brisbane Units saw prices decline by just -0.1%, but quarterly growth remains in positive territory at +0.4%. The median value for a unit in Brisbane is now $501,255, just $3,265 off the recent peak which was $504,520 at the end