Property market update: Brisbane, March 2021

When it comes to the performance of its property market, Brisbane has remained resilient over the last year when other parts of the country suffered from the economic stress caused by the COVID-19 pandemic. The Queensland capital took a smaller hit from lower immigration and is also benefiting from people moving to the city for lifestyle reasons.

A recent report released from ANZ Bank forecasts Brisbane house prices will rise by a strong 16 per cent through 2021, before slowing to 8 per cent property price growth in 2022. This is a stark contrast to the pessimistic forecasts experts made last year.

A whole host of factors are underpinning Brisbane’s property market, including increasing consumer sentiment and demand, a surge in interstate migration, and historically low-interest rates. Recent developments, such as the national vaccine roll-out and the expected lifting of travel restrictions, are only seen to further solidify Brisbane’s stable outlook for the rest of the year. 

So, what were the highlights across Brisbane’s property market throughout March 2021?

Property values

According to the latest Hedonic Home Value Index data by CoreLogic, dwelling values in Brisbane recorded a median monthly price increase of 2.4 per cent in March. This brings the growth in the capital city’s housing values to 4.8 per cent for the recent quarter’s 6.8 per cent for the year-to-date. 

Brisbane’s median dwelling value of $548,260 continues to be attractive to anyone who is moving away from the larger property markets of Sydney ($928,028) or Melbourne ($736,620). 

Like in most capital markets,  growth in values has been skewed towards houses in Brisbane. Median values for detached houses in the city rose 2.6 per cent over the month and 7.9 per cent over the year. The median value of houses in Brisbane now stands at $607,969, the highest it has ever been and $14,737 more than a month ago. 

The unit market in Brisbane saw some more positive growth in the median value, edging up by 1 per cent over the month. The 12-month growth for units across Brisbane is now 1.9 per cent. The current median unit price in Brisbane is $400,866, which is $4,683 more than one month ago. 

Outstanding demand for lifestyle areas as well as extremely strong demand for detached houses in Brisbane, particularly in the inner and middle-ring suburbs has delivered 5.3 per cent overall growth in the last three months, with Brisbane’s more expensive properties outperforming. Brisbane’s upper quartile index rose 3.1 per cent at nearly triple the rate of lower quartile values (1.1 per cent).

Supply and demand 

At the heart of the solid market conditions in Brisbane, there is a disconnect between supply and demand. A count of national total listing numbers over the four weeks ended March 28 showed advertised stock levels were 25.5 per cent lower than the five-year average.

CoreLogic noted that the total advertised listings remained extremely low throughout March. CoreLogic’s Tim Lawless said that the main reason total listing numbers remain so low is that buyer demand is consistently outstripping new advertised supply.

“The ratio of sales to new listings is tracking at around 1.1, implying for every new listing added to the market, 1.1 homes are sold. Such a rapid rate of absorption is keeping overall inventory levels low and adding to a sense of FOMO amongst buyers,” he said. 

Figures released today by SQM Research supported this observation, as its national residential property listings slipped in March 2021 by 0.5 per cent, falling to 256,568 from 257,952.

In Brisbane, total listings rose 0.5 per cent throughout March from 24,636 to 24,763. But the yearly change showed a steeper decline in listings, posting a 17.4 slide from 29,992 seen in March 2020. 

In another sign that absorption rates are increasing, and stock is clearing, listings over 180 days fell 5.6 per cent for the month and are down 32.5 per cent compared to the same time last year, with listings down in all capital cities. 

Auction markets 

Sydney and Melbourne dominated the auction markets during the last week of March, as the cities posted clearance rates of above 80 per cent and hosted almost 87 per cent (3,291 properties) of all auctions. Around three in four auctions were for houses. The detached house segment recorded a clearance rate of 87.2 per cent, higher than the unit segment’s 75.4 per cent.

Of the 3,791 auctions held over the period, 191 were from Brisbane, with a clearance rate of 68.8 per cent. 

Archistar’s latest My Housing Market report found that all capital cities recorded sharp inclines in the median price of houses sold at auction over the year ended March 2021.

Brisbane saw the highest level of annual price growth at 29.3 per cent, followed by Sydney with 16.4 per cent, Canberra with 12.2 per cent, Melbourne with 11 per cent and Adelaide with 10.9 per cent.

“Home auction markets have soared to record highs over March, reflecting unprecedented buyer demand for available property,” said Archistar chief economist Dr Andrew Wilson.

“No surprise that strong buyer competition has resulted in surging auction prices, also now at record highs and clearly set to go higher.”

Vacancy rates 

Overall, vacancy rates remain tight across all capitals except Melbourne and Sydney. Brisbane’s vacancy rate held steady in March from February at 1.4 per cent, according to Domain. Data from Archistar’s latest National Home Rental Market Report also showed the city’s vacancy rate across both units and houses stood at 1.4 per cent.

“Unit vacancy rates also remain tight in most capitals, with the notable exception of Melbourne and Sydney where record-level inner-city apartment vacancies have resulted in sharply falling rents,” Dr Wilson said.

The areas with the highest vacancy rates in Brisbane and Gold Coast are Brisbane Inner (4 per cent), Sherwood-Indooroopilly (3.3 per cent), Brisbane Inner-West (2.9 per cent), Nathan (2.4 per cent) and Mount Gravatt (2.3 per cent). Meanwhile, Gold Coast Hinterland (0.1 per cent), Capalaba (0.2 per cent), Nerang, Mudgeeraba-Tallebudgera, and Coolangatta (0.2 per cent) had the lowest vacancy rates. 

With significant changes to JobKeeper and JobSeeker at the end of March, changes may be seen in the rents in the following months and an increase in vacant properties in the coming weeks, as significant reductions in welfare payments threaten the ability of tenants to pay their rent, heightening the risk of some tenants falling into rental stress. 

Rental market 

In March, gross rental yields in Brisbane were favourable compared to Sydney and Melbourne at 4.3 per cent. But regional landlords got higher returns, as house rents rose 5.3 per cent on an annual basis and units showed signs of life as they rose 1.1 per cent.

Overall, unit rents have been showing weaker conditions relative to houses throughout the COVID period to date. Since March last year, capital city house rents are up 5.2 per cent while unit rents are down 3.8 per cent

The declining rental vacancies are putting upward pressure on rents, according to Archistar’s latest National Home Rental Market Report for March 2021. House rents in Brisbane rose by 5 per cent to $420, while units rose 10.5 per cent to $420. 

Looking ahead, housing shortages and higher rents will continue to be evident across most capitals, including Brisbane, Dr Wilson said.

Outlook

So what can we expect in the months ahead for the Sunshine State capital?

With buyers flooding the market, experts are not expecting a slowdown in price growth any time soon as buyers are feeling optimistic and confident. According to recent research by NAB, as many as 45 per cent of Aussies believe that now is a good time to buy a home despite soaring prices, with 13 per cent planning to buy in the next 12 months.

However, an increase in the number of listings is seen to weaken the growth in property prices. 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 Brisbane.

And a higher number of listings may be on the horizon sooner than later. More than one in three home owners are planning to sell their house over the next five years as Aussies increasingly look to purchase a new home to better meet their future needs, according to a new research commissioned by Westpac and conducted by Lonergan Research. 

CoreLogic’s chief economist Mr Lawless believes, “Australians are feeling optimistic and confident in making high commitment decisions related to the property market”, though cautions that, “It is reasonable to expect the pace of growth will slow”, due to “...factors such as rising interest rates, weaker economic conditions or changes to credit availability”.