Brisbane property market update November 2021

Housing affordability is less pressing in Brisbane, and we have had fewer lockdowns due to COVID-19. Additionally, we have continued to see a positive rate of migration, especially from those moving interstate. This continues to fuel the housing demand throughout the city.

Listing volumes are also a lot lower in Brisbane with 33.9 per cent fewer properties available for sale in the four weeks up to 28 November 2021, compared with the five-year average. This is different to Sydney, where listing volumes are more in line with the long-term average, and Melbourne, where listing volumes are actually 7.9 per cent above the long-term average. These differences in supply dynamics are certainly playing a part in the upward price growth momentum in Brisbane. 

With the stimulus from the federal government boosting construction, new builds in fresh estates are thriving, but this is having little impact on the low supply levels of established properties in locations where there is a scarcity of land and high demand. These are the locations where we are seeing maximum price growth.

A number of predictions have been made in relation to the direction of the Brisbane market both next year and into 2023. According to some of the big banks and also SQM Research, the outlook for 2022 looks positive, regardless of the projected scenario. 

Source: SQM Research

Looking further ahead towards 2023, the predictions for Brisbane property values range from price falls of 1 per cent (Westpac) to price falls of 8 per cent (Commonwealth Bank). Obviously as we look further into the future, the assumptions are also less reliable. Therefore, we prefer to report on the outlook once we have more certainty about when there will be any potential increase in interest rates as well as other impacts that could influence the demand for property such as changes to credit policies and the economic recovery as a whole. 

This month we did see tighter credit conditions come into effect with new applications for finance now being assessed with an interest rate buffer of 3 per cent above the current mortgage rates, which is an increase of 0.5 per cent from where it was prior. We are yet to see any impact associated with this change throughout Brisbane.

There is definitely no slowdown in the demand for property in Brisbane at this time. In fact, sales volumes have been 51.5 per cent higher in the 12 months up to October 2021 compared with the same period last year. There is a high volume of property transactions occurring, which is evidence of the confidence that buyers have in the Brisbane market.

There has been a shift in the composition of buyers recently with lending data now showing that first home buyers have dropped to 26.9 per cent of all loan commitments. Instead, we are seeing an uplift in investment buyers with investors now making up 32.8 per cent of all lending commitments across Queensland.

Whilst fixed interest rates have started to climb, the Reserve Bank has been clear in that a number of conditions need to be met before the official cash rate does increase.  Specifically, they have confirmed that the inflation rate needs to be sustained within the 2-3 per cent range before any changes will be made. The latest inflation figures showed a rebound in the last quarter, although the factors contributing to this result (i.e. higher commodity prices and supply chain issued) may be mitigated over time. Additionally, with international borders reopening, wages growth may be suppressed, another factor that may delay any sustainable change to inflation. Time will tell, but when the official cash rate does start to rise (and it will at some point) then it is likely that the rate of any increases will be gradual so that any impacts on the economy can be assessed.

With the vaccine roll-out in place, we also now find ourselves in a position where international migration will again be possible. This will add further ongoing demand to housing markets.

In this month’s update, we outline the performance of the Brisbane property market across all sectors.

Brisbane property market prices

The latest Hedonic Home Value Index data by Corelogic released on 1 December 2021, has confirmed that the median dwelling value in Brisbane increased by 2.9 per cent over the month of November. This price growth is a further 0.5 per cent growth compared to the growth observed in Brisbane last month, which is evidence that in Brisbane, the momentum of price growth continues to accelerate.  The current median value for dwellings across Greater Brisbane is $662,199 which is $20,102 higher than just one month ago.

The quarterly growth in dwelling values across Greater Brisbane is now up 7.4 per cent. Annual growth for the last 12 months for Brisbane Dwellings is now 25.1 per cent.

Source: CoreLogic

Brisbane’s higher value properties are still driving the growth as you can see in the CoreLogic Data below. In the three months to October 2021, the top 25 per cent of values experienced 7.3 per cent growth (up from 6.7 per cent at the end of September) compared with 5 per cent growth in the lowest 25 per cent of property values across the city (up from 4.2 per cent last month). Even the middle 50 per cent of values in Brisbane saw an increase in the three months to October of 6.1 per cent, compared with 5.7 per cent growth in the three months to September. All segments of the Brisbane market are in a strong growth phase right now, but the top end of the market is growing at the fastest pace.

Source: CoreLogic

Brisbane house prices

The Brisbane housing market is on fire! We saw median values for the greater Brisbane region increase 3.2 per cent in just one months throughout November, up from 2.8 per cent growth throughout October. This is a new record high for monthly growth figures recorded for Brisbane in the current property boom. The 12-month change in Brisbane house prices has been 27.9 per cent. The current median value for a house in Greater Brisbane is now $757,194, the highest it has ever been. This is $25,802 more than one month ago! Every month this seem to keep growing and growing.

Source: CoreLogic

Brisbane unit prices

The unit market in Brisbane retracted slightly again in its rate of growth throughout November 2021. Units were up 1.1 per cent this month, compared with 1.3 per cent last month. The 12-month growth for units across Brisbane is now 11.4 per cent. The current median unit price in Brisbane is $443,981, which is $6,895 more than one month ago.

Source: CoreLogic

Summary of price growth in Brisbane for the year to date

The graph below charts the percentage change in property values for houses and units since January 2020 for both houses and units in Greater Brisbane.

It is obvious that the housing sector is continuing to outperform the unit sector in Brisbane on a month-to-month basis. This has been a trend observed since October 2020 and has become especially apparent in the last two months where we can clearly observe a divergence in the rate of growth in the different property types. 

Below we have charted the actual median value changes for houses and units across Greater Brisbane since January 2021. You can see the median value for houses has increased $173,292 over the last 11 months, whereas the median value for units has increased $50,804 across the same period of time. In simple terms, the growth in the dollar value of houses has been 3.4 times the growth in the dollar value of Units throughout Greater Brisbane during 2021. 

Brisbane rental market movements 

Vacancy rates at a city-wide level in Brisbane remained stable between September and October, at 1.4 per cent. The table below highlights where vacancy rates across Brisbane sit at the end of October 2021.

Source: SQM Research

Vacancy remained relatively unchanged this month across every sub-region throughout Greater Brisbane. These tight vacancy rates are continuing to put upward pressure on rents throughout the city. 

Housing rents have demonstrated annual growth in Brisbane of 11.7 per cent according to Corelogic Data, which is up a further 0.4 per cent compared with one month ago.

Rental incomes in the unit market throughout Brisbane have seen an annual increase of 6.8 per cent, up 0.3 per cent compared with last month. 

Gross rental yields for dwellings across all of Greater Brisbane according to CoreLogic remained have slipped slightly lower this month due to property values rising faster than rents. As at the end of November, the gross yield in Brisbane is 3.8 per cent, down 0.1 per cent compared with last month.