Brisbane Property Market Update December 2020

Brisbane Property Market Update December 2020

This article will highlight what has been happening in the Brisbane Property Market during December 2020.

 

The last month of 2020 delivered a strong wrap up for the year for Brisbane.  There was little slow down in the weeks leading up to Christmas.  Buyers were still very active throughout the city up until around mid-December.  This article will provide a summary of what the data has now confirmed and also some of the observations we have made from our on-the-ground assessment.

At a macro level, the Australian Economy is performing miraculously given the context of the global pandemic.  According to ABS data, approximately 84% of jobs have already been recovered.  Job ads area also up nearly 50% of their lows all pointing to a recovery in the right direction for us all, nationwide.

Last month we reported , consumer confidence was the strongest it has been in 7 years.  During December that climbed to 10 year highs according to Westpac Economics.

 

Brisbane Property Market update

 

 

Brisbane property prices have continued to show positive growth, a trend that has been continuing for several months now.  Let’s explore this in further detail in the summary below.

 

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 1.1% over the month of December 2020.  The current median value for dwellings across Greater Brisbane is $521,686 which is the highest it has ever been. 

The quarterly growth in dwelling values across Greater Brisbane was 2.1% and annual growth for the year was 3.6%.  Brisbane has outperformed the national combined capital city average for annual growth in 2020, which was recorded as being a more modest 2% over the past 12 months.

In terms of which market segments within Brisbane are performing the strongest, Corelogic Data confirms that dwelling values in the upper quartile rose 1.25% in December.  This is compared with a 0.94% rise seen in the lower quartile values according to Corelogic Data.

 

Property Values Brisbane

 

Melbourne is now the only capital city location that still reporting negative annual price growth, and its dwelling values are still -4.1% off their previous March 2020 peak.  Sydney, whilst reporting annual price growth up to the end of 2020, is also still down -3.9% from its previous peak in July 2017.  Additionally, Perth and Darwin are down -19.9% and -25.7% respectively from their 2014 peaks, despite showing positive annual price growth across the last 12 months.

In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 1.2% across the month of December 2020. The current median value for a Brisbane house is now $576,338, the highest it has ever been.

 

Brisbane House prices

 

The Unit Market in Brisbane saw some positive growth in the median value once again with an increase of 0.4% for the month of December 2020. The current median unit price in Brisbane is now $390,785, which is still 0.6% lower than 12 months ago.

 

Brisbane Unit Prices

Brisbane Rental Market Movements

 

The Vacancy Rate in Brisbane as a whole fell again between October and November 2020, and now sits at 1.8% city wide.   There are many areas in Greater Brisbane where vacancy rates are even tighter.  The table below highlights where vacancy rates across Brisbane sit at the end of November 2020.

 

Region Vacancy Rate November 2020
Beenleigh Corridor 0.8%
Brisbane CBD 6.9%
East Brisbane 1.6%
Inner Brisbane 3.5%
Ipswich 0.9%
Northern Brisbane 0.9%
South East Brisbane 0.8%
Southern Brisbane
2.0%
West Brisbane 1.5%

Source: SQM Research

 

Vacancy risk is still highest within the Brisbane CBD, although there has been a rapid recovery over the past few months when vacancy rates peaked at around 14% in this location.   The CBD and inner city areas are also the locations in Brisbane where there is a large number of higher density units that have been impacted by the pandemic, compared to other areas and alternative building types. 

Rents in the unit market in Brisbane saw price falls -1.1% from January to December 2020, whereas housing rents increased 2.7% across the same period.

See below the change in rents for Brisbane Units and Houses across the last 12 months according to Corelogic Data.

 

 

Rent changes Brisbane

What did we see on the ground across Brisbane during December 2020?

 

Typically in the lead up to Christmas, many buyers prefer to spend their time Christmas shopping rather than property shopping.  This did not seem to be the case in Brisbane throughout December.

We observed strong auction attendance right up to the last weekend before Christmas.  We also observed strong bidding from those who were in a position to buy under auction conditions.  Of particular interest, was the higher than normal interest in properties in prime locations that were ripe for renovation.  In several examples, we saw higher than normal bidder registrations for these types of properties across our City.

Brisbane Property values are definitely in an upswing phase and buyers must consider this when considering making an offer on a property.  As I reportes last month, if buyers are relying on sales that occurred 3-4 months ago to come to a price to pay for a property in the current market, they will in most cases simply miss out.  The market is strong in Brisbane and buyer activity is continuing to increase.  There are definitely more active buyers entering the market than there are new listings being added so a sense of urgency is continuing to grow in Brisbane.

 

The months ahead …

 

Looking forward into 2021, Brisbane looks to be very well placed for some strong price growth.

The risks associated with less fiscal support and the expiry of mortgage repayment deferrals have diminished as the economy has outperformed all forecasts.  We have also seen a rapid improvement in labour markets nationwide, and especially here in Queensland.  In Brisbane, the COVID-19 outbreak has had minimal impact in terms of restrictions and lockdowns since the first wave back in March 2020.

Of course we cannot underestimate the risk that further outbreaks of the virus in the months ahead may impact the recovery of our local economy.  We have done so well to date.  With increasing positivism around the distribution of a vaccine and the management of small clusters, it is looking more likely that the trajectory for our local housing market will remain positive in the months ahead.

 

 

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Brisbane Property Market Update November 2020

Brisbane Property Market Update November 2020

This article will highlight what has been happening in the Brisbane Property Market throughout November 2020.

 

It feels like rocket fuel has been added to the Brisbane Property Market in the last month.  Sentiment has accelerated rapidly and so too are prices in some locations around the city.  The buyer depth has been increasing throughout November and plenty of buyers are complaining that properties are selling too fast, often before they have time to fully consider if the property is right for them.  Let’s explore what has been happening on the ground, and unpack what the monthly data tells us.

The latest lending figures show that owner-occupier lending has risen to historical highs, excluding refinancing.  In Queensland, first home buyer numbers are up 70% year-on-year.  The value of housing finance commitments (excluding refinancing) increased 40.2% in Queensland over the September quarter, accounting for around 31% of the uplift in finance nationally. 

 

lending commitments

 

 

Investor lending remains relatively modest overall looking at nation-wide data, although based on our own level of inquiry there is definitely a lot of investor interest in Brisbane at the moment.

Over the month we also saw mortgage lending get a little easier once again, with assessment rates from many banks being reduced.  This alongside the interest rate cut on Melbourne Cup Day has resulted in an increased borrowing capacity for many property buyers.

Also, consumer confidence is the strongest it has been in 7 years.

 

Consumer confidence and brisbane property market

 

Housing Loan Deferrals are also falling, down from more than 900,000 loans at the peak of the pandemic to under 300,000 now, a decline of almost 70%.  This is also providing reassurance for property markets, with the risk of forced selling due to mortgage holders unable to make their repayments, rapidly diminishing.

Finally Queensland had some good news on the employment front, adding back 206,000 jobs in only 5 months to see total employment higher now than a year ago.  And of course, vaccine tests are proving to be increasingly effective and there is talk of a nationwide roll out early in 2021.

Last month, we reported that Brisbane property prices were showing signs of growth and we are pleased to confirm that this positive growth trend is continuing.  Let’s explore what is happening in our local property market.

 

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 0.6% over the month of November 2020.  The quarterly growth in dwelling values across Greater Brisbane is now 1.5% and annual growth is sitting at 3.2%.  

Of particular interest, is that all segments of the Brisbane market appear to have had similar growth over the last quarter with upper quartile values 1.5% higher compared with a 1.6% lift seen in the lower quartile values according to Corelogic Data.

 

Brisbane price growth

 

This month is the first since the onset of the pandemic where all capital cities demonstrated positive price growth, with Melbourne the only capital city location still reporting negative growth for the quarter. 

In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 0.7% across the month of November 2020. The current median value for a Brisbane house is now $568,629, the highest it has ever been.

 

Brisbane house prices

 

The Unit Market in Brisbane saw some positive growth in the median value once again with an increase of 0.2% for the month of September 2020. The current median unit price in Brisbane is now $388,661, which is still 1% lower than 12 months ago.

 

Brisbane unit proces

Brisbane Rental Market Movements

 

The Vacancy Rate in Brisbane as a whole remained consistent at 2% between the end of September and the end of October 2020.   There are many areas in Greater Brisbane where vacancy rates are extremely low.  The table below highlights where vacancy rates across Brisbane sit at the end of October 2020.

 

Region Vacancy Rate October 2020
Beenleigh Corridor 0.9%
Brisbane CBD 7.9%
East Brisbane 1.8%
Inner Brisbane 3.8%
Ipswich 1.0%
Northern Brisbane 0.9%
South East Brisbane 0.9%
Southern Brisbane
2.1%
West Brisbane 1.6%

Source: SQM Research

 

You can see from the table above, that vacancy risk is still high in the inner city region where there is a large number of higher density units.  Rents in the unit market in Brisbane have now seen price falls -1.9% from March 31 to November 31, a remaining consequence of supply and demand side factors. 

See below the change in rents for Brisbane Units and Houses from March 31 to November 31 2020.

 

Brisbane rent prices

 

What are we seeing on the ground across Brisbane?

 

Every Saturday throughout November appeared to be busier than the last with buyer numbers continuously increasing.  Most properties that we viewed that were listed for sale by private treaty went to multiple offer after the first open home.  Buyers could not believe just how fast quality properties were selling and a lot of buyers have become increasingly frustrated that they keep missing out.

At auctions, we have seen strong prices being achieved.  If properties have passed in, in many instances there is a contract in place with a conditional buyer soon after.

Most properties are now selling outside of our appraisal range.  Appraisals are based on historical recorded sales and this data is lagging based on the current contract values.  If buyers are relying on sales that occurred 3-4 months ago to come to a price to pay for a property, they will in most cases simply miss out.  The market is on the move and buyers must be prepared to pay more than was required just a few short months ago.

 

The months ahead …

 

The outlook for the Brisbane housing market appears to be strong looking forward into 2021.

The demand is rising due to interstate migration, the broad range of stimulus measures and positive changes to market sentiment.  Economic conditions are improving with the virus containment and it has never been cheaper to borrow money.

Whilst we are seeing buyer numbers rise, we are also seeing stock remain low.  Listing volumes decreased again in November in Brisbane according to SQM Research, down a further 3.8% which demonstrates a decline of -12.5% annually.  Tight levels of inventory combined with rising buyer numbers creates urgency amongst buyers, which in turn adds to the upward pressure on property prices.

The recovery trend is well and truly in full swing in Brisbane and we expect 2021 will deliver some strong capital growth returns for Brisbane property.

 

 

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Brisbane Property Market Update October 2020

Brisbane Property Market Update October 2020

This article will summarize what has been happening in the Brisbane Property Market throughout October 2020.

 

October has seen a huge turn around in Buyer sentiment in Brisbane.  It seems that even more buyers have entered the market in the last month and this is contributing to the very high demand that is evident around our City.  Here we will summarize the monthly data and share our experiences of what we have seen on the ground by being out and about every Saturday, mixing with other buyers at open homes in several pockets around Brisbane.

 

Last month we reported that Westpac Bank updated its property forecasts with Brisbane prices tipped to surge 20% between 2022 and 2023.  Since then consumer confidence has surged, returning to an 8-month high.  It is well known that consumer confidence is a key driver for housing markets across Australia.  With the announcement of further rates cuts, we may now see a further surge in housing market activity.

 

Consumer Confidence Rating

 

There has still been a lot of talk about the mortgage payment deferrals that are expiring, and will that have an impact on property values in the coming months.  We have now seen a decline from 11% ($195 billion) in June to 7.4% ($133 billion) in September 2020 according to APRA’s figures a trend which is reassuring.

 

Repayment Deferrals

 

We have also seen the latest Domain House Price Report published, which confirmed that Brisbane house prices have increased over the September quarter.  The same report also showed how fragmented the Brisbane market actually is with annual house price growth up 3.7% across Greater Brisbane, whilst annual unit prices were down 6.1% in the same region.  As we always say … there are markets within markets.  

 

The table below shows the breakdown of house prices by local Government area.

Domain House Price Report September 2020

 

The unit sector in Brisbane has not performed as well as evidenced by the breakdown below.

Domain House Price Report September 2020

 

The Domain Buyer Demand Indicator has shown that houses remain a firm favourite for prospective homehunters, with demand rising post-lockdown in Brisbane, and it remains significantly elevated compared to last year.  Unit demand has been sliding since late May although it also remains slightly higher than last year, with investment grade stock likely to be impacted most.  

 

At the moment the Brisbane real estate market is moving at different speeds.  We have the housing market, and the high end unit market (as a small segment of the unit market as a whole) that are incredibly strong, but the inner city 1 and 2 bedroom standard apartment markets are suffering.  It is unlikey that we will see a recovery until borders open and international students return.

 

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 0.5% over the month of October 2020.    

 

Brisbane Property Prices

 

The data now confirms that property prices across Australia have moved into recovery mode with a broad based lift in dwelling values, with the exception of Melbourne.  

In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 0.6% across the month of September 2020. The current median value for a Brisbane house is now $564,531.  Combined with last month’s house price results for Brisbane, this is a 1% increase across the last 2 months.  On a $500,000 property, this means it will cost a buyer $5,000 more to buy, and on a $1,000,000 property it is now $10,000 more to buy in the same area than it was 2 months ago.

 

Brisbane House Prices

 

The Unit Market in Brisbane saw a decline in median values during October with a small slide of -0.1%. The current median unit price in Brisbane according to Corelogic is now $389,583.

 

Brisbane Unit Prices

 

Brisbane Rental Market Movements

 

The Vacancy Rate in Brisbane as a whole fell again from 2.1% at the end of August to 2.0% at the end of September.   There are still many areas in Greater Brisbane where vacancy rates are extremely low.  The table below highlights where vacancy rates across Brisbane sit at the end of September 2020.

 

Region Vacancy Rate September 2020
Beenleigh Corridor 0.9%
Brisbane CBD 8.1%
East Brisbane 1.9%
Inner Brisbane 3.9%
Ipswich 0.9%
Northern Brisbane 0.9%
South East Brisbane 0.8%
Southern Brisbane
2.1%
West Brisbane 1.7%

Source: SQM Research

 

The main changes over the last month in vacancy are a further tightening in the Beenleigh Corridor, East Brisbane, Inner Brisbane, Northern Brisbane and Southern Brisbane, a small increase in the Brisbane CBD and no change in the other regions.  Again the main area of risk seems to be the higher density unit markets confined to the inner city and CBD areas as previously reported.

Rents in the unit market in Brisbane saw price falls -1.7% from March 31 to October 30, a consequence of too many investment apartments in a small geographical location around the city with a recent change in demand for these types of accommodation due to the impacts of Covid-19 as we reported last month.

See below the change in rents for Brisbane Units and Houses from March 31 to October 30 2020.

 

Brisbane Property Market

 

 

What are we seeing on the ground across Brisbane?

 

The number of people out at open homes every Saturday has continued to grow throughout October.  With listing volumes still lower than 12 months ago, there is fierce competition for quality properties throughout Brisbane.

Demand is very strong.  I would argue the strongest that we have seen in more than a decade.  There are many reasons for this.

The most recent Herron Todd White Residential Month in Review, it states:

” Money has never been cheaper and for those with the ability to
access it, the opportunity is obvious.

 

Here is an example of a recent auction in Brisbane.  This was vacant land in Kedron, which is 11km to the north of the Brisbane CBD.  There were 39 registered bidders and the vacant 607m2 block sold for $1,155,000.

From our own “on-the-ground” experience, we can say that there is not a single property that we have been able to buy that has been listed on the market, that has not been a multiple offer situation after the first open home.  Every property we have considered for our Client has has high competition.

 

We are now also seeing properties sell outside of our appraisal range based on previous comparable sales in the area.  This shows how strong the current market is, with properties selling between 5 and 10% over the highest end of our appraisal range.  This is critical for buyers to understand, otherwise they will simply keep missing out.

 

There is still off-market activity and this is generally less competitive.  Obviously this is one advantage of working with professional buyer’s agents who have an extensive agent network.

 

There is less fear in Brisbane now about property prices falling, so purchasers are eager to act.  Interstate migration is also boosting sales with property buyers looking to secure a home before relocating to Brisbane.  There is a sense of anticipation building in Brisbane what we will see high volumes of interstate arrivals once the borders re-open for everyone.  Given the changes that Covid-19 has had on all of us, many people are seeking a great lifestyle, which Brisbane provides, whilst having the ability to work more remotely. 

 

The dominant buyer group is still the owner occupier in Brisbane, although we have definitely seen investor activity start to rapidly pick up again.  Lending has spiked and owner-occupier lending is now at historical highs, excluding refinancing.  First home buyer numbers are up 70% year on year in Queensland according to the most recent ABS lending data.  Investor lending also rose 5% in September, but it remains low overall.

 

The months ahead …

 

The future for the Brisbane housing market looks very bright.  We expect the current price growth to continue given the sheer number of buyers currently in the market ready to buy.  With tight vacancy rates throughout most areas in Greater Brisbane we also see great investment opportunities for those who have been sitting on the sidelines waiting for the worst of the pandemic to pass.

The high density unit market is still subject to further headwinds – especially in the inner city.  With elevated vacancy rates, investors without a tenant in place will certainly feel the impact on their returns.  Also with downward pressure on prices, the immediate future looks bleak.

Queensland now has a re-elected Labor government, so there is more certainty than this time last month when we were still in the lead up to our State election.  With the promise of jobs, and more jobs, let’s hope they get it right!  With an improving economy, together with the creation of more jobs in the months ahead, this will have further positive effects on the Brisbane Market.

 

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Brisbane Property Market Update September 2020

Brisbane Property Market Update September 2020

This article will summarize what has been happening in the Brisbane Property Market throughout September 2020.

 

Funnily enough, last month we reported that many of the news and media headlines in relation to property values around Australia were negative.  In such a short period of time, the news has suddenly become a lot more optimistic.  And Brisbane appears to be the city set to benefit most!  Let’s explore what has been happening on the ground, and unpack what the monthly data tells us.

 

Westpac Bank has updated its property forecasts this month, and they are now expecting a serious boom in the coming years, with Brisbane tipped to perform the best.  The bank’s economists expect Brisbane property prices to surge 20% between 2022 and 2023.

 

Westpac predictions for Brisbabe Property Market September 2020

 

It is anticipated that the recovery will be supported by sustained low interest rates, which are likely to be even lower than current levels; ongoing support from regulators; substantially improved affordability; sustained fiscal support from both federal and state governments; and a strengthening economic recovery.

 

The Westpac view is quite optimistic compared to some of the other major lenders in Australia.  Commonwealth Bank and ANZ remain less bullish, despite recent upgrades to their forecasts also.

With banks so inconsistent with their forecasts, what are we supposed to believe?

Again, not all markets will recover in the same way or at the same speed.  Local drivers of supply and demand will determine local performance.

 

Last month, we reported that Brisbane is always very different to Sydney and Melbourne because our properties are more affordable, our income to debt ratio is a lot lower and the amount of our take home income that we spend on our mortgages here in Brisbane is also a lot lower.

 

This gives us an enormous advantage over our Southern East Coast Capitals.  We are already seeing a spike in buyer interest from Interstate, driven by affordability and the desire for a better lifestyle.  The pandemic has caused a shift for a lot of people in the way they want to live, and it seems that South-East Queensland may be set to benefit!

 

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 0.5% over the month of September 2020.  This now makes up for the total decline in dwelling values across Greater Brisbane with the quarterly change at 0%.  As we mentioned over previous months, the dire predictions for large falls in value simply did not occur in Brisbane and many property buyers who have been waiting for bargains to appear, have been disappointed.  In fact prices in some areas throughout Brisbane have continued to climb.  

 

Brisbane Property Market Update September 2020

 

 

 

 

 

 

 

 

 

The data is demonstrating a large divergence between regions where the virus curve has steepened, and where the virus is well contained.  Melbourne is the market that has been impacted most with dwelling values falling a further -0.9% across the month of September followed by Sydney will price falls of -0.3%.  These markets make up approximately 40% of Australia’s housing stock by number and 55% by value so the national reading still shows a fifth straight month of decline with overall values declining -0.1% during September.  This is hardly in line with broader, more pessimistic predictions of much larger falls, but is does highlight that some areas are definitely more impacted than others during this time.

 

In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 0.4% across the month of September 2020. The current median value for a Brisbane house is now $559,646.

 

Brisbane House Prices September 2020

 

The Unit Market in Brisbane saw a slightly higher median value increase of 0.7% for the month of September 2020. The current median unit price in Brisbane is now $388,505.

 

Brisbane Unit prices September 2020

Brisbane Rental Market Movements

 

The Vacancy Rate in Brisbane as a whole fell again from 2.2% at the end of July to 2.1% at the end of August.   There are many areas in Greater Brisbane where vacancy rates are extremely low.  The table below highlights where vacancy rates across Brisbane sit at the end of August 2020.

 

Region Vacancy Rate August 2020
Beenleigh Corridor 1.0%
Brisbane CBD 7.9%
East Brisbane 2.0%
Inner Brisbane 4.0%
Ipswich 0.9%
Northern Brisbane 1.0%
South East Brisbane 0.8%
Southern Brisbane
2.2%
West Brisbane 1.7%

Source: SQM Research

 

You can see from the table above, that vacancy risk is still high in the inner city region where there is a large number of higher density units.  Rents in the unit market in Brisbane saw price falls -1.6% from March 31 to September 30, a consequence of supply and demand side factors. 

We have seen a huge increase in the supply of investment apartments over the past few years in Brisbane, with a significant number of new apartments being built.  Additionally, many short term rentals (such as air bnb rentals) have recently transitioned to longer term rentals due to restrictions on travel for a number of months due to Covid-19.  Whilst the availability of these rentals has surged (ie: supply) we have also seen a huge decline in the demand for these properties due to a number of factors. 

International and State border closures have weakened apartment demand from short term travellers, as well as international students in Brisbane.  Additionally, industry sectors such as hospitality, the arts and recreational services have been hit the hardest by job losses and reduced working hours.  These types of workers are more likely to rent inner city apartments, which has also negatively impacted on the demand for these properties in Brisbane.

See below the change in rents for Brisbane Units and Houses from March 31 to September 30 2020.

 

Brisbane Property Market Update September 2020

 

What are we seeing on the ground across Brisbane?

 

We continue to see a ramp up in the number of buyers in Brisbane.  With record low interest rates and the recently announced plan to relax lending laws, we expect credit availability will become even more free flowing in the months ahead.  

We believe that the middle ring suburbs in Brisbane are showing the highest level of demand over recent weeks.  We are seeing a combination of first home buyers, investors and families compete for a very small number of properties that become available.

The successful virus containment in Brisbane has meant that the real estate market has continued to operate as usual.

We are seeing high volumes of buyers at open homes every Saturday and even mid-week inspections are busy in many suburb around Brisbane.  Multiple offers are still very common – even with properties not actually listed online.  There is sufficient off-market demand from buyers (many through Buyer’s Agents) to cause some level of competition for off-market transactions also.  

The most recent Herron Todd White Residential Month in Review, it states”

“the news remains upbeat. Agents have said they’re registering solid numbers at open homes and multiple offers on properties isn’t an unusual event. The limited listings that do make it to the web portals aren’t sticking around for long. If this level of demand keeps up (and indications are that it will), then we may well see spring and summer seasons that are more impressive than may have been expected just a few short months back.”

Of course, there will always be properties that are listed for sale, but that don’t sell immediately.  We are seeing some of these properties throughout Brisbane also.  These properties are usually those with some type of compromise, or with vendors who have unrealistic price expectations.  It is very easy for properties like this to become stale listings, at which time many buyers believe there must be something wrong with them if they have not sold quickly.  

Investors are also starting to regain confidence.  Our buyer list is starting to include more investors than home buyers once again.  With a striking return in the housing market sentiment and consumer confidence, investors are starting to position themselves for the potential wave of capital growth that has now been predicted.

 

The months ahead …

 

The outlook for the Brisbane housing market is subject to a combination of headwinds and tailwinds over the next few months.

The headwinds will appear as the fiscal support winds back.  There may be an increase in the number of property owners that need to sell as mortgage repayment holidays end and the benefits of JobKeeper and JobSeeker fade out.  We have not seen any evidence to date of distressed selling in Brisbane, and based on the current level of buyer demand it is likely that any increase in new listings will be rapidly absorbed by the market. 

Of course we will also see low rates of migration to South-East Queensland until the borders open for everyone.  Additionally the labour market outlook looks weak and wages growth is likely to be minimal.  These factors may have some impact on demand in the months ahead.  

In terms of tailwinds, we currently have low mortgage rates (with the potential for rates to fall further), low listing volumes, government incentives and improving consumer sentiment.  According to Corelogic’s Head of Research, Tim Lawless, these factors “seem to be outweighing the negative economic shock brought about by the pandemic.”

With the federal budget being delivered next week, we expect additional announcements to stimulate the economy further.  Anything aimed at supporting jobs and improving consumption will be of benefit.  We look forward to seeing what policies are introduced during the nationwide recovery.

Queensland also goes to the polls in October, and we expect the campaigning from major parties will focus on promises for jobs, and an economic recovery.  Brisbane, and in fact Queensland, will have an interesting few weeks ahead as we discover more about what is proposed and more importantly, how it is going to be funded.

 

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Brisbane Property Market Update August 2020

Brisbane Property Market Update August 2020

Have you read the Headlines about the Property Market throughout August 2020?

 

We have read a number of headlines again throughout August about the direction that the Property Markets are headed.  Most of these stories discuss the Property Market as one … instead of breaking down the Australian Property Market into more specific locations.

 

This headline, for example, states that the RBA predicts a potential 40% drop in house prices.  This is a scary headline … but is it true or is it just click bait?  Of course this would be “the most extreme” scenario, but is is the headline that is used to evoke a response.

We know Australia is NOT one property market.

And yet stories like the one above don’t discuss local markets, or the drivers of supply and demand at a local level, at all.

 

Brisbane Property Market Update August 2020

 

Brisbane is always very different to Sydney and Melbourne, for example.  As a start, our properties are more affordable and our income to debt ratio is a lot lower.  The amount of our take home income that we spend on our mortgages here in Brisbane is also a lot lower.

 

Additionally, markets around the country are all responding differently as a result of the pandemic.  Let’s explore this in a bit more detail before diving in to why the Brisbane market is proving to be quite resilient.

 

What markets are most vulnerable to price falls and why?

 

It has been consistently reported that both Sydney and Melbourne properties are most vulnerable to price falls during the pandemic.

 

Shane Oliver, AMP Chief Economist, updated his forecasts recently for Australia’s property market.  He confirmed the Sydney and Melbourne are more exposed to price falls given their higher dependence of international migration, higher debt to income ratios, higher price to income ratios and greater investor penetration.  

 

Additionally, with the resurgence of coronavirus cases, especially in Melbourne, and the associated Stage 4 lockdowns, many commentators are again seeing reduced confidence in those locations.

 

At this stage we have not seen the number of cases in Victoria morph into a broader second wave across Australia and with border closures in place, it is less likely that this will eventuate.

 

Brisbane Property Market Prices

 

Corelogic Results for Brisbane Property Market Update August 2020According to the latest Hedonic Home Value Index data by Corelogic, dwelling values in Brisbane saw a -0.1% decline in value over the month of August 2020.  This brings the total decline in dwelling values across Greater Brisbane to -0.9% from the recent market peak.  This is hardly in line with the broader predictions from some commentators over previous months.

 

The data is starting to show a divergence between regions where the virus curve has steepened, and where the virus is well contained.  Melbourne is the market that has been impacted most with dwelling values falling -3.5% across the last quarter.  Again this is hardly in line with broader predictions of much larger falls, but is does highlight that some areas may be more impacted than others during this time.

 

In the Brisbane Housing Market, we saw median values for the greater Brisbane region remain stable across the month of August 2020. The current median value for a Brisbane house is now $557,969.

Change in Brisbane House Prices August 2020

 

The Unit Market in Brisbane saw a slightly higher median value decline of -0.3% for the month of August 2020. The current unit price in Brisbane is now $387,672.

Chane in Brisbane Unit prices August 2020

Brisbane Rental Market Movements

 

The Vacancy Rate at the city level is continuing its downward trajectory, after an initial spike from March to April 2020.  Since then rental markets have tightened, with many markets across Greater Brisbane experiencing the tightest vacancy for many years.  

 

Brisbane Vacancy Rates August 2020

 

We urge investors to investigate the local vacancy rate of a suburb, and more importantly the trend for vacancy as part of their due diligence before buying.  There remain some “at risk” locations in certain pockets of Brisbane.  For example postcode 4000 (which includes the Brisbane CBD) has a local vacancy rate of 13%, which is extremely high risk for an investor who may be looking at buying into that market.  

 

What are we seeing on the ground across Brisbane?

 

Our on-the-ground observations continue to suggest that some pockets in Brisbane are outperforming other locations across the City.  When we break down sales we are seeing at a local level, we know there is extremely high demand in some suburbs which is continuing to put upward pressure on prices.

A high number of buyers combined with a lower volume of quality listings tends to have this effect.

Many homes are still being sold with multiple offers.  This is consistent with what we reported last month.  

 

Auctions that we have attended this month have remained strongly contested with multiple bidders in most instances. Below is a photo of one auction we attended where there were more than 100 people (yes we did a head count) and multiple registered bidders fighting it out.

 

populat auction in Brisbane August 2020

Where we have seen properties passed in (yes this happens as well), we have observed that those properties have been impacted in some way.

Some have needed significant renovations.  One was a development site and another was flood impacted.  In these instances, buyers are more cautious about buying under auction terms and would prefer to do further due diligence before committing to a purchase. 

We have also observed instances where the sellers expectations were simply too high and therefore the property did not sell where the market determined its value (even though negotiations post auction).  This happens in any market of course.

 

In the most recent Herron Todd White Month in Review it states:

“As a general observation, investors have remained relatively inactive in the Brisbane market, but that doesn’t mean South East Queensland isn’t offering excellent potential for those looking to build their portfolio of assets.”

We are seeing inquiry pick up from investors once more, especially those who are seeking opportunities that effectively “pay for themselves” with the more generous rental yields that Brisbane offers.

 

What about the future – what does that look like?

 

In a recent announcement, Corelogic’s Head of Research, Tim Lawless, made the following statement:

“So far there has been no evidence that large numbers of distressed properties are coming to the market, however this could change towards the end of the year and into next year as fiscal support tapers and lenders become less lenient on distressed borrowers”

We will address this statement in more detail below.

 

Whilst the recent announcement of the JobKeepr and JobSeeker extensions may improve some confidence, for some people this is only putting off the so called “economic cliff” that has been referred to a lot.  We remain of the opinion that different markets around Australia will be impacted in different ways.

 

For a start, Queenslanders are the most optimistic property seekers in the country according to a recent report.  Demand is strong, and has remained strong, throughout the worst of the pandemic.

Additionally, any economic cliff, will be relevant to the level of exposure of each particular market.

According to a recent NAB announcement, Australian Home Loan deferrals are broadly in line with the total portfolio spread.  This means the exposure of some States to potential “forced selling” is much less than some other states.

 

proportion of home loans at risk by state

 

This provides a greater level of confidence for property owners and property buyers in Brisbane, given our exposure is a lot less than other locations around Australia.

 

Additionally, the average mortgage size is a lot higher in Sydney and Melbourne, compared to Brisbane and other Capital Cities around the country.  On this basis, we urge people to read into the general data and understand more about local drivers of potential risk. 

 

 

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Brisbane Property Market Update July 2020

Brisbane Property Market Update July 2020

What has been happening to the Property Market in Brisbane in July 2020?

This is the question that a lot of people ask when we first speak. There is so much variation in what is going on around Australia. We know, it is hard to keep up with information that is relevant to a specific region.

That’s how we can help!  We not only look at the data, but we also understand what is going on by being “on the ground.”  We can assess real-time demand around certain suburbs.

How do we do this?

We can monitor how many people are attending open homes in Brisbane.

We find out how many people are putting in offers for a property that is listed for sale.

AND, we see how many people are attending and bidding at auction in several suburbs around our city.

Let’s take a look at some the data and some of our real time observations, to summaries what is happening in the Brisbane housing market and also the Brisbane unit market right now.

Brisbane Property Market Prices

Brisbane Property Market Summary of Data

According to the latest Hedonic Home Value Index data by Corelogic, dwelling values in Brisbane saw a -0.4% decline in value over the month of July 2020.

 

In a recent announcement, Corelogic’s Head of Research, Tim Lawless, made the following statement:

“Record low interest rates, government support and loan repayment holidays for distressed borrowers have helped to insulate the housing market from a more significant downturn. Advertised supply levels have remained tight, with the total number of properties for sale falling a further 4.3% in the 4 weeks to July 27th , sitting 15.2% below where they were this time last year. Additionally, increased demand driven by housing specific incentives from both federal and state governments, especially for first home buyers, have become more substantial.”

In the Brisbane Housing Market, we saw median values for the greater Brisbane region fall -0.3% across the month of July 2020. The current median value for a Brisbane house is now $555,284.

brisbane housing market price growth

The Unit Market in Brisbane saw a slightly higher median value decline of -0.5% for the month of July 2020. The current unit price in Brisbane is now $384,681.

unit market in brisbane price growth

What is happening in the Rental market in Brisbane?

At a city level, the rental market in Brisbane has definitely recovered, although there are still some at risk markets around our city.  For an in-depth review of the current state of the rental market the Brisbane Property Podcast provides a comprehensive review. Click HERE to access.

In short, the vacancy rate in many locations is trending down and is very tight. The areas where this trend is not happening are in the Brisbane CBD and locations immediately surrounding this and also in areas where there are a lot of higher density unit developments. In these locations, vacancy is still a big problem. Therefore these markets remain high risk.

Asking rents according to SQM Research across the city have also been trending higher, so this is also reassuring for property investors.

Rent index for Property Market in Brisbane

That said, Brisbane is not one property market and caution definitely needs to be taken when looking at a postcode level. You will see in the Brisbane CBD, for example, the situation is VERY different.

Rent index for Brisbane Property Market

What are we seeing on the ground across Brisbane?

In our opinion, the data above may be slightly misleading based on our on-the-ground observations. Despite the overall median data trend showing very slight falls in house values, we are in fact seeing quality housing in very high demand. Some open homes we have attended over the month of July have seen more than 30-40 groups through. This illustrates that buyers are still very active in the Brisbane property market.

Advertised properties that are listed for sale in desirable locations are being sold very quickly in Brisbane. Often the sale is a result of multiple offers being submitted on the property. If listed for sale by auction, they are achieving high prices with multiple registered bidders.

There are markets within markets and we are seeing strong prices being paid for quality properties in many regions around our City. In the most recent Herron Todd White Month in Review it states:

“The Coronavirus crisis has not resulted in a measurable fall in property prices across the Brisbane market generally and $700,000 is a solid value band. As such, don’t expect to score a bargain due to the pandemic. A lack of listings means buyer choice is limited. In addition, many properties are trading off-market.”

How does the Brisbane Property Market compare to other Capital Cities around Australia?

Melbourne and Sydney are leading the decline in capital city values. Melbourne recorded a -1.2% fall in dwelling values across the month, whereas Sydney saw a fall of -0.9% in dwelling values for July 2020.

This is certainly now surprising, given the recent second wave of coronavirus cases in Melbourne.  This has now resulted in Stage 4 Restrictions with the Victorian State Government’s recent announcement.

This has impacted on consumer sentiment with readings from the ANZ-Roy Morgan Consumer Confidence Rating weakening throughout July, despite the huge recovery from the April lows. This index shows a high correlation with HOUSING MARKET ACTIVITY (not prices). The recent downturn might therefore suggest that buyers and sellers may once again retreat to the sidelines.

In terms of changes in rent, Brisbane is doing well compared to other capital cities.  The weakest rental conditions are being experienced in Hobart (House rents down -2% and units down -4.5% since March), Sydney (house rents down -1.1% and units down -3.2%) and Melbourne (house rents down -0.7% and units down -3.1%).  It is important to mention that the weaker rental conditions are larger in the unit markets, compared to the housing markets in these cities.

Brisbane Property Market Rents

What’s going to happen to the Brisbane Property Market moving forward?

There is a lot of worry and concern about what might happen to property values across the country when the governments fiscal response starts to taper in October and repayment holidays expire at the end of March next year. Of course, we may see a rise in distressed properties coming to the market. What we do not know is if this will put any downward pressure on prices.  This is where I think the different property markets around Australia will each experience something slightly different.

According to the Commonwealth Bank Home Buying Spending Intentions Index, there was a 6% rise in home buying intentions nationally up to the end of June 2020. This index showed the index had returned back close to levels seen in March – after much weaker readings in April and May.

How Housing Index effects theProperty Market in Brisbane

We are definitely seeing this trend on the ground with a the current high volume of buyers in Brisbane.  Because of this, I’m sure we could see some moderate increase in new listings come to the market without any significant impact on the supply and demand balance.  Remember property prices will only fall when supply outstrips demand. 

With dwelling approvals now at the lowest level in 8 years, the future supply pipeline also looks tight.  The most recent Australian Bureau of Statistics Data data showed a decline of -10.9% in new detached house approvals in Queensland.

Real-time demand is still strong and Brisbane property buyers are being fuelled by the lowest ever interest rates, good levels of affordability and strong rental yields compared to many other state capitals.  This is good news for our local Brisbane property market and these factors will continue to support our property values into the future.

If you need help navigating the Brisbane Property Market, or if you are looking to purchase a home or an investment property in Brisbane in the future, please book a free discovery call to understand how we may be able to help.  You can also find out more about our services by clicking HERE.

Brisbane Property Market Update June 2020

Brisbane Property Market Update June 2020

The real estate market in Brisbane continues to prove its resilience, despite the Coronavirus shock. The long awaited lift in the housing market throughout late 2019 and early into 2020 has definitely slowed down, but Brisbane still looks better placed to weather the storm in terms of fundamentals, compared to other capitals around the country.  This month’s Brisbane Property Market Update unpacks all of the latest data, as well as our on-the-ground update.

With Brisbane less exposed to the shock pause in international tourism, compared to its close coastal regions of Gold Coast and Sunshine Coast, downside risk is more limited. It is also expected that Queensland, as a whole, is more likely to be supported by a domestic tourism recovery in the near term future.

Brisbane also has a lower exposure to foreign education and migration, compared to Sydney and Melbourne. Since 2013, population flows into Queensland have been steadily rising, but obviously the impact of Covid-19 travel restrictions will see a large dent in this trend for the short term. With the highest level of residents from around the country preferring to relocate to Queensland, it is likely that interstate migration will continue to drive population growth once the state borders are reopened. Deloitte Access Economics forecast population growth to slip to 1% in 2020 and 0.8% in 2021, but it is encouraging that growth will still occur, just as a lower level. 

When we explore what has been happening at a local level in this Brisbane Property Market Update, the turnover in real estate was down 40% in Queensland in April, compared to 45% nationally according to Westpac Economics.  But sales activity has jumped 22% in May (Westpac Housing Pulse) which is positive for the local market. Despite this, sales volumes are still -30.2% lower than the equivalent period last year in Brisbane according to Corelogic which is contributing to the imbalance causing a strong seller’s market right now.

Buyer demand is strong, driven largely by owner occupiers and also first home buyers according to our Agent network. This is similar to what we reported last month.  We are also starting to see investor inquiry pick up, although this segment of buyers are still more cautious about the overall macroeconomic environment. Property search activity has increased more than 45% from a year ago according to REA Group … another positive sign that seems to be associated with more buyers on the ground at open homes across Brisbane.

Asking Prices for Brisbane houses are +0.4% higher for the month of June according to SQM Research, and 0.8% higher for units.  Asking rents based on SQM Data in Brisbane also look optimistic with growth of +1.5% in the housing market and +1% for units for the week ending 28 June 2020.

Price growth based on settled sales in Brisbane according to the Corelogic Hedonic Home Value Index at the end of June 2020 has moderated, rather than faltered. Over Greater Brisbane house prices are recording a -0.4% change compared to a softening in the unit market -0.8%. Given the macro-economic environment and the very low transaction volumes this is not alarming at all.

Vacancy Rates at a city level have recovered slightly from April to May, but there are some suburbs we consider to be at risk.  Rental vacancies have continued to escalate between March and May on a month by month basis in the CBD (currently at 13.3%), West End (9.1%), Newstead (7.7%) and Herston (7.7%). 

Rent discounting is also greater in some of these locations with Domain reporting 24% of rentals were discounted in May compared with 14.9% in February. Two other suburbs with high rates of rent discounting in Brisbane are East Brisbane (15.2% in May vs 8.5% in February) and Milton (32.7% in May vs 10.3% in February)

Property investors need to be aware that Brisbane is not one property market and it is important to understand location and product type before making any investment decisions.

Looking forward, Queensland unemployment has increased to 6.8% in April 2020 (JLL Research), but new payroll data released by the ABS shows jobs in Queensland fell 6.1% between March and May and total wages fell 4.6%, but this was less than the national average in both instances. This is reassuring for our local economy at this time.

With major infrastructure projects already underway, the Brisbane City council announcing further fast tracked projects including the construction of new river crossings and the federal government announcing that the inland high speed rail project linking Melbourne and Brisbane to be pushed forward, this is more good news for our region.

The supply pipeline still remains grim, as we have reported previously, with residential approvals across Brisbane continuing to decline.  New dwelling approvals fell -17.7% across greater Brisbane to the year ending March 2020 and now they are likely to decline further due to Covid-19. New completions for apartments are down from 2019 again this year and this trend is also likely to continue.

Brisbane offers affordability, livability, quality schools, great lifestyle and good future economic prospects. These factors all drive the demand for quality properties in our City.

With the current imbalance between supply and demand, the future does look bright despite what is going on around us. For those with a long term horizon, it might be time to think about preparing to get into the market.

We hope you have enjoyed this month’s Brisbane Property Market Update.  If you would like to get in touch to find out more, please contact us TODAY!

Brisbane Property Market Update May 2020

Brisbane Property Market Update May 2020

It is not surprising that the data reported for May in relation to the Brisbane Property Market supports our “on-the-ground” assessment of what we have been seeing for a number of weeks. In short, there has been no change in house values recorded across the month according to Corelogic Data.  No increase and certainly no decrease in house values (ie: 0.0% change), despite what media reports might have led you to expect. In the unit market in Brisbane, prices have retracted -0.6%, reflecting less stability in this asset class across Greater Brisbane.  In this month’s Brisbane Property Market Update we dive into these results a little further.

Last month we reported improved optimism from buyer’s across Brisbane.  This has continued throughout May, as open homes and auctions have re-emerged through the city, coinciding with significant gains in the 4 week moving average in consumer confidence as reported by the ANZ-Roy Morgan Index

Whilst the unemployment level reached 6.2% in May, this has not yet had any material impact on the demand for property from buyers here in Brisbane. Whilst employment is critical, there is no data that backs up the claim that a spike in unemployment always leads to a fall in property values. The availability of credit seems to be a more significant driver of demand, because lower borrowing costs effectively allow borrowers to take on bigger mortgages and right now, interest rates are at their lowest level ever.

The demand for property is also driven to a large extent by population growth. Brisbane will be less impacted than Sydney and Melbourne by the cessation of international migration due to closed international borders, but we will be waiting eagerly to see what happens when the state borders are open again. This is because the largest portion of our population growth comes from interstate migration. It will be interesting to see if more people reflect on their circumstances as a result of the Covid-19 shut down, and as a result there may be a greater shift to locations that deliver a more affordable lifestyle. I wonder if South-East Queensland will see a spike in migrants from the southern states once the borders are again open? I guess time will tell.

But even with state borders still closed, there seems to be enough pent up demand from local home buyers and interstate investors who may have been in the market for months (even before the pandemic) and they are now actively searching again despite what has happened over the last 3 months.

It also seems that Listings are beginning to pick up as sellers also have renewed optimism about the market. According to Corelogic, pre listing activity is up 2% to the week ending 31st May 2020, but listing activity remains down compared with this time last year.

SQM Research have reported a +1.8% increase in total listings in Brisbane throughout May, but the yearly change is still -12.9% lower than the same time last year so we still have a severe supply shortage. This means that quality properties are very quick to sell with multiple buyers. Some properties are being measured by hours on market, not days on market in some popular pockets around Brisbane due to the depth of buyers, and lack of available properties for sale.

The longer term supply chain for new properties also looks set to slow down with apartment building work completed to the end of March down 57% in Queensland since December 2016 according to ABS Data. We expect the Government will announce an enormous amount of stimulus to encourage home buyers to buy, build and renovate properties to stimulate slowdown in the construction industry, as it is one of Australia’s largest employers. 

Weekly rents across Brisbane are also higher across the month of May according to the SQM Research Weekly Rents Index, with houses reporting a +0.6% rolling monthly change. This is reassuring for property investors who have been nervous about falling rents, due to the effects of Covid-19.  At this stage there appears to be stability in the rental returns within the Brisbane housing market.

Of course, there are some “at risk” suburbs in Brisbane where vacancy rates have spiked due to Covid-19, which means finding a tenant will be harder – thus impacting on rental yields.  We have previously summarized these locations in a previous Brisbane Property Market Update HERE.  Suburbs most impacted by vacancy risk have more high-density unit developments, and most suburbs where lower density family homes are located have not been impacted across the city.

Much of the reported information in this Brisbane property market update may come as a surprise to many who are reading the news headlines. We have been reporting for weeks that there is little correlation between the news headlines and what we are observing by being “on the-ground.” Property buyers need to be cautious in terms of what information they may be relying upon to make large financial decisions (like buying or selling a property) at this time because as the data shows, the Brisbane housing market is proving it’s resilience.

Brisbane Property Market Update April 2020

Brisbane Property Market Update April 2020

We are not going to lie, as I write this Brisbane Property Market Update for April 2020, I realize that has been a very tough month for many of us and it feels like a long time ago that we wrote our last Market Update.  We have had to come to terms with a new way of living and we have spent a significant amount of time at home. For many of us we spent the Easter Holiday period at home, we are working from home and now we are juggling the supervision of our children’s school education from home.

It is probably fair to say that our home has become our cocoon for everything that we do!

There have been some scary headlines from journalists about property prices plummeting throughout the month. Admittedly, you do have to read into the story because the headline generally states the “worst possible” scenario based on a number of alternative possible outcomes in the months ahead. Also, most commentators are also suggesting the Sydney and Melbourne markets will be impacted more than others due to the much higher debt to income ratios in those capital cities, compared to elsewhere around Australia. Another reason to always be cautious about the information you are reading – Australia is NOT one property market!

Of course, predictions are just that and there is no certainty about them. A lot depends on how long Covid-19 impacts our lives and conditions are too uncertain to make any meaningful assessment. In saying that, Australia has done a great job of flattening that curve! In fact, we are excited that the Queensland Government is already easing restrictions the first step towards life returning to a “new normal.” With so few cases reported in Queensland since 5th April, we are optimistic that things will continue to open up and we can start to get our economy moving again.

According to SQM Research listing volumes are 10.1% lower in Brisbane than they were 12 months ago and in the last month alone (between March and April 2020) listing volumes were down a further 5.6% so we expect transactions volumes will remain low for some time yet, simply due to limited supply.

New Building Approval data released early in May from the ABS confirms that year on year new House approvals have fallen 3.4% in Queensland and year on year new unit approvals have plummeted 24.4%. Approvals are a leading indicator for future new housing supply so this shows the shortage of property may continue for some time yet. There have also been fewer sales across the city throughout April as well. With open homes banned and auctions having to move to digital platforms we all had to change the way we conduct our business.

There have been fewer buyers and fewer sellers throughout the majority of the month across Brisbane. Whilst there was a distinct shut down in the earlier part of April, since Easter we have definitely seen the optimism return (from a buyer’s perspective) so there is hope that this renewed optimism continues in the coming weeks. Even buyer search activity on realestate.com.au has increased 41% after a sharp decline at the end of March 2020, so people are starting to at least “think” about real estate after going into hibernation for a few weeks.

This month also saw the Queensland Government announce some very unfair proposed arrangements to be legislated between Landlords and Tenants, however after less than a week of intensive industry lobbying, what ended up being legislated is very fair and will now guide any hardship arrangements for Landlords and Tenants. For more information relating to these changes click HERE. Despite this, Property Managers in Brisbane are reporting less than 2% of all Tenants experiencing any Hardship or arrears as reported HERE and HERE.

In terms of property values if you already own property in Brisbane you will be pleased to know we have seen no noticeable drop in values and this is consistent with the feedback we are hearing from our Agent network across many parts of Brisbane. The latest Corelogic Hedonic Home Value Index showed an increase of 0.3% in dwelling values across the city in April 2020. This is reassuring given a typical settlement period is 30 days in Brisbane and the pandemic was declared on March 11, so this months’ figures would capture a lot of the contracts that were entered into throughout March when the number of coronavirus cases was rapidly escalating.

At the time of writing this Brisbane Property Market Update, there remains plenty of uncertainty about the immediate future. Whilst Australia has had a remarkable response to tackling the coronavirus, any longer term impact on housing (and specifically the Brisbane Property Market) will depend on factors that hinge on the timing and the extent of social distancing policies being lifted. Already we are seeing positive signs that the Government intends on opening up the economy gradually and this in turn will likely support consumer confidence, which in turn should see housing market activity pick up again. Of course what we don’t want to see is a second wave of coronavirus cases so let’s keep our distance and do what we can to stay safe and slowly kick start our economy again.

Brisbane Property Market Update March 2020

Brisbane Property Market Update March 2020

The trend in Brisbane house price growth remained positive throughout the month of March, despite the outbreak of the COVID-19 virus radically changing the way we now have to live over the last 2 weeks of the month. In this Brisbane Property Market Update, the latest Corelogic Hedonic Home Value Index data  shows there was an overall increase in dwelling values in Brisbane of 0.6%, which can be divided into House price growth of 0.7% and Unit price growth of just 0.1%. Interestingly, according to the same data, overall dwelling values in the Brisbane sub-regions of Ipswich and Logan/Beaudesert edged lower this month, despite value growth across greater Brisbane as a whole providing concrete evidence that Brisbane is not “one property market”.

What comes next is uncertain, as it will largely depend on the length of time that the current health and economic crisis persists. But looking at SQM Asking Prices for Brisbane, for the week ending 31st March 2020, for all houses there is a -0.1% rolling month change and -0.5% for units.  Of course, when we take that down to a suburb or postcode level the story is very different with some areas showing much more positive forward indicators than others. It is important to note that asking prices do not always equate to sales prices, but is it one indicator we can look at to determine seller expectations in these uncertain times. Despite the increased inquiry we have received in relation to a potential “fire sale,” there is no evidence of this at all in Brisbane right now.

Corelogic head of research, Tim Lawless said “Considering the temporary nature of this crisis, along with the unprecedented levels of government stimulus, leniency from lenders for distressed borrowers and record low interest rates, housing values are likely to be more insulated than sales activity.”

This provides some level of confidence for the residential property sector during the next 6 months whilst all of this support is in place. Property values are unlikely to be impacted when property owners can simply stall their repayments to the banks in the case of financial hardship. Of course, the uncertainty of low long this health crisis and associated economic disruption will last is unpredictable right now, so we hope to gain further insights into this in the coming days and weeks.

There are early indicators that listing volumes will fall substantially over the coming weeks. Corelogic have confirmed that reports generated through their online platform (used for pre-listing Real Estate sales packages) have more than halved in recent weeks and Agents are also reporting both buyer and seller inquiry has fallen by more than 50%. If sales volumes do fall significantly in the coming weeks and months, then the reliability of property data in the coming months may be compromised to some extent. I have previously discussed the importance of this HERE . It is times like now that local knowledge of what that data is made up of will be critical to understand true price movements based on comparable properties.

From a rental perspective in Brisbane, the overall trend in residential vacancy rates continues to decline with city wide vacancy rates recorded at 2.2% as the end of February 2020 . When we assess at a suburb level, there are several locations where vacancy rates have been much lower (even below 1%) due to a severe shortage of rental properties available.

In the last week, there have been reports of an increase in rental listings , especially for fully-furnished properties that are no longer being listed under short term accommodation sites such as Airbnb as owners seek a more stable income source and convert those properties onto the full-time rental market during these turbulent times. According to Domain there were 1420 new rental listings between March 16th and March 29th which equates to an increase of 53% compared with the previous 4 weeks. But to date, our feedback from Property Managers in Brisbane is that properties are still being rented quickly despite a drop off in tenant inquiry, because it appears that people who are inquiring are ready to move immediately.

Forward indicators for asking rents by SQM Research show for the week ending 28th March 2020, asking rents across all of Brisbane on all houses was down -0.5% and fur units this was -0.4%. This might indicate a flattening of rent price growth, however when we look at certain locations at a postcode level it again confirms that there are markets within markets, as there are still many suburbs where we have been purchasing properties for our investor clients where asking rents are still higher for the week, month and quarter. Again, this highlights the importance of local knowledge in these uncertain times.

Having reviewed what I wrote in last month’s Brisbane Property Market Update  there have certainly been a lot of unprecedented changes over the last 4 weeks! But there have also been huge changes to support the residential property market during these difficult times including interest rate cuts, enormous government support announcements, and banks freezing interest and principal repayments (if necessary). The missing link right now is support for tenants and we expect an announcement by the State Governments in the coming days in this regard. That said, many of the fundamentals for Brisbane have not changed. Supply is still down. The Infrastructure is still underway. Right now demand has dropped, but once the virus is contained, we expect economic activity to improve quickly, therefore driving a turnaround in consumer sentiment. With record low interest rates and many neutrally or positively geared opportunities in the Brisbane Property Market, on the other side of COVID-19 (and yes there WILL be the other side) we expect the demand for property in our great City to be sky high.

Brisbane Property Market Update February 2020

Brisbane Property Market Update February 2020

Brisbane continues to show underlying strength in its property market with a new record median house price set in February 2020 of $503,265.  This month’s Brisbane Property Market Update can report another month of positive house price growth.  February demonstrated an increase in property values of 0.6% according to the Corelogic Hedonic Home Value Index across all areas of Greater Brisbane which is in line with the national trend for positive property price growth since June last year.  Of course several pockets within Brisbane are performing a lot better than others as we have explained in previous monthly updates.

Further support from the Valuer-General’s 2020 Property Market Movement Report showed that the residential median land value increased slightly in Brisbane from $455,000 to $460,000 over the last 12 months.

Brisbane’s upper quartile values are 2.2% higher over the last 12 months compared with the lower quartile, up just 1.3% so the trend shows stronger performance across premium markets.  This may be attributed to the dominance of owner occupiers during the last 12 months (rather than investors) and the geographical spread of properties included in the data whereby properties closer to Brisbane’s CBD in the higher price brackets are performing better than other properties much further out.

From a rental perspective, during February, gross rental yields compressed slightly from 4.6% to 4.5% in Brisbane according to Corelogic Data  This can possibly be attributed to house values rising slightly more rapidly than rental rates, but it may also be due to seasonal factors so we will be monitoring this in the coming months.

Keep in mind mortgage rates are also trending lower, with another rate cut announced on 3rd March 2020.  From our review some three year fixed rate loans now being offered for an investor for as low as 3.14%, so depending on an investor’s deposit amount and mortgage structure there are still a lot of neutrally geared or positively geared property investment opportunities in Brisbane.

Looking ahead, there are a few things we are monitoring to determine the potential future impact on property values in Brisbane.  Broadly speaking, the primary factors supporting the steady price growth in Brisbane remain in place.  These include the low cost of debt and improved borrowing capacity.  Additionally, Brisbane remains affordable with a median house price $369,669 cheaper than in Sydney and $185,823 cheaper than in Melbourne so affordability pressures are less likely in our City.  Furthermore, population growth is still 2.3% greater than the decade average, economic growth is up 21.2% above the ‘normal’ decade average level of output, jobs growth is trending higher and unemployment is reducing with the lowest trend jobless rate in 10 months according to the CommSec State of the States economic performance report (January 2020) .

Of course we can’t predict with certainty right now what impact the Coronovirus may have on property values, if any. There certainly may be supply chain issues for the construction industry, slowing down the delivery of an already lacklustre level of new housing supply due to falling construction commencements over the last 12 months.  Foreign Investment has already plunged by 58% year on year in the 2017/18 fiscal year to the lowest level in a decade so foreign buyers have already existed the market in years prior.  Perhaps there may be some impact to properties associated with tourism, (eg – hotels and motels) and also student accommodation, again it is too early to tell.  Of course we can’t estimate the impact that it may have on consumer confidence or economic growth, but looking back on the SARS outbreak in 2003, there was a sharp slowing of output growth in China for a few months, before a sharp bounce back as the outbreak was controlled and economic stimulus measures were introduced.

So whilst we are entering a period where some may see uncertainty, Brisbane is still poised to report robust growth based on the fundamentals outlined above.  With continued signs of strength across many locations in Brisbane is it a great time to secure your next home or investment property in Brisbane. We look forward to discovering what next month’s Brisbane Property Market Update will uncover.

Brisbane Property Market Update January 2020

Brisbane Property Market Update January 2020

In this months’ Brisbane Property Market Update, it has been described as the “busiest January in a decade” by some real estate sales agents and we certainly agree with this statement.

Right from the first Saturday in January, we have witnessed record numbers of people at open homes, most likely fueled by the low interest rates, the limited volume of properties available for sale and rising market confidence.

Corelogic data released on 3rd February 2020 has confirmed that the median dwelling values in Brisbane rose again in January by a modest 0.5%, but when we look at houses alone this growth was 0.7% across January whereas units experienced negative growth of -0.6%.  Of course, seasonal factors often result in reduced sales activity in the month of January, so we expect February will deliver a much better feel for the current Brisbane trends as activity returns to normal.

Looking ahead, interest rates are expected to see further reductions in 2020, which along with consistently strong population growth to South East Queensland, is likely to continue to support housing demand in Brisbane.

In terms of supply, according to the most recent quarterly ABS Data, published on 15th January 2020, dwelling approvals, commencements and completions are all collapsing across Queensland as a whole, despite rising population growth. Total dwelling commencements are down 27% from the previous year.  Listing volumes remain 6% lower in Brisbane compared to this time last year, so this also puts limits on the available supply in the current market.

To summarize, supply is currently constrained and demand for property is huge right now in Brisbane.

If you are looking for sustained capital growth opportunities, according to Herron Todd White’s latest Month in Review, the closer you buy to the Brisbane CBD, the more likely you will see capital gains.  Add to that … detached housing still attracts better growth premiums than attached housing. This is certainly supported by current Corelogic data. Commentary in the latest Herron Todd White report indicates that for a good investment location in Brisbane, you can travel further out but be nearby to public transport options, major services and employment centers.

With the First Home Buyers Deposit Scheme now in place, there is also going to be more competition in the market where properties are valued up to $475,000 in Brisbane (being the threshold that the Australian Government has applied for our City) This is something to keep in mind if you are looking to buy with a similar budget.

Gross yields are still very attractive in Brisbane, averaging 4.5%.  Corelogic has confirmed that the City has experienced rental price growth of 1.8% over the last 12 months and SQM Research aligns with this showing an increase of 3.7% in asking rents over the last 12 months across Brisbane as a whole. 

With interest rates at record lows (the average fixed rate mortgage for an investor was 3.48% at the end of December 2019)  it is not hard to find positive cash flow properties in Greater Brisbane areas, but we urge investors to assess the potential for strong capital growth drivers in some of these locations if this is also part of an investors’ strategy.

As we always say. Brisbane is not one property market and there are certainly local pockets where growth has been much greater than the overall City average.  The latest Domain House Price Report reported a number of suburbs that completely outperformed the Brisbane average – with many suburbs reporting strong annual growth well above 7% – and a few suburbs with double digit growth.

We are certainly excited by what we are seeing on the ground every week.  The Brisbane market seems to be hot …. and the competition is fierce.  We are monitoring closely price movements in “real time” throughout certain pockets to ensure we keep up with the very latest trends in our great city.  It is interesting to monitor what we were saying 12 months ago.  We will continue to write our regular Brisbane Property Market Updates to report on what we are seeing on the ground, as well as in the data itself.  If you are interested in getting in understanding how we may be able to help you with a property purchase in Brisbane  … please reach out to us at any time.