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.
The trend in Brisbane house price growth remained positive throughout the month of March, despite the outbreak of the COVID-19 virus radically changing the way we now have to live over the last 2 weeks of the month. In this Brisbane Property Market Update, the latest Corelogic Hedonic Home Value Index data shows there was an overall increase in dwelling values in Brisbane of 0.6%, which can be divided into House price growth of 0.7% and Unit price growth of just 0.1%. Interestingly, according to the same data, overall dwelling values in the Brisbane sub-regions of Ipswich and Logan/Beaudesert edged lower this month, despite value growth across greater Brisbane as a whole providing concrete evidence that Brisbane is not “one property market”.
What comes next is uncertain, as it will largely depend on the length of time that the current health and economic crisis persists. But looking at SQM Asking Prices for Brisbane, for the week ending 31st March 2020, for all houses there is a -0.1% rolling month change and -0.5% for units. Of course, when we take that down to a suburb or postcode level the story is very different with some areas showing much more positive forward indicators than others. It is important to note that asking prices do not always equate to sales prices, but is it one indicator we can look at to determine seller expectations in these uncertain times. Despite the increased inquiry we have received in relation to a potential “fire sale,” there is no evidence of this at all in Brisbane right now.
Corelogic head of research, Tim Lawless said “Considering the temporary nature of this crisis, along with the unprecedented levels of government stimulus, leniency from lenders for distressed borrowers and record low interest rates, housing values are likely to be more insulated than sales activity.”
This provides some level of confidence for the residential property sector during the next 6 months whilst all of this support is in place. Property values are unlikely to be impacted when property owners can simply stall their repayments to the banks in the case of financial hardship. Of course, the uncertainty of low long this health crisis and associated economic disruption will last is unpredictable right now, so we hope to gain further insights into this in the coming days and weeks.
There are early indicators that listing volumes will fall substantially over the coming weeks. Corelogic have confirmed that reports generated through their online platform (used for pre-listing Real Estate sales packages) have more than halved in recent weeks and Agents are also reporting both buyer and seller inquiry has fallen by more than 50%. If sales volumes do fall significantly in the coming weeks and months, then the reliability of property data in the coming months may be compromised to some extent. I have previously discussed the importance of this HERE . It is times like now that local knowledge of what that data is made up of will be critical to understand true price movements based on comparable properties.
From a rental perspective in Brisbane, the overall trend in residential vacancy rates continues to decline with city wide vacancy rates recorded at 2.2% as the end of February 2020 . When we assess at a suburb level, there are several locations where vacancy rates have been much lower (even below 1%) due to a severe shortage of rental properties available.
In the last week, there have been reports of an increase in rental listings , especially for fully-furnished properties that are no longer being listed under short term accommodation sites such as Airbnb as owners seek a more stable income source and convert those properties onto the full-time rental market during these turbulent times. According to Domain there were 1420 new rental listings between March 16th and March 29th which equates to an increase of 53% compared with the previous 4 weeks. But to date, our feedback from Property Managers in Brisbane is that properties are still being rented quickly despite a drop off in tenant inquiry, because it appears that people who are inquiring are ready to move immediately.
Forward indicators for asking rents by SQM Research show for the week ending 28th March 2020, asking rents across all of Brisbane on all houses was down -0.5% and fur units this was -0.4%. This might indicate a flattening of rent price growth, however when we look at certain locations at a postcode level it again confirms that there are markets within markets, as there are still many suburbs where we have been purchasing properties for our investor clients where asking rents are still higher for the week, month and quarter. Again, this highlights the importance of local knowledge in these uncertain times.
Having reviewed what I wrote in last month’s Brisbane Property Market Update there have certainly been a lot of unprecedented changes over the last 4 weeks! But there have also been huge changes to support the residential property market during these difficult times including interest rate cuts, enormous government support announcements, and banks freezing interest and principal repayments (if necessary). The missing link right now is support for tenants and we expect an announcement by the State Governments in the coming days in this regard. That said, many of the fundamentals for Brisbane have not changed. Supply is still down. The Infrastructure is still underway. Right now demand has dropped, but once the virus is contained, we expect economic activity to improve quickly, therefore driving a turnaround in consumer sentiment. With record low interest rates and many neutrally or positively geared opportunities in the Brisbane Property Market, on the other side of COVID-19 (and yes there WILL be the other side) we expect the demand for property in our great City to be sky high.
Brisbane continues to show underlying strength in its property market with a new record median house price set in February 2020 of $503,265. This month’s Brisbane Property Market Update can report another month of positive house price growth. February demonstrated an increase in property values of 0.6% according to the Corelogic Hedonic Home Value Index across all areas of Greater Brisbane which is in line with the national trend for positive property price growth since June last year. Of course several pockets within Brisbane are performing a lot better than others as we have explained in previous monthly updates.
Further support from the Valuer-General’s 2020 Property Market Movement Report showed that the residential median land value increased slightly in Brisbane from $455,000 to $460,000 over the last 12 months.
Brisbane’s upper quartile values are 2.2% higher over the last 12 months compared with the lower quartile, up just 1.3% so the trend shows stronger performance across premium markets. This may be attributed to the dominance of owner occupiers during the last 12 months (rather than investors) and the geographical spread of properties included in the data whereby properties closer to Brisbane’s CBD in the higher price brackets are performing better than other properties much further out.
From a rental perspective, during February, gross rental yields compressed slightly from 4.6% to 4.5% in Brisbane according to Corelogic Data This can possibly be attributed to house values rising slightly more rapidly than rental rates, but it may also be due to seasonal factors so we will be monitoring this in the coming months.
Keep in mind mortgage rates are also trending lower, with another rate cut announced on 3rd March 2020. From our review some three year fixed rate loans now being offered for an investor for as low as 3.14%, so depending on an investor’s deposit amount and mortgage structure there are still a lot of neutrally geared or positively geared property investment opportunities in Brisbane.
Looking ahead, there are a few things we are monitoring to determine the potential future impact on property values in Brisbane. Broadly speaking, the primary factors supporting the steady price growth in Brisbane remain in place. These include the low cost of debt and improved borrowing capacity. Additionally, Brisbane remains affordable with a median house price $369,669 cheaper than in Sydney and $185,823 cheaper than in Melbourne so affordability pressures are less likely in our City. Furthermore, population growth is still 2.3% greater than the decade average, economic growth is up 21.2% above the ‘normal’ decade average level of output, jobs growth is trending higher and unemployment is reducing with the lowest trend jobless rate in 10 months according to the CommSec State of the States economic performance report (January 2020) .
Of course we can’t predict with certainty right now what impact the Coronovirus may have on property values, if any. There certainly may be supply chain issues for the construction industry, slowing down the delivery of an already lacklustre level of new housing supply due to falling construction commencements over the last 12 months. Foreign Investment has already plunged by 58% year on year in the 2017/18 fiscal year to the lowest level in a decade so foreign buyers have already existed the market in years prior. Perhaps there may be some impact to properties associated with tourism, (eg – hotels and motels) and also student accommodation, again it is too early to tell. Of course we can’t estimate the impact that it may have on consumer confidence or economic growth, but looking back on the SARS outbreak in 2003, there was a sharp slowing of output growth in China for a few months, before a sharp bounce back as the outbreak was controlled and economic stimulus measures were introduced.
So whilst we are entering a period where some may see uncertainty, Brisbane is still poised to report robust growth based on the fundamentals outlined above. With continued signs of strength across many locations in Brisbane is it a great time to secure your next home or investment property in Brisbane. We look forward to discovering what next month’s Brisbane Property Market Update will uncover.
In this months’ Brisbane Property Market Update, it has been described as the “busiest January in a decade” by some real estate sales agents and we certainly agree with this statement.
Right from the first Saturday in January, we have witnessed record numbers of people at open homes, most likely fueled by the low interest rates, the limited volume of properties available for sale and rising market confidence.
Corelogic data released on 3rd February 2020 has confirmed that the median dwelling values in Brisbane rose again in January by a modest 0.5%, but when we look at houses alone this growth was 0.7% across January whereas units experienced negative growth of -0.6%. Of course, seasonal factors often result in reduced sales activity in the month of January, so we expect February will deliver a much better feel for the current Brisbane trends as activity returns to normal.
Looking ahead, interest rates are expected to see further reductions in 2020, which along with consistently strong population growth to South East Queensland, is likely to continue to support housing demand in Brisbane.
In terms of supply, according to the most recent quarterly ABS Data, published on 15th January 2020, dwelling approvals, commencements and completions are all collapsing across Queensland as a whole, despite rising population growth. Total dwelling commencements are down 27% from the previous year. Listing volumes remain 6% lower in Brisbane compared to this time last year, so this also puts limits on the available supply in the current market.
To summarize, supply is currently constrained and demand for property is huge right now in Brisbane.
If you are looking for sustained capital growth opportunities, according to Herron Todd White’s latest Month in Review, the closer you buy to the Brisbane CBD, the more likely you will see capital gains. Add to that … detached housing still attracts better growth premiums than attached housing. This is certainly supported by current Corelogic data. Commentary in the latest Herron Todd White report indicates that for a good investment location in Brisbane, you can travel further out but be nearby to public transport options, major services and employment centers.
With the First Home Buyers Deposit Scheme now in place, there is also going to be more competition in the market where properties are valued up to $475,000 in Brisbane (being the threshold that the Australian Government has applied for our City) This is something to keep in mind if you are looking to buy with a similar budget.
Gross yields are still very attractive in Brisbane, averaging 4.5%. Corelogic has confirmed that the City has experienced rental price growth of 1.8% over the last 12 months and SQM Research aligns with this showing an increase of 3.7% in asking rents over the last 12 months across Brisbane as a whole.
With interest rates at record lows (the average fixed rate mortgage for an investor was 3.48% at the end of December 2019) it is not hard to find positive cash flow properties in Greater Brisbane areas, but we urge investors to assess the potential for strong capital growth drivers in some of these locations if this is also part of an investors’ strategy.
As we always say. Brisbane is not one property market and there are certainly local pockets where growth has been much greater than the overall City average. The latest Domain House Price Report reported a number of suburbs that completely outperformed the Brisbane average – with many suburbs reporting strong annual growth well above 7% – and a few suburbs with double digit growth.
We are certainly excited by what we are seeing on the ground every week. The Brisbane market seems to be hot …. and the competition is fierce. We are monitoring closely price movements in “real time” throughout certain pockets to ensure we keep up with the very latest trends in our great city. It is interesting to monitor what we were saying 12 months ago. We will continue to write our regular Brisbane Property Market Updates to report on what we are seeing on the ground, as well as in the data itself. If you are interested in getting in understanding how we may be able to help you with a property purchase in Brisbane … please reach out to us at any time.
Property Markets around Australia have continued to perform well throughout December, and certainly Brisbane is one Capital City that has ended the 2019 year with positive annual growth. This growth has occurred mainly in the second half of the year, spurred on by lower mortgage rates, a relaxation in borrower serviceability assessments, improved housing affordability and renewed certainty around property taxation policies following the Federal election. This Brisbane Property Market Update will explore these trends in detail.
December saw price growth across Greater Brisbane inch higher, up a further 0.7% across the month according to the most recent Corelogic data . This equates to 2.4% price growth across the final quarter of 2019, which supports what we have been reporting on the ground for a few months now.
Interestingly, the Corelogic data also showed that the greatest price growth in Brisbane has occurred in the middle of the market over the month. This segment increased +0.7%, compared with a 0.1% rise across the lower quartile and steady conditions across the upper quartile.
SQM Research confirmed that property listings decreased again in December, down -14.6% for the month and down -8.4% compared to 12 months earlier. Whilst there is certainly a seasonal fall in properties listed for sale at this time of the year because it is the start of the festive season and summer holiday period, listing volumes are still lower now than they were 12 months ago in Brisbane.
Buyers are still very active in the Brisbane property market. This was the case right up to Christmas. We attended an open home just 5 days before Christmas and there were 40 groups through the property, which went to multi-offer on the same day and resulted in a contract for the seller that afternoon. The Brisbane market is certainly proving to provide some good returns for sellers at the moment!
Further to this, the Herron Todd White Residential December 2019 Report detailed that over the last 12 months in Brisbane, demand for suburbs closest to the city centre was consistently better than for most of the fringe suburbs. It was reported that cashed up interstate migrants played a role in this, searching for high quality lifestyle – oriented homes. In addition to this, it was noted that desirable school zones continued to contribute to price growth potential with higher demand in locations with good school catchments translating to premium prices. This is something we have previously highlighted as well.
According to SQM Research asking prices across Brisbane increased again in December, up +0.5% for houses for the month. This represents a total +2.8% positive 12-month change … correlating well with the Corelogic median price growth for our City across the same time period.
With Herron Todd White reporting that Brisbane is at the Start of its Recovery in the housing market and at the bottom of the market in the unit market, there are very good prospects for capital growth across our City in the near future. Brisbane currently presents with excellent indications of sustained, long-term capital gains, particularly in the detached housing market. We are looking forward to the months ahead and will continue to report trends and on-the-ground updated through our regular Brisbane Property Market Update blog series. Watch this space for further details in the months ahead!
Brisbane property values have continued to grow slowly and steadily over the last month on the back of stronger house price growth at a national level. Since our October Brisbane Property Market Update was published, Corelogic Home Value Index data has confirmed that Brisbane house prices increased 0.9% over November and units a more moderate 0.3%.
However from this point forward we will treat this data with caution as we have learned that the Brisbane results reported by Corelogic incorporate not just Brisbane, but also Ipswich, Logan, Redlands, Moreton Bay, Lockyer Valley, Scenic Rim and Somerset – a geographical spread of more than 32,000 km2.
This is not Brisbane … this is South-East Queensland!
Nevertheless, at this time of the year at the back end of the Spring Season we expected to be reporting that a lot more properties became available for sale. But this has not been the case. Advertised stock levels have been persistently low, which has created a sense of urgency in the market as buyer demand had escalated.
A total of 4,039 fresh listings were added to the Brisbane market over the first four weeks of November, tracking almost 14% lower than a year ago and 11% below the decade average. This was the lowest number of new listings added to the market for this time of the year since 2012. Total listing numbers also remain relatively low across Brisbane. There were 20,704 properties advertised for sale across the market over the past four weeks, which was 8.1% lower than a year ago and 3.7% below the decade average.
Brisbane’s Prestige Market is firing with recent reports of multiple properties selling above $3M within a single week. The biggest selling point for this market appears to be land size and the width of the frontages … and this segment is being driven by an increase in the number of people downsizing and pressure from southern buyers according to Sales Agents who have been involved in these transactions.
SQM Property index reports show that the asking price for Brisbane houses has increased 2.1% over the last 12 months, but has decreased 2.1% for units. Furthermore, rental yields continue to improve with a 2.6% increase in the weekly rents index for houses and a 1.4% increase in the same index for units.
With overall vacancy rates still trending downwards and at a City level sitting at 2.3% we clearly have a tight tenancy market. In fact, there are some suburbs in Brisbane that currently have vacancy rates less than 1% … proving there may already be a shortage of quality investment properties available for the growing rental demand that exists in some pockets.
Coming towards the end of the year, we expect a further drop in new listings … but often this time of year brings some increased activity in the off-market space. A lot of buyers will pause their search and focus on the festive season so demand may also drop off. These circumstances often create buying opportunities for those who are still actively looking to secure a property over the coming weeks. Let’s just hope by the time we are writing the next month’s Brisbane Property Market Update we see more new listings at the start of 2020 so that the current buyer demand can be met and so there is less competition for properties in the foreseeable future.
It appears that property values around the nation have continued to trend higher in October and Brisbane certainly follows this positive month-on-month gain. Since last month, we are even more excited about what we are seeing on the ground. In this month’s Brisbane Property Market Update we can report that buyer activity is really starting to push prices up in some pockets around our city, which is great news for those who already own property in Brisbane, and also those just getting into the market now.
The CoreLogic Home Value Index Results for October confirm a further 0.8% increase in Brisbane dwelling values, pushing the median price growth for the quarter up to 1.1%. Houses and units saw similar price growth this month with 0.9% and 0.8% respectively.
Relying on overall median price growth trends for an entire City can be somewhat misleading for investors and property owners who want to understand what may be happening at a more local level. AS we have said before, Brisbane is not one property market – there are markets within our City that are certainly performing a lot stronger than the overall median trends. Let me give a couple of examples.
In a northside suburb, about 15km from the CBD, we recently attended the first open home for a property listed for sale just 3 days prior. The listed price was $519,000 so the property was in an affordable location and appealed to a wide range of buyers including first home buyers, families, investors and downsizers. There were more than 30 groups through at the first inspection (indicating very high demand) and the property received multiple offers on the same day – 7 offers to be precise. This property was located in a suburb where new listings are few and far between, so the supply of homes available for sale is very limited. This puts an enormous mismatch between supply and demand and the result was that the price escalated and it ended up going under contract for just under $550,000 – about $30,000 more than the asking price.
In another example, we attended an auction in another Brisbane suburb last weekend, and there were 22 registered bidders who were keen to secure the property. When we performed our comparative sales analysis we knew similar properties in the area had sold for around $550,000. We also knew that these sales had taken place in a different market … either late in 2018 or early in 2019 before all of the current buyers entered the market created the renewed confidence that we are now experiencing. The property sold under the hammer for just under $650,000 – nearly $100,000 MORE than the last comparative sale in this area, which represents a shift of approximately 20%. So, there are 21 other buyers still looking to purchase in this area and every time they miss out, FOMO sets in and they often stretch their budget a little more. Again, this type of competitive pressure is representative of the current market in certain pockets around Brisbane.
Except for properties that we have been lucky to secure off market for our clients, every property that we have purchased that has been listed on the market over the last 2-3 months has been under multi-offer. This has included properties in many different suburbs across many different price points.
Like any data, it is important to understand what information contributes to the median value. CoreLogic Hedonic Home Value Indexes that we report on each month include sales from many areas of Greater Brisbane including the Brisbane local government area as well as Moreton Bay, Redlands, Ipswich, Logan and the Gold Coast. There are so many different markets across these regions and certainly many that we do not consider to be investment grade, so whilst the median price growth trends provide some certainty that our markets are heading in the right direction, it is important to get some further understanding of what we are seeing on the ground every single day around Brisbane.
In terms of rental markets, Brisbane was one of only two Capital Cities around Australia to record rent price growth this quarter – up 0.2% with median gross yield for Greater Brisbane now sitting at 4.6%. Again, this data includes many of the investment properties located outside of the Brisbane local government area. Gross yields typically decrease as you move closer to the CBD but even in our Blue Chip suburbs our rental return is comparatively a lot more attractive compared to the yields that can be achieved in the Melbourne and Sydney property markets.
With the average 3 year fixed rate investor mortgage now at 3.8%, more properties around Brisbane will be showing a positive cashflow for investors and therefore tenants may actually be better off buying their own property as opposed to renting. Understandably, not everyone qualifies for a mortgage and saving for a deposit can also be hard. But with the Federal Government’s incentives about to kick in in January 2020, now might be the perfect time for many to make a start on the property ownership ladder.
We are certain that, at a suburb level, we are seeing significant price growth in many pockets right now. The data is recorded based on settlements, so it is slightly delayed, and this must be considered as well. If you are relying purely on data to select your Brisbane Investment Property then you may have already missed the boat! We hope you have enjoyed this month;s Brisbane Property Market Update and we look forward to bringing you more of the latest trends next month.
September is the first month of Spring, and housing markets around Australia have made further progress towards a recovery. In Brisbane, it is still slow and steady, but the trend in dwelling values is still upward.
The Corelogic hedonic home value index at the end of September confirmed a further 0.1% rise in dwelling values across wider Brisbane. This can be further assessed by houses and units which show the price growth trend for September is upward for houses, but not units. Houses recorded a 0.2% increase in values whereas units demonstrated a -0.2% decrease over the same period.
Vacancy Rates for Brisbane are, in most cases, still trending downward with some variation by suburb. The overall Brisbane Vacancy Rate is sitting at 2.5% according to SQM Research, so any suburbs which are sitting higher than this are likely to have supply issues in the current market. There are a number of suburbs that we are actively buying in which have vacancy rates below 2% which demonstrates the extremely low supply of properties available for rent.
Additionally, asking rents over the month of September according to SQM Research showed that Brisbane is the only Capital City to record an increase over the month for both houses and units. Asking rents increased 0.6% for houses and 0.9% for units which represents a 12 month change in asking rents for Brisbane houses of 3.5% and units of 1.9%.
This is good news for investors as the yield for many properties in Brisbane is a lot better than the yields that could be achieved when comparing investment properties in Sydney and Melbourne. And, of course, with the capital growth projections of around 20% over the next 3 years that have been reported by BIS Oxford Economics and the QBE Housing Market Outlook Report, the total investment return in Brisbane is likely to be superior in the immediate future.
Recent results from the Property Investment Professionals of Australia (PIPA) Investor Survey Report for 2019 showed that Brisbane is the number one state capital with the best investment prospects, with 44% of respondents indicating that our city has more positive prospects. This is ahead of Melbourne at 27%, Sydney at 14% and Adelaide at 7%. This is potentially one reason why buyer demand in Brisbane continues to grow.
Generally when we see increasing demand, coupled with decreasing supply, there is upward pressure on prices. It seems Brisbane currently has the perfect recipe for growth. The latest SQM data confirms that the number of properties listed for sale from August to September actually fell by 4.8% over the month. New listings fell slightly, but it seems older listings that had been on the market for some time, fell away significantly. But when we compare the data for listing volumes at the end of September in Brisbane with the data from 12 months ago, it shows a massive 17% reduction in properties available for sale. Coupled with falling building commencements, this obviously creates an enormous imbalance between the underlying driver of prices in the property market being supply and demand.
And what is happening on the ground? Some new listings are being sold within days, many are going to multi-offer, record numbers are being seen at some open homes and when a property is listed for auction (which is not the most popular way to sell a property in Brisbane) we are seeing a lot more registered bidders attempting to secure their ideal property. We are still seeing prices increase in many pockets around the City, often with properties selling for more than the asking price, and whilst the overall median value is only moving marginally, suburb specific price movements are expected to be a lot greater in certain pockets.
With these underlying conditions in place, a stable economy, buyers now experiencing better access to borrowed funds and interest rates coming down, we continue to remain optimistic about the future for Brisbane property price growth.
Slow and steady is the best way to describe the performance of the Brisbane property market so far in the nationwide recovery in property markets around the country since May this year. The current data collected for this Brisbane Property Market Update August 2019 shows that for the second consecutive month, Brisbane property values have increased, which confirms what we have been reporting from being on the ground every day. Let’s explore what this means for property buyers.
Brisbane Property Market Update August 2019 – Data
Corelogic data released on 31st August 2019 shows that Brisbane dwelling values increased a modest 0.2% across the month, the same price growth that was reported in the previous month.
Underlying demand continues to remain strong with more homebuyers recently entering the Brisbane market as well as increased investor interest – especially from the southern states. Every property that we have purchased over the last 3 months on behalf of clients (that was not off-market or for sale by auction) has resulted in a “Multi-Offer” situation where more than one buyer had submitted an offer to buy the property at the same time. These properties were also all new listings … have been on the market for less than 7 days by the time they went under contract. This is a further demonstration of very high demand from buyers for quality properties that are well located.
Brisbane still presents as a very attractive investment option for investors due to our strong rental yields and relative affordability in comparison to Melbourne and Sydney.
Rental rates increased again in Brisbane over the month of August with gross rental yields in the greater Brisbane region at 4.6%, up from 4.4% this time last year. Overall, our vacancy rates are also trending downward which shows there are less properties left vacant for extended periods of time – another positive for investors.
Of course it is necessary to consider the vacancy rates on a suburb by suburb basis as this trend does depend on more local drivers in an area. We are still finding that well-priced, good quality properties across Brisbane are more scarce at the moment, and there are fewer of them being offered for sale. Of course, this limits the “supply” side of the equation in determining property price growth. Coming into Spring, we are expecting more properties to become available for sale and this is further supported by early indications that vendors are gearing up for the spring selling season because property stylists – who dress the homes for sale- have reported a marked increase in business.
At the moment, we are still monitoring unit supply with a certain level of caution – especially in the inner city market. The two precincts in the inner north (Fortitude Valley, Newstead and Bowen Hills) and the inner south (South Brisbane and West End) have accounted for 49% of inner city medium and high density building approvals (just over 14,000 units) over the past five and a half years according to the Residential Property Market Report (2019) by CBRE. Since 2016, these precincts have accounted for a 70% increase in stock with 10,500 units completed.
Whilst the development cycle in the inner city unit cycle has effectively come to a halt, there are a further 14,500+ units currently either under construction or with a development approval in place. Whilst it is likely that many of these are on hold at present, property buyers need to understand how another wave of hyper development may impact on property values in this region, as well as surrounding areas such as Wooloongabba, Dutton Park and even the CBD where new or upgraded rail stations will be developed as a result of the cross-river rail project which is currently under construction.
The shift in Brisbane dwelling values is consistent with price movements in Sydney and Melbourne in August as well. We believe that buyer demand and confidence is responding well to the positive effect of a stable federal government, as well as lower interest rates and the easing in credit policy. We remain optimistic about the months ahead.
For information about how we can help source your home or investment property in Brisbane, please get in touch.
In this Brisbane Property Market Update July 2019, we summarize the latest data and provide insights into what we are seeing on the ground as well. July has finally delivered some price growth in Brisbane property values according to the latest monthly data released by Corelogic on August 1. We suggested in our last monthly update that the data is often retrospective to what we are seeing “on the ground.” Since the Federal election in May, and also the stimulus from decreased interest rates and the loosening of credit markets, we have seen buyers out in force and a lot more people have entered the market looking to secure a property in Brisbane.
The main issue in Brisbane, that we have at the moment in relation to property, is that there are not enough new properties being listed. In fact, listing volumes are down 21.5% in Brisbane compared to this time last year according to CoreLogic Data.
Of course, we know when there is limited supply (ie: fewer quality properties for sale) and increased demand (ie: more buyers looking for property), this puts upward pressure on prices.
Brisbane Property Market Update July 2019 – Data
So, we now have a confirmed month on month change in overall dwelling values in Brisbane from June to July 2019 of 0.2%.
This is broken down further to reflect a 0.3% change in house values and a 0.1% change in unit values, so single homes are definitely leading the way. This is very positive news for Brisbane.
Reports from NAB residential property index have demonstrated that Queensland is the only State within Australia that has demonstrated a shift from negative to positive sentiment between the first and second quarters of 2019, which is more good news for our region.
And if you missed the predictions, BIS Oxford Economics have recently predicted that Brisbane house prices will increase by 20% over the next 3 years, leading the projected growth for all capital cities across Australia. Now might just be the perfect time to ensure you are positioned to benefit from this.
Furthermore, asking rents in Brisbane have demonstrated a further increase this month, which provides confidence for investors looking to maximise their investment yields. This is in contrast to Sydney and Melbourne markets where the monthly change in rent was negative.
The Brisbane market is in favour of landlords with residential vacancy rates well below 2% in many pockets and trending downward. This is on the back of limited new supply of housing coming to the market with building approvals down in the order of -21% compared with 12 months ago.
Outlook for the Brisbane Property Market
So overall Brisbane’s property market looks bright. Whilst we did not see the losses that Sydney and Melbourne have experienced over the last couple of years, our market certainly slowed down because of the negative sentiment that filtered through nation-wide. But the data now shows a small turn around and the projections look bright. With another possible rate cute before the end of the year, it is possible that even more optimism may creep in over the coming months. Get in touch today, to find out how you can capitalize on these opportunities in Brisbane.
AS PUBLISHED IN AUSTRALIAN PROPERTY INVESTOR MAGAZINE (CLICK HERE)
The month of June brought a lot of positive news for property markets around Australia. At the time of this month’s Brisbane Property Market Update June 2019, the Reserve Bank has cut interest rates to an all-time low, with a further reduction in July and an expected cut again in the coming months. This, on the back of no changes to negative gearing or capital gain tax policy and the banking regulator changing lending rules that will make it easier for people to borrow money, has all come at the same time injecting a lot of positive sentiment back into property markets around the country.
Following all of this news, Domain have provided House Price Forecasts from now into 2020 with the Brisbane Property Market median house price tipped to increase between 4-6% over the next 18 months.
As always, we must remember that Brisbane is not one Property Market and therefore local data needs to be analysed to determine the pockets in Brisbane that are more likely to outperform, compared to others.
Brisbane Property Market Update June 2019 – On the Ground Update
The average number of attendees at open for inspections in Brisbane is up 15% compared to before the election which confirms what we have been seeing on the ground with record numbers at some open homes in popular pockets around the city.
Whilst this may suggest a turnaround in the local Brisbane market, the latest monthly Corelogic Hedonic Home Value Index shows that the housing market outcomes are still relatively soft in Brisbane with a monthly median value decline of -0.52%.
The latest SQM Research has also revealed that Brisbane has experienced a -4.4% reduction in listing volumes.
We would normally find that when there are more buyers in the market than there are properties available for sale, there is likely to be upward pressure on prices, but perhaps the median values are more of a reflection of WHAT is selling around our City because we have certainly been witness to some properties more recently which have sold for higher than expected prices – something that is not reflected in the monthly median values reported by CoreLogic. Or perhaps it is just a more local phenomenon in the locations we are actively buying in.
The latest monthly data still confirms that over the last financial year, 4 areas within Brisbane are still performing within the top ten capital city sub-regions across Australia which is reassuring that things are not as bad as some may seem.
A recent media report found that over the last 12 months, 83 Brisbane suburbs recorded annual price growth above 5% (including 20 suburbs with double-digit growth) and another 100 had recorded growth below 5%. This means that 7 out of 10 Brisbane Suburbs have median prices higher than a year ago. As we keep referencing, there are always markets within markets.
Gross Rental Yields in Brisbane are still rising and the latest results show investors can expect a 4.5% return, which is still a lot higher than Sydney at 3.5% and Melbourne at 3.5%. Perhaps this is the reason why there is still so much interested in Brisbane from interstate investors.
Of course, we still have strong population growth and everyone needs somewhere to live. With the inner city apartment oversupply coming to an end, and construction commencements falling, things are still looking optimistic for Brisbane in the future. Get in touch today if you would like professional assistance with selecting the right asset in the Brisbane market, we are here to help.
AS PUBLISHED IN AUSTRALIAN PROPERTY INVESTOR MAGAZINE (CLICK HERE)
May has been an interesting Month in Brisbane property which, from being on the ground, can be described as a two-speed race. This Brisbane Property Market Update May 2019, summarizes what we have seen.
Prior to the Federal election on May 18, listing volumes were down, there were limited buyers actively in the market and it was generally flat and unexciting. But almost instantly following the election, the speed seems to have significantly changed. Our enquiry has picked up. People we have not spoken to for 2 or 3 months are saying they are now ready to buy. There are more buyers at open homes and Sales Agents have told us they are experiencing the same this so it seems to be across the board.
Why might that be? Well, the 2019 Federal Election results have removed the uncertainty surrounding changes to capital gains tax and negative gearing policy which should see some improved confidence for buyers looking to enter the market, especially investors.
No-one likes uncertainty – especially when the impact of potential change is unknown. But there have also been a variety of announcements since the election that are also likely to have a positive impact on housing market conditions.
We are now likely to see serviceability assessments reduced from 7.25% to a 2.5% buffer above the actual mortgage rate being offered, which is a more practical level of assessment of a borrower’s capacity to service a loan. This will potentially improve access to credit and enable some buyers to access more funds to purchase a property, therefore having a positive impact on housing demand. In saying that it is still tough to access credit because lenders are continuing to scrutinize expenses and borrowers’ income is also being investigated in more detail.
So… to the Brisbane property market performance … not surprisingly there was not a lot of change in May.
Brisbane Property Market Update May 2019 – Data Summary
The Corelogic Hedonic Home Value Index recorded a slight fall in median dwelling values of -0.5% across the month which now shows an annual decline of -2.3%. In saying that. Other Data collated by SQM Research shows the 12 month change in Brisbane house prices is up 0.7%, so it depends on what data you wish to rely on.
At a national level, the rate of decline in dwelling values eased once again and in May, national values recorded the smallest month-on-month decline since May 2018. The broad nature of the housing downturn has now found half of the top ten best performing capital city sub-regions are actually reporting a slight negative annual result for housing value movements. In saying that, Brisbane still has three sub-regions in the top ten across capital cities throughout Australia (two regions in Moreton Bay and one in the western suburbs), thus demonstrating the resilience of some sub-regions over others in our capital city.
Gross yields in Brisbane are showing positive growth and according to the Corelogic Hedonic Rental Index they are currently sitting at 4.6%, which is above Sydney, Melbourne, Adelaide and Perth, but slightly behind ACT, Darwin and Hobart. The SQM Rents Index shows 12 month rent growth of 2.4% for Brisbane property investors. Vacancy Rates are also tight across the city at 2.6%, with some regions recording even tighter vacancy at less than 2%.
The development supply in the inner city has effectively come to a halt. Since 2016 we have seen an increase of approximately 70% of unit stock in inner city medium and high density buildings. Whilst there are a further 14,500+ units with development approval, a large number of those are on hold at present. This is likely to have an impact on shorter term supply.
The fundamentals have not changed in Brisbane over recent months. Our city still has accelerating population growth, enormous spending on new infrastructure and declining building commencements pushing the supply and demand ratio out of balance. This is likely to put upward pressure on prices. Already since the election we have seen some properties go under contract for prices higher than other comparative sales in the area. If this was a one off, we could discount its effect … but it is something we have seen on a few properties which may be reflective of renewed optimism and a greater appetite for quality property in our City. Now that a lot of the headwinds have lifted, we are certainly optimistic about the months ahead.
To get professional assistance on your Brisbane property purchase, please get in touch with our professional team today.