Property market update: Brisbane, August 2021

Unlike its bigger capital city peers, which have shown signs of slowing price appreciation in the recent months, Brisbane’s monthly rate of growth has been consistently high since May. 

Nationwide headlines are indicating that property markets are losing steam. CoreLogic’s research director, Tim Lawless, said that the slowing rate of growth probably has more to do with worsening affordability constraints than ongoing lockdowns. 

“Housing prices have risen almost 11 times faster than wages growth over the past year, creating a more significant barrier to entry for those who don’t yet own a home,” he said. 

He added that while lockdowns are also having a clear effect on consumer sentiment, they had a “ less impact on [the] price growth momentum”. 

So why is the Brisbane property market bucking the national trend in terms of house price growth? 

It’s important to note that the city also saw its share of lockdowns. At the start of August, the city faced a short lockdown to control the spread of the Delta COVID variant with buyer and seller activity almost at standstill until the second week of the month.  

According to experts, what makes Brisbane different from other capital city markets is that it doesn’t show the same affordability challenges as the larger cities, which may help to explain the persistently high rate of growth. 

Additionally, the city also had fewer outbreaks of COVID and a strong interstate migration tailwind propping up housing demand in the absence of overseas migration.

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

Property values 

The latest data from CoreLogic showed that the average dwelling value in Brisbane increased by a further 2 per cent during August, the same rate of dwelling growth seen in July. This brings the current median property values in the city to $612,377, which is $13,672 higher than one month ago.

Meanwhile, Brisbane’s quarterly growth in dwelling values is now 6.1 per cent, indicating a slight pick up again since the previous month. Housing values in the city are now 18.3 per cent higher over the year. 

The trend of the housing sector outperforming the unit sector – which has been the case every month since October 2020 – continued through August. But the unit sector has marginally closed the performance gap, rebounding in July and August from the price growth momentum between May and June. 

The housing market has consistently notched 2.2 per cent monthly gains in the last three months, which saw a slight deceleration in August. Median values in the city’s housing market rose 2.1 per cent on a monthly basis to a median of $691,214 – their highest value ever and $16,476 higher than the previous month.

Year-on-year data also impressed market observers with the 12-month change in Brisbane house prices at now at +20.2 per cent. 

The city’s unit market saw further gains in the median value and a further acceleration in the pace of growth in August. Month-on-month, units saw a 1.4 per cent increase, significantly stronger than the 0.8 per cent seen in the previous month. The 12-month growth for the sector now stands at 8.9 per cent, with the median unit price in Brisbane at $425,777, which is $6,635 more than one month ago. 

Supply and demand  

The significant gap between the available supply and solid demand is another reason for the consistent increase in housing prices in Brisbane. 

Latest figures released by SQM Research showed that residential property listings in Brisbane declined in August 2021 by 10.3 per cent to 23,203 from 20,804 in July 2021. Compared to the same period last year, total listings in the city have fallen by 28.2 per cent from 28,995 in August 2020. 

CoreLogic’s data showed new listings have edged up by 5.3 per cent in Brisbane compared with the equivalent period last year but the total listings are down by 29.1 per cent. This indicates that more buyers are making compromises and purchasing properties that may have been on the market for a longer period.

This is corroborated by SQM’s data, which showed that old stock (or properties that have been on the market for more than 180 days) in Brisbane dropped by 10.9 per cent in August 2021 and they are down 59.4 per cent over the year. 

In another indication of strong demand, transaction activity across the Queensland capital remains strong. According to CoreLogic, sales volumes in Brisbane rose 47.5 per cent in the year to July 2021, an annual change that indicated the heightened demand from buyers across the city.

Over the last 12 months, CoreLogic estimates that the number of home sales in the city is approximately 41 per cent higher than the five-year average, while total active listings are 30 per cent below the five-year average. 

Melinda Jennison, the managing director of Streamline Property Buyers, said that the growing demand is not surprising given that mortgage rates are so low. In an article for SPI, she stated: “They (mortgage rates) have fallen by about 110 basis points since July 2019. This means that housing interest payments as a percentage of household incomes has declined from a peak of 10.6 per cent in 2008 to now just 4.7 per cent across Australia”.

The real estate executive also commented that “mortgage stress is not something that a lot of households have to worry about at the moment”. 

Auction rates  

In another show of its property market’s strength, Brisbane’s clearance rates tracked record-highs in August. 

According to Streamline Property Buyers, Brisbane’s clearance rates throughout August 2021 tracked between 73 per cent and 80 per cent, a remarkable improvement from the same period last year, when clearance rates came in between 35 per cent and 58 percent. 

Meanwhile, Brisbane was among the frontrunners in Domain’s latest auction data, just behind Sydney and Canberra. The city recorded the highest monthly clearance rate of 60.1 per cent since Domain’s records began, indicating an unusually strong competition and demand over the final month of winter.

Houses that went under the hammer during the month recorded a clearance rate of 63.6 per cent with a median price of $990,000. The unit market fell behind houses with a clearance rate of 35.8 per cent with the median price at $557,500. 

Rental market 

Over the last 12 months, rents for Brisbane houses have risen by 10.1 percent, indicating a 0.7 percent increase from July. 

Meanwhile, unit rental incomes in the city have recorded an annual increase of 5.6 percent in August, indicating a 1 percent increase from June. 

Gross rental yields for dwellings in the city are compressing even further as rising dwelling prices outpace rent price growth. At a city-wide level, gross rents have fallen again this month to 3.9 per cent, down a further 0.1 per cent from last month, a new record-low for Brisbane. 

Vacancy rates 

SQM Research revealed that there were 4,732 vacant residential rental properties in Brisbane in August, which is down from the 4,651 vacancies in July. Despite the decline, Brisbane’s vacancy rate was unchanged at 1.3 per cent on a monthly basis. 

There was a small increase in vacancy in the Brisbane CBD, which contrasts with the trends observed in previous months.

Louis Christopher, managing director of SQM Research said that the lockdowns have impacted vacancy rates in August. He noted that in addition to SQM recording new declines in rental vacancy across the regions, CBD rental vacancy rates have also surged again over August. 

In the coming month, the expert expects vacancy rates to decline again. “We anticipate that vacancy rates will fall again over the month of September. Weekly listing updates through to the 12th of September suggest a further tightening of conditions and so it is reasonable to expect another surge in rents in most areas except for the CBD locations,” he said. 

Despite the increase in vacancy rates in Brisbane CBD, vacancy remains tight across the city. While Domain’s data showed that vacancy rates also nudged higher from 1.3 per cent in July to 1.4 per cent in August, it noted that the city’s current monthly rate remains tight and is sitting close to multi-year lows.

The areas with the lowest vacancy rates in Brisbane and Gold Coast were Caboolture – Hinterland (0.3 per cent), Nerang (0.3 per cent), Gold Coast Hinterland (0.3 per cent), Capalaba (0.3 per cent), and Ormeau – Oxenford (0.3 per cent). Meanwhile, the areas with the highest vacancy rates were Brisbane Inner (4.1 per cent), Sherwood – Indooroopilly (2.6 per cent), Nathan (2.4 per cent), Brisbane Inner – West (2 per cent) and Brisbane Inner – North (1.9 per cent).  

Outlook 

With strong demand, low supply and comparatively more affordable properties than its bigger capital city peers, everything’s coming up roses for Brisbane as the real estate market head into what is considered to be its busiest time of the year: spring season. 

According to CoreLogic, new listing numbers can be expected to ramp up in Brisbane leading up to spring. However, local experts say that demand will likely continue to outpace the demand from buyers in the market right now. This, in turn, is seen to continue driving up prices in the city in the coming months. 

Experts also advised to look out for other potential headwinds that can affect Brisbane’s property market, such as further lockdowns from the COVID Delta outbreak, tighter credit policies and affordability constraints.