Brisbane Property Market Update March 2021

Brisbane Property Market Update March 2021

Brisbane Property Market Update March 2021

 

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

 

Housing market values across Australia continued to surge throughout March 2021, and Brisbane was no exception.  With the fastest rate of monthly growth recorded in Brisbane for several years, perhaps it is finally time for Brisbane to shine?  There are a broad range of positive factors that continue to drive this rapid price escalation within Brisbane.  This update will unpack what is happening right now and why.

 

With record low interest rates as well as improving economic conditions that continue to beat forecasts, it certainly is looking a lot brighter in the housing markets throughout the country than what was predicted 12 months ago.  But what has happened in the last month that continues to support this rapid price growth in Brisbane?

 

Firstly, the Reserve Bank of Australia have clearly stated that interest rates will not be rising again until we have inflation back within the target range of 2 to 3%.  Interest Rates are at record low levels and for many property buyers, it has never been cheaper than now to borrow funds to buy.  During March we saw more big banks cut their fixed rates.  First home buyers are getting into the market because it is often cheaper to buy then rent.  Home buyers are upgrading due to cheap money, and investors are returning to the market – driven by cashflows not previously seen due to lower overall holding costs. 

 

We have now seen the end of the fiscal support provided by the Federal Government through Job Keeper arrangements.  Many predicted that this would mark the time when property values would plummet.  However, loans on deferral fell to just $14 billion (or 0.5% of total loans) in February, according to APRA’s latest figures.  It is fairly safe to assume that the systemic risk may have now passed.

 

Lending standards remain relatively tight also.  If you have tried to seek funding you would know how rigorous the process seems to be.  Whilst there has been a modest increase in the market share of higher LVR loans due to the success of the First Home Loan Deposit Scheme (FHLDS), lending is still much tighter than it used to be.

 

Also, job ads have surged to the highest level since 2008 according to ANZ.  ABS Data has confirmed that Queensland has outperformed many other states on the jobs front, with a record high 53,500 job vacancies, so it is a very opportunistic time for job seekers to be looking for work in our State.

 

Off the back on the Homebuilder stimulus provided by the Federal Government, which has now ended, we saw a high increase in dwelling approvals in Queensland in February, up by 40.5%.  This helps us to understand that more future supply is on its way, and it is important to understand where this is going to be built throughout Greater Brisbane so that we can understand the local impact on supply and demand in certain pockets around our city.

 

So overall, the economic outlook looks bright.  It is not surprising that this is translating into high buyer demand and strong property price growth in Brisbane.  Let’s take a closer look at what is happening through the city.

 

 

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 2.4% over the month of March 2021.  The current median value for dwellings across Greater Brisbane is $548,260 which is $12,642 higher than just one month ago. 

 

The quarterly growth in dwelling values across Greater Brisbane is now 4.8% and annual growth for the last 12 months is now 6.8%. 

 

Brisbane Property Market Update March 2021

 

 

The premium end of the housing market is still leading the acceleration in capital gains throughout Brisbane.  Upper-quartile property values rose at nearly triple the rate (+3.1%) of lower quartile property values (+1.1%) throughout March, according to Corelogic data. 

 

Brisbane House Prices

 

In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 2.6% across the month of March 2021.  The 12 month change in Brisbane house prices has been 7.9%.   The current median value for a house in Greater Brisbane is $607,969, the highest it has ever been and $14,737 MORE than one month ago.

 

Brisbane House Prices

 

Brisbane Unit Prices

 

The Unit Market in Brisbane saw some more positive growth in the median value this month with another increase of 1% in March 2021.  The 12 month growth for units across Brisbane is now 1.9%, which seems to confirm that this market is not in recovery stage.   The current median unit price in Brisbane is $400,866, which is $4,683 more than one month ago.

 

Brisbane Unit Prices

 

Brisbane Rental Market Movements

 

The Vacancy Rate in Brisbane as a whole, tightened yet again between January and February 2021, and now sits at 1.5%.    The table below highlights where vacancy rates across Brisbane sit at the end of February 2021.

 

Region Vacancy Rate February 2021

(change from January 2021)

Beenleigh Corridor 0.6% (-0.1%)
Brisbane CBD 5.2% (-0.4%)
East Brisbane 1.2% (-0.2%)
Inner Brisbane 3.1% (-0.4%)
Ipswich 0.9 % (-0.2%)
Northern Brisbane 0.7% (-0.2%)
South East Brisbane 0.6% (-)
Southern Brisbane 1.6 (-0.1%)
West Brisbane 1.3% (-0.2%)

Source: SQM Research

 

Vacancy rates are generally very tight through Greater Brisbane.  At a suburb level there are still some higher risk areas and the breakdown of regions shows where some of these locations might lie.  Vacancy risk within the Brisbane CBD continues to show a rapid recovery.  With every region showing a further reduction in vacancy rates between January and February 2021, except for South East Brisbane, it is clear that a rental crisis is pending.

 

Rents in the unit market in Brisbane are now on the way up, stimulated by tight supply.  We are seeing upward pressure on rents with the annual change in unit rents now at 1.1% across the city. 

 

Housing rents continue to see strong growth, due to the tightening vacancy and also due to higher levels of interstate migration.  Everyone needs a place to call home and we are seeing high competition for quality rental properties throughout the City.  The annual increase in rents for Brisbane Houses is now 5.2% according to Corelogic Data.

 

Brisbane Rent Prices

 

 

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

 

Open homes were still heavily populated with strong attendance observed throughout the month of March.  Line ups were still evident at most properties at the first open for inspection.  Most properties listed by private treaty only required one inspection before it became a multiple offer situation with so many properties selling fast with more than 10-12 offers for vendors to consider.

 

It really is crazy out on the ground!  Competition is fierce and many buyers are taking big risks just to secure a property.  We have seen buyers putting forward unconditional offers in an attempt to beat the competition.  Being I a position to move fast and with good conditions is a huge advantage in the current market.

 

We are also seeing the timeframe for Auction campaigns reduce.  Traditionally we would see 4-week auction campaigns in Brisbane.  Now we are seeing some Agents run 2-week campaigns.   There seems to be enough buyers to justify this without waiting for all buyers to obtain finance approval to be in a position to bid under auction conditions. 

 

It certainly is interesting times.

 

The months ahead …

We believe it is Brisbane’s time to shine.  There are simply too many buyers in the market to see any slow down in price growth any time soon.  We would need to see a huge increase in the number of listings to see a slow-down in price growth.  This is because there is a lot of buyer demand that needs to be absorbed before there is a better balance between supply and demand in our city.

 

Brisbane buyers are feeling optimistic and confident.  They are making huge property buying decisions very quickly.  Brisbane is currently a strong seller’s market and prices are on the rise.  In fact prices are rising, but they are also accelerating with more rapid price growth every month since the start of 2021. 

 

Will this slow down?  It has to slow down eventually because this rate of price growth is unsustainable.  But we are seeing no signs of slow down on the ground yet so only time will tell.

 

 

 

 

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Brisbane Property Market Update February 2021

Brisbane Property Market Update February 2021

Brisbane Property Market Update February 2021

 

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

 

Like most locations around Australia the Buyer activity in Brisbane has escalated rapidly as the weeks of 2021 continue to roll around.  Each week we are seeing line ups get longer at open homes around the city.  More Buyers are active in the market and this is also reflected through the fact that most quality properties sell after the first open home with multiple offers and high prices.  This month we will explore why this is happening throughout Brisbane and what this might mean for the future.

 

With the roll out of the Covid-19 Vaccine in Australia it seems the worst of the pandemic might be behinds us.  Our economic environment seems to be a lot better right now than what governments predicted and consumer confidence has returned.

 

The level of unemployment peaked at 7.5%, far better than what was expected.  The unemployment rate is now falling with 93% of the job that were lost, now recovered.  It is expected that unemployment will return to the 4-5% range a lot sooner that what was predicted. 

 

Even the loan deferrals data up to 31 January 2021 is positive with 91% of deferred loans now resuming their repayments leaving only 0.5% of all loan facilities in deferral.

 

Domestic migration has been accelerating into south-east Queensland out of the southern states further increasing the demand for housing throughout Brisbane.  It seems this trend is set to continue, at least for the foreseeable future.  REA Insights shows that demand for housing is at record highs in Queensland, and compared to the same time last year is up 45.1%.

 

Brisbane Property Market Update February 2021

 

ABS figures this month showed that building approvals and construction volumes in the higher-density unit market in Queensland seems to have bottomed out.  Attached dwellings data has shown a slight increase in activity, whereas the data for detached house approvals is surging.  This, in part, has been driven by the HomeBuilder grant stimulus.  The figures suggest that the current supply shortage off the back of peak oversupply in 2016, may start to slowly recover in the years ahead, but time will tell. 

 

Stock levels are still very low in Brisbane, with total listing volumes down nearly 30% year on year.  No wonder it is a frenzy out there with more buyers and fewer properties to purchase.

 

 

Brisbane Property Market Update Listing Volumes

 

 

And of course, interest rates are low.  There are plenty of cashed up buyers in the market.  With the RBA not expected to increase rates “until 2024 at the earliest” there is a lot of confidence and people ready to spend.

 

With these positive news stories, more positive outlooks for the Housing Market are being published.  Westpac have now forecast 20% price growth for Brisbane across 2021 and 2022, a big change from their dire predictions less than 12 months ago.

 

And let’s not forget the big news this month.  Brisbane is officially the top choice for the 2032 Olympic Games!  This is game changing – it is the best opportunity Brisbane has had in generations.  It will turbocharge investment into the city and boost our economic activity.  We will see the fast tracking of major infrastructure projects, which will have a knock-on effect for the property market.  It really an exciting time for our City!

 

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 1.5% over the month of February 2021.  The current median value for dwellings across Greater Brisbane is $535,618 which is once again, the highest it has ever been. 

 

The quarterly growth in dwelling values across Greater Brisbane is now 3.5% and annual growth for the last 12 months is now 5%. 

 

 

Brisbane Dwelling Values

 

Of particular interest is the fact that the upper-quartile properties are leading the growth in Brisbane.  These properties represent the most expensive quarter of the market.

 

Brisbane Property Price Growth

 

Brisbane House Prices

 

In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 1.6% across the month of February 2021.  The 12 month change in Brisbane house prices has been 5.9%.   The current median value for a house in Greater Brisbane is $593,232, the highest it has ever been.

 

Brisbane House Price Growth

 

Brisbane Unit Prices

 

The Unit Market in Brisbane saw some more positive growth in the median value this month with an increase of 1% in February 2021.  The 12 month growth for units across Brisbane is now 1.1%, so it seems this market has bottomed out and is starting to recover.   The current median unit price in Brisbane is $396,183.

 

Brisbane Unit Price Growth

 

Brisbane Rental Market Movements

 

The Vacancy Rate in Brisbane as a whole, tightened further between December 2020 and January 2021, and now sits at 1.7%.    The table below highlights where vacancy rates across Brisbane sit at the end of January 2021.

 

Region

Vacancy Rate January 2021

(change from December 2020)

Beenleigh Corridor 0.7% (-0.1%)
Brisbane CBD 5.6% (-0.4%)
East Brisbane 1.4% (-0.1%)
Inner Brisbane 3.5% (-)
Ipswich 1.1% (-)
Northern Brisbane 0.9% (-)
South East Brisbane 0.6% (-0.2%)
Southern Brisbane 1.7 (-0.2%)
West Brisbane 1.5% (-0.1%)

Source: SQM Research

 

Vacancy risk continues to recover rapidly within the Brisbane CBD this month with currently vacancies now similar to the peaks between 2016 and 2018.  This is a remarkable recovery given the extremely high vacancy risk in this area during the peak of Covid-19.  Vacancy Rates across most other parts of Greater Brisbane remain tight, and in fact are tightening even further as the demand for rental properties increases.

 

Rents in the unit market in Brisbane have now recovered and we are seeing some upward pressure on rents with an annual change in unit rents of 0.5% across the city. 

 

Housing rents continue to see growth, due to the tightening vacancy.  The annual increase in rents for Brisbane Houses is 4.2% according to Corelogic Data.

 

Brisbane Rent Growth

 

 

Anecdotally we are seeing strong rent increases in the inner-city locations, especially in the premium housing sector.  Large shifts in the rents achieved when properties are advertised, are being demonstrated.  Property Management firms that we work with are also confirming this trend

  

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

 

The Saturday inspection run in Brisbane is becoming chaotic.  Line ups at open homes are to be expected.  We are seeing some Agents extend the inspection timeframe from 30 minutes to 1 hour – purely to get the volume of people through the door.  We can’t ever remember a time when we experienced this level of demand in our City.

 

Quality properties are continuing to sell after the first inspection, when listed for sale by private treaty.  Buyers need to be prepared to submit offers on the same day as they inspect in most cases.  Thankfully, some Sales Agents are providing slightly longer timeframes for buyers to submit offers, but this usually means more buyers have time to get an offer in before the closing timeframe.

 

We have been in the running for properties alongside more than 20 other buyers under multiple offer several times this month.  This level of demand is madness!  At auctions we have attended there have been several registered bidders and properties are selling well above our appraisal range based on settled sales data.

 

Of course, in a rapidly appreciating market, relying on settled sales data is a mistake.  We are coaching our buyers through the process, so they understand how much “stretch factor” needs to be applied to the settled sales data.  Depending on the location right now, this is between 3-10%.  Whilst the median data for Greater Brisbane shows price growth over the quarter of 3.5% across the region as a whole, we know for a fact that many locations have grown significantly faster than this.  So as a buyer it is important to understand the “real-time” information for an area or you may simply keep missing out.

 

The months ahead …

 

We have no doubt that the future for Brisbane property prices looks positive.  For once we actually agree with the predictions that the economists have made.  In fact, there are some areas in Brisbane where I’d argue we could see growth exceed the forecasts over the next 2 years.

 

Property prices are driven by the balance between supply and demand.  We break down these two elements to understand, at a local level, what this dynamic looks like.  Right now the demand in Brisbane is being fuelled by so many things.  Demand for housing comes from both Owner Occupiers and Investors and right now there are different motivations from these two groups.  Our own enquiry tells us that investors are rapidly coming back into the market, but they are competing fiercely with Owner Occupiers who are still the main drivers of the current demand in Brisbane.  We expect this demand to continue to increase in the coming months.  For how long it lasts, no-one knows.   But for now, we do know that for those who own Brisbane property, the future looks bright!

 

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Brisbane Property Market Update January 2021

Brisbane Property Market Update January 2021

Brisbane Property Market Update January 2021

 

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

 

The New Year has seen very strong buyer activity throughout Brisbane.  After a small Covid-19 scare causing Greater Brisbane to go into lockdown on the weekend of January 9-10, buyers have since been out in force inspecting and buying properties around the City.  This article will explore in more detail what we are seeing on the ground and also what the market indicators are telling us.

 

The latest Australian Bureau of Statistics (ABS) figures show that new loan commitments for housing and the value of owner occupier home loan commitments each reached records highs in December 2020.  Figures show an increase of 31.2% in new loan commitments compared to December 2019.  This type of data is usually a leading indicator for what is happening in relation to housing demand in the market.

 

According to APRA’s latest figures the number of deferred loans across Australia continued to decline to 1.9% in December, with Queensland’s portion of housing deferrals currently at a lower level than both Victoria and New South Wales.

 

Brisbane Property Market Update January 2021

 

Additionally, ABS data showed Queensland saw a monthly increase of 1.4% in the number of employed people in December, a sign of a strengthening local economy and a stand out performance at a national level.  Also, the number of total job advertisements jumped in Queensland by 2.5% over December, representing an increase of 20.8% over the last 12 months.  Encouragingly, the reduction in JobKeeper wage subsidies has not resulted in a negative shock to employment in Queensland as many had predicted.  The unemployment rate is still 7.5% across Queensland so there is still more work to do in this area, however the indicators are extremely positive for the future.

 

In terms of population movements, Queensland seems to be benefiting from strong interstate migration and the rate of growth has not been this high in annual terms since 2006.  Corelogic calculated that approximately 25,350 residents relocated from other Australian States to settle in Queensland over the last financial year.  Estimates from Corelogic suggest that Queensland’s interstate migration rate is 90% above the decade average.  Although the lifestyle drivers are causing some buyers to show interest in Queensland’s tourism centres, the majority of interstate buyers are looking for properties in the metropolitan areas.

 

Of course, as more people migrate to a given location, the demand for properties will increase and in the absence of rapidly increasing new supply, sale prices will rise.  Looking at the total number of listings in Brisbane according to Corelogic Data, compared to 12 months ago we are down -28.4%.  This provides an indication of the current market conditions.  It is a strong Seller’s Market right now in Queensland’s State Capital.

 

Brisbane Property Market Update January 2021

Let’s explore this further by looking at what the data is now showing us.

 

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 0.9% over the month of December 2020.  The current median value for dwellings across Greater Brisbane is $527,826 which is once again, the highest it has ever been.

The quarterly growth in dwelling values across Greater Brisbane is now 2.5% and annual growth for the last 12 months is now 4%.  Brisbane continues to outperform the national combined capital city average for annual growth over the last 12 months, which is currently 1.7%.

 

Brisbane Property Market Update January 2021

 

Regional markets have performed well recently, however according to Corelogic’s research director, Tim Lawless, “the divergence between metro and regional housing demand in New South Wales and Victoria is more substantial than in other states.”

 

Brisbane House Prices

 

In the Brisbane Housing Market, we saw median values for the greater Brisbane region increase 1% across the month of January 2021.  The 12 month change in Brisbane house prices has been 4.9%.  Based on the median price growth, a house in Brisbane that was purchased in January 2020 for $750,000 would now be worth $786,750.   The current median value for a house in Greater Brisbane is $583,902, the highest it has ever been.

 

Brisbane Property Market Update January 2021

 

Brisbane Unit Prices

 

The Unit Market in Brisbane saw some more positive growth in the median value this month with an increase of 0.4% in January 2021.  The 12 month growth for units across Brisbane is now slightly positive again at 0.4%.   The current median unit price in Brisbane is $393,177.

 

Brisbane Property Market Update January 2021

 

Brisbane Rental Market Movements

 

The Vacancy Rate in Brisbane as a whole remained consistent between November and December 2020, at 1.8%.    The table below highlights where vacancy rates across Brisbane sit at the end of December 2020.

 

Region Vacancy Rate December 2020

(change from November 2020)

Beenleigh Corridor 0.8% (-)
Brisbane CBD 6% (-0.9%)
East Brisbane 1.5% (-0.1%)
Inner Brisbane 3.5% (-)
Ipswich 1.1% (+0.2%)
Northern Brisbane 0.9% (-)
South East Brisbane 0.8% (-)
Southern Brisbane 1.9 (-0.1%)
West Brisbane 1.6% (+0.1%)

Source: SQM Research

 

Vacancy risk is recovering rapidly within the Brisbane CBD with a further reduction from 6.9% in November to 6% in December.  Whilst this is still relatively elevated, it is far better than the vacancy rates experienced at the peak of the pandemic.  Vacancy Rates across most other parts of Greater Brisbane remain tight.

 

Rents in the unit market in Brisbane have seen price falls -0.3% from February 2020 through to January 2021, whereas housing rents increased 3.4% across the same period.

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

 

Brisbane Property Market Update January 2021

 

 

Tenants are finding stock levels tight for finding a rental property in many locations around Brisbane.  There are strong crowds at open homes for rent and multiple applications being submitted on properties that become available – often well above the asking weekly rent price advertised.  The current imbalance between supply and demand in the rental market, especially in detached housing, is causing rents to rise and this is likely to show in the data in the coming months.

  

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

 

The buyer activity across Brisbane has been stronger throughout January that what we observed in the latter part of 2020.  It is now common to line up before entering a property at a Saturday Open Home.  Buyers must therefore factor this time delay into their inspection schedule on a weekend.

 

We have seen properties with more than 100 groups through in the first week of listing for highly sought-after properties.  This is unusually high demand, but not uncommon in the current market.  We are seeing very competitive offers being made and many buyers taking on high risk by submitting offers that are unconditional, even despite no building and pest inspections taking place.  This is not something we recommend, however with such short timeframes between properties being listed and then going under contract, buyers are doing what ever they can to be more competitive.  Multiple offers on properties listed for sale by private treaty is a given in the current market.  It is an extremely competitive property market across the city.

 

The months ahead …

 

2021 has started strongly as we predicted, but there is a lot of opportunity for the months ahead in the Brisbane Property Market.  The housing headwinds that were reported throughout the worst of the pandemic have dissipated.  The local economy is outperforming forecasts and the labour market is continuing to improve.

The low interest rate environment has been a catalyst for higher housing demand from buyers, and the record low rates are likely to remain low for the foreseeable future.  Interstate migration is also very strong.  We haven’t seen conditions like this in Brisbane for a long time.  Is now the time for Brisbane to really shine?  It all looks perfectly aligned for some solid price growth – that is for sure.

 

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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.