Property market update: Brisbane, November 2021

In the previous property booms over the last decade, the Sunshine State capital was observed to sit on the sidelines and struggled to see the same phenomenal growth seen by its southern cousins, particularly Sydney and Melbourne.

But it seems the tables have turned in 2021, as Brisbane solidified its top-dog position as the year closes.

The Queensland capital is now leading the capital city pack in terms of growth, with Brisbane property prices continuing to rise full steam ahead at the same time Sydney and Melbourne’s markets are slowing down.

Brisbane has well and truly surpassed expectations of a dwelling price rise of 8 per cent in 2021 and instead managed to notch a 25 per cent jump on the back of increased interstate migration, low stock and heightened demand.

The city’s house prices also grew almost three times as much as expected this past year, with prices set to rise further amid fresh predictions it will outperform all other Australian capitals in 2022.

CoreLogic head of research Eliza Owen said Brisbane’s property market saw further momentum in recent months while other capitals were flagging, mainly due to its relatively low level of stock, which was keeping competition between buyers intense.

“Over the past months, there [have] been 14,000 properties for sale, but at this time of the year, Brisbane would usually have 24,000,” she said.

For comparison, the expert said: “That’s very different to what’s happening in Sydney and Melbourne, where they are back to pre-COVID stock levels.”

Meanwhile, CoreLogic research director Tim Lawless said that the combination of several factors has led to Brisbane becoming one of the fastest-growing property markets in the country.

“Relative to the larger cities, housing affordability [in Brisbane and Adelaide] is less pressing – there have been fewer disruptions from COVID lockdowns and a positive rate of interstate migration is fuelling housing demand,” he said.

Also commenting on the city’s upward trajectory, Real Estate Institute of Queensland (REIQ) chief executive Antonia Mercorella said the phenomenal property price gains being seen in Queensland in 2021 are a result of a number of factors driving insatiable demand from buyers.

“Queensland hasn’t experienced this sustained level of demand and accelerated growth before, but after years of modest growth, prices here are playing catch up,” Ms Mercorella said.

And Brisbane’s status as the apple of investors’ eyes isn’t expected to end – even with the year’s end fast approaching.

While Brisbane’s growth has been tipped to taper down as part of a broader slowdown across the country, it has also been forecast to be the best capital city performer for 2022.

“If you look at the bank forecasts, they’re all picking Brisbane to be the best capital city performer, even in the lower growth environment,” Ms Owen noted. “Those tailwinds of internal migration and lower prices are likely to keep the momentum going.”

Before we look into what is in store for Brisbane, let’s first look at how the river city performed in November 2021.

Property values

Brisbane’s dwelling values hit a cyclical high, rising by 2.9 per cent in November. This is the biggest increase of any capital city during the month and the fastest rate of growth for the city in 18 years, CoreLogic reported.

It also indicates that Brisbane’s growth accelerated from the 2.5 per cent increase seen in October, a markedly different trend compared to the observed slow down in growth in other cities during the same period.

The recent gain also equated to the median values in the city rising $18,500 to the cost of a property in just one month, with the average property in Brisbane now sitting at $662,199.

Looking at the bigger picture, the city’s property values were 7.4 per cent over the quarter, its highest rate of quarterly growth since 2002. Brisbane’s annual growth now sits at a massive 25.1 per cent, only just below Sydney’s growth of 25.8 per cent and significantly higher than Melbourne’s annual growth of 16.3 per cent.

Brisbane’s house sector saw the biggest monthly increase among its capital city counterparts in November, recording a 3.2 per cent growth from October. Compared to the same period last year, house prices have increased by a staggering 27.9 per cent, with the median price now at $757,194.

Meanwhile, the city’s unit sector saw a 1.1 per cent increase over the month. On an annual basis, unit prices in Brisbane have risen by 11.4 per cent, with the median price now at $443,981.

A typical Brisbane house is now about $180,000 more expensive than it was at the start of January 2021, while units have experienced a gain of $52,000.

Supply and demand

Across November, the total stock available for sale across Brisbane was 33.9 per cent lower than the five-year average.

This is different from Sydney, where listing volumes are more in line with the long-term average, and Melbourne, where listing volumes are reported to be 7.9 per cent above the long-term average.

According to CoreLogic, these differences in supply dynamics are certainly playing a part in the upward price growth momentum in Brisbane.

Figures released by SQM Research also showed that Brisbane’s residential property listings saw the biggest monthly decline among capital cities, falling 5.9 per cent from 20,506 in October to 19,305 in November.

Louis Christopher, managing director of SQM Research, noted that the strong declines in listings during the month was expected, given the strong October numbers.

The low stock in the city is met by strong demand for property in Brisbane. There is a high volume of property transactions occurring, which is evidence of the confidence that buyers have in the Brisbane market.

Data showed that sales volumes were 51.5 per cent higher in the 12 months up to October 2021, compared with the same period last year.

With Queensland set to open its borders to vaccinated travellers and thousands of returning residents, international migration is also seen to further boost demand.

But with the year-end just around the corner, local market commentators are expecting the city’s market to experience the traditional slowdown during the summer season.

Melinda Jennison, managing director of Streamline Property Buyers, stated: “As we head into the festive season, we do expect the number of active buyers to reduce as people focus more on Christmas shopping rather than property shopping.

“At the same time, we also expect that the number of properties that become available for sale will also drop off sharply as we head into December. This is a seasonal trend that we do not expect will be any different this year.”

Auction market

In recent months, Brisbane has been emerging as an up-and-coming auction market after the city sat out the worst of the pandemic disruption and consequently drew increased population from disenchanted southerners.

The city’s red-hot auction market has moved from strength to strength and showed no sign of slowing down in November, remaining one of the few cities on an upward trajectory a year into the latest property boom.

Over November, the city recorded a healthy clearance rate of 80.5 per cent across 1,053 auctions, according to CoreLogic.

Domain’s data also showed Brisbane’s auction market was in full swing in November. Over the month, Domain reported that 951 auctions were held in the city, the highest number of auctions ever to be held in the Sunshine State capital in a single month on record.

The city’s auction rate also came in at an impressive 74.9 per cent for the month. Clearance rates for houses continued to outperform units, with 76.4 per cent and 61.1 per cent, respectively.

Domain also reported that the city’s median house auction prices hit a record high in November at $1,195,000.

Rental market

SQM’s latest data showed house rents rose 1.5 per cent, while unit rents rose 1.1 per cent over the month. This brought the average weekly rent for houses and units to $544.40 and $399.90, respectively.

The city’s relatively low impact from the pandemic has meant that house rents have risen for five consecutive quarters – a growth streak the Queensland capital has not experienced since 2007.

But despite rents rising, gross rental yields have continued to reduce as housing values rise at a faster rate than rents.

CoreLogic data showed that gross rental yields for dwellings across all of Brisbane fell from 3.9 per cent in October to 3.8 per cent in November.

At an annual rate, house rents in Brisbane were up by 11.7 per cent in November, slightly higher than the 11.4 per cent rise in October.

Meanwhile, unit rents were up 6.8 per cent over the year in November, up 0.3 from October.

Vacancy rates

Brisbane’s rental market, which has boomed during the pandemic from a surge in interstate migrants, saw its vacancy drop to 1.3 per cent in November from 1.4 per cent in October, with just 4,670 properties available to rent at the end of the month, according to SQM.

Brisbane’s low supply in the market has been met with concern ahead of the country’s borders reopening to immigrants in mid-December.

Further data showed that the vacancy rate in the Brisbane CBD has dropped by 20 basis points so far this year to now be 8.4 per cent.

Meanwhile, Domain reported that the city’s vacancy rates held steady in November, remaining at a historic low of 1.2 per cent.

The areas with the highest vacancy rates in Brisbane and Gold Coast were Brisbane Inner (4.2 per cent), Nathan (2.7 per cent), Sherwood – Indooroopilly (2.2 per cent), Brisbane Inner – West (1.9 per cent), Mt Gravatt (1.9 per cent).

Meanwhile, the areas with the lowest vacancy rates were Strathpine (0.2 per cent), Nerang (0.3 per cent), Ormeau – Oxenford (0.3 per cent), North Lakes (0.3 per cent), Mudgeeraba – Tallebudgera (0.3 per cent).

What’s next for Brisbane’s property market?

As 2021 winds down and Australia heads into the festive season, local market commentators are expecting Brisbane to see a traditional slowdown in market activity.

But looking beyond this year, Brisbane’s property market is expected to hit the ground running in 2022.

Data from Domain showed residential listings are set to pile up when the housing market reopens in January, with a surge in the number of home owners looking to sell before prices peak.

Requests for appraisals have jumped by 19 per cent in Brisbane, indicating that a large number of potential vendors are looking to enter the market in the new year.

Commenting on the figures, Nicola Powell, senior research analyst at Domain, said: “The [recent] surge in appraisals is quite revealing, particularly at this point in time as we’re so close to the end of the year.

“I think this shows that more homeowners are thinking of putting their homes on the market, for fear of missing out on the peak, and that will probably come to fruition early next year.

“Housing stock is now building up and rapidly changing the dynamics in the market in favour of the buyers.”

There is also persisting hype about Brisbane’s growth prospects from being an Olympic city in the coming years, with Mr Christopher calling it a “positive” for the city’s economy.

“It is likely to help with the housing market over the next 10 years. So we can expect outperformance of the Brisbane housing market compared with other Australian cities over this time.

“It will also benefit over the short term from interstate migration inflows from Sydney and especially Melbourne, notwithstanding any future state border closures,” he said.

Generally, most banks forecast that Brisbane will continue to grow, albeit at a slower pace, throughout 2022 before dialling back further in 2023.

ANZ has tipped house prices to rise by 9 per cent next year in the city before declining by 4 per cent in 2023 as the post-pandemic boom cools. Meanwhile, CBA now expects Brisbane house prices to increase by 9 per cent next year before plunging by 8 per cent in 2023 when the Reserve Bank ramps up interest rates.

NAB is expecting house prices in the Queensland capital to rise by 5 per cent over 2022 as the effect of low rates and strong income support start to wane.

Westpac has also updated its property forecasts, with property values in the city forecasted to surge 10 per cent between 2022 before retreating 1 per cent in 2023.

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