Property market update: Brisbane, March 2022

Brisbane led the pack of capital cities still recording growth at the tail end of the property boom, with the Queensland capital posting the biggest monthly gains in March. 

But despite Brisbane’s strong showing, the first quarter of the year has not been a walk in the park for the city. At the end of February, Brisbanites faced forces of nature in the form of devastating floods, which were labelled as one of the most extreme disasters in Australia’s history. 

There have been concerns that the natural disaster will serve as a circuit breaker to what was a white-hot property market. 

But the city upended expectations of an immediate decline, as the Sunshine State capital held its ground in the wake of the catastrophe and even managed to outperform other capital cities in terms of annual growth. 

“Brisbane dwelling values continue to see strong capital growth, with values seeing a further 2 per cent in the month of March, despite the shock of recent flooding events,” according to the CoreLogic’s head of research Eliza Owen.

“Sales and rental listings declined over the month, but it is difficult to isolate the impact of flooding from a usual seasonal slowdown in transaction activity.” 

While the recorded pace of price growth was slower than 2021, there were no signs property values would drop as increased interstate migration, low stock, and heightened demand continued to drive the city’s boom.  

According to CoreLogic’s research director Tim Lawless, the market has transitioned from an upswing generally characterised by strong and uniform gains across the country to one best described as “multi-speed”. 

“At one end of the spectrum Australia’s two largest cities, Sydney and Melbourne, are recording flat to falling housing values, while at the other is Brisbane and Adelaide, where the quarterly pace of growth continues to rise at an annualised pace of more than 20 per cent,” Mr Lawless said.

Domain’s head of research and economics Dr Nicola Powell said the supply-demand dynamics in the city are driving the city’s growth. 

“There are still more buyers than there is supply. Buyer competition remains heated and, despite the increase in new listings, buyers are still clearly outpacing supply for the time being,” she said.

Domain’s data showed views per listing in Brisbane have risen by 18 per cent compared to March last year, indicating the strong appetite for properties in the city. 

“Brisbane is still going to be one of the cities that will see a strong rate of growth relative to the others because it hasn’t seen such a strong upswing for so long, like 10 years. Its growth has been so modest for so long, so it’s still playing catch up,” Dr Powell further explained. 

Unlike its bigger southern cousins that have shown signs of hitting their peak, favourable conditions have been forecast for Brisbane in the year to come due to the city’s relative affordability and lack of supply. 

Market observers also continue to bank on the 2032 Brisbane Olympics to push property prices in the city higher in the next decade.

Even so, there are a number of factors that are set to impact markets on a national scale over the coming months, with most talks now centred around a potential interest rate hike by the Reserve Bank of Australia (RBA) by as early as June 2022. 

Will Brisbane continue to buck the general trend of declining growth in the coming months? Or will it also take the same downward route as the real estate frenzy fades in other parts of the country? 

For now, let’s see how Brisbane performed in March 2022. 

Property values

CoreLogic’s latest data showed dwelling values in Brisbane grew by 2 per cent over March, accelerating from the 1.8 per cent increase seen in February. 

Brisbane was the strongest-performing capital during the period, marking the fifth consecutive month the city outpaced its peers. 

Dwelling prices were also up 7.2 per cent for the quarter to March, the fastest rate of any capital city.

The Queensland capital also saw the highest annual growth rate among the capital cities, with housing values up 29.3 per cent. The current median value for dwellings across Brisbane now stands at $749,293, representing a $26,860 increase in prices from February. 

In another show of the market’s strength, Brisbane’s housing market also remained the top-performing housing market across all capital cities in March. Over the month, the median values for houses in the city rose by a further 1.6 per cent, slowing down from the 1.9 per cent growth seen in February. 

Over the year, detached houses have risen by 32.1 per cent, which is equivalent to the median price level rising by around $200,000 in a 12-month period.

The monthly gain also brings the median value of a detached property in Brisbane to a record high of $856,731, representing a $28,556 increase from the previous month.  

Brisbane’s unit market was also the strongest performer in its own category among capital markets, rising 1.6 per cent this month, compared to 1.5 per cent in February. This marks the third month of gains for the unit sector.

The 12-month growth for units across the city is now 15.1 per cent, bringing the current median unit price to $479,562, which is $11,169 more than one month ago. 

The gap between house and apartment prices in Brisbane is now the widest in at least two decades, but local experts say this is set to shrink over the next 12 months as housing affordability bites and buyers choose cheaper options. 

Colliers residential director Queensland Andrew Roubicek said the price difference between houses and apartments in Brisbane has reached 45 per cent compared with an average of around 20 per cent between 2003 and 2015.

But he expects this gap will narrow in the coming months, as increasing construction costs have hit the new apartment market hard.

As a result, he says developers who are looking to acquire new development sites are forced to increase their projected sales prices by around 20 per cent. This domino effect will result in Brisbane apartment values rising by “at least” another 15 per cent in the next 12 months. 

“If you believe in history, if you believe in charts, and take a long-term view you would have to think that gap is going to narrow because everyone’s talking about affordability, everyone’s talking about interest rate movements,” he said.

“Natural forces will push what would have been a buyer of a detached home back into the unit market because of affordability.” 

Supply and demand 

Buyer demand continues to outstrip supply in Brisbane’s property market, with local experts predicting that the recent floods will only cause a further tightening in market fundamentals. 

CoreLogic data showed total advertised stock levels in the city are 25.9 per cent lower than they were 12 months ago. This is also more than 40 per cent below the previous five-year average level. 

New listings in the city are also down by 1.2 per cent compared to the same period last year.  

According to CoreLogic, the supply levels in capital cities help explain the divergence in housing growth trends. 

Mr Lawless said the cities where housing values are rising more rapidly continue to show a clear lack of available properties to purchase.

Meanwhile, SQM Research’s data showed total listing volumes in the city rose by 2.8 per cent in February to 17,278 from 16,804 in the previous month. 

Despite the monthly increase, Brisbane was the biggest decliner in total stocks among capital cities on an annual basis. Compared to 12 months ago, total listings have fallen by 30.2 per cent, indicating strong absorption rates in the city. 

Brisbane’s new listings (or properties that have been on the market less than 30 days) saw a 1.9 per cent increase over the month from 7,796 to 7,946. Year on year, new listings in the city are down by 13.7 per cent, the biggest annual decline among capital cities. 

Meanwhile, data revealed that old listings or property listings over 180 days fell by 8.5 per cent from 2,211 in February to 2,022 in March. On an annual basis, old listings in the city have fallen by 63.3 per cent, the steepest annual decline among capital markets. 

Managing director of SQM Research Louis Christopher said there is still a shortage of stock in the market, particularly in Brisbane and Adelaide. 

“Those two cities continue to record massive housing price rises as a result,” he stated. 

The expert also noted that the stock in the market could continue to thin out in the coming months. “Going forward I expect we will shortly enter into a lacklustre period of activity in the lead up to the federal election. After that point, there will be a looming interest rate rise for the market to consider,” Mr Christopher said.

Meanwhile, sales volumes in Brisbane remain high, indicating the strong demand for properties in the city. 

Compared to the same period last year, CoreLogic data showed Brisbane has seen an increase in the number of transactions across the city of 62.8 per cent. 

Local experts commented that while the floods have affected consumer sentiment, it has not affected overall demand. 

“After the floods at the end of February, we have definitely observed a reduction in the number of buyers who are in the market,” according to Melinda Jennison, the managing director of Streamline Property Buyers. 

She noted that before the floods, they had seen an average of 10 or 15 offers on a property, but now they are generally observing an average of four or five offers. 

Despite the decline in the average number of interested buyers, the expert said that there is still strong competition for properties in the city. 

“We have not yet seen a reduction in the quality of the buyers, which means that the buyers who are still looking to secure a home or an investment property in Brisbane are still willing to pay strong prices. This is further evidenced by the continued growth in property prices,” she noted.

Auction markets

According to Domain, the floods at the end of February and beginning of March have taken some steam out of the city’s auction market. 

Dr Powell said the floods had been a reset for buyers and sellers to wait a while.

“In the last weekend of March we saw the highest number of auctions scheduled so far this year, however, we did see over a quarter of auctions withdrawn, perhaps reflecting how the recent floods delayed or changed decisions for some sellers.

“It’s very telling of the sentiment in the city. Decisions may have been changed or delayed,” she stated.

Over the month, Domain’s data showed the city recorded a clearance rate of 63.3 per cent out of 710 auctions scheduled. 

Average clearance rates for houses and units stood at 61.3 per cent and 77.2 per cent, respectively. 

Data also showed Brisbane’s median auction house price grew by 32 per cent year-on-year to $1.23 million, the highest median for houses since Domain’s records began.  

Meanwhile, CoreLogic’s data showed that the city’s clearance rate for March stood at just 57 per cent out of 372 auctions held throughout the month.

Looking over the data, auction clearance rates in Brisbane plummeted in the two weeks after the floods (42 per cent and 53 per cent), as buyer confidence declined in the immediate wake of the flooding disaster.

However, the market managed to turn around in the following weeks, recording clearance rates of 69 per cent and 63 per cent in the second half of March. 

 If you want to be in the loop about what’s happening across auction markets in the country, follow our weekly updates in our News section.  

Vacancy rates 

Brisbane’s rental market further tightened in March as the city’s supply of rental properties continued to decline over the month. 

Domain’s data showed the city’s vacancy rate stood at 0.7 per cent at the end of March, down from the 0.8 per cent seen in February.

Compared to March 2021, vacancy rates in the Queensland capital are down from 1.3 per cent. 

The areas with the lowest vacancy rates in Brisbane and Gold Coast were Strathpine, Southport and Gold Coast – north at 0.1 per cent. Caboolture Hinterland and Nerang also recorded a tight vacancy rate of 0.2 per cent. 

On the one hand, the areas with the highest vacancy rates were Jimboomba (1.5 per cent), Brisbane Inner (1.5 per cent), Sherwood – Indooroopilly (1.3 per cent), Brisbane Inner – West (1.2 per cent), and Mt Gravatt (1.2 per cent). 

Meanwhile, data from SQM Research showed that vacancy rates in Brisbane have also fallen to 0.7 per cent in March from 0.9 per cent in the previous month. 

The current rates are down by almost half of the 1.5 per cent rate seen in March 2021. 

Mr Christopher said the figures showed that the rental crisis has deepened as the national vacancy rate collapsed to 1 per cent. “As a result, market rents have exploded. Some of our capital cities and regions are recording asking rental increases in excess of 15 per cent over the past 12 months,” he said. 

He further warned that the worst is yet to come. “The recent monthly data suggests we are still not at the worst point of the crisis. We were thinking at least regional Australia may have started to have some relief as people return back to the cities. But that has not happened as of yet. Many localities and townships are recording zero vacancy rates,” he explained. 

Mr Christopher said that with many localities and towns having rental vacancy rates close to zero, actions must be taken to avert the crisis. 

“Clearly, we are not going to resolve this overnight, but I do hope the various state and territory governments will ramp up their rental assistance packages in order to cushion the rental accommodation emergency we have here and now,” he said.

Rental market 

Domain’s latest rental report brought good news to Brisbane landlords, as data showed rental prices continued to rise due to strong demand and low rental supply. 

The city’s record-breaking streak continued over the March quarter, with house and unit rents rapidly climbing to new record highs.

Data showed housed rents surged to a new record high of $500 a week, following a 4.2 per cent increase over the quarter.

This is at the same level as the previous quarter and has resulted in the steepest annual increase on record, at 14.9 per cent. 

Unit rents also rose by 2.4 per cent on a quarterly basis to a new record high of $430 a week. This has resulted in the biggest annual increase in rental prices in almost 13 years, at 7.5 per cent.

House rents continue to increase faster than units, at almost double the pace. Domain noted this reflected the underlying demographic trends that are driving rental demand, not only from young families relocating to Brisbane from interstate but also, more recently, those who have been displaced from their homes due to the devastating floods. 

Another factor driving demand is knowledge workers that continue to be home-based, according to Domain, particularly remote workers from interstate. 

While the dramatic rent increases are good news for investors, the skyrocketing prices are putting enormous pressure on tenants, who are forced to pay premium prices in order to secure a space. 

The availability of advertised rentals has halved over the past year alone, providing tenants little choice as supply dwindles, Domain stated. 

The report also highlighted that Brisbane remains firmly a landlord’s market, with certain areas in a rental crisis. 

It also forecasts the tightening of the rental market will continue as Queensland recorded the strongest population growth of all the states, driven by interstate migration hitting a record high.

Demand will also be supercharged by the opening of international borders, eased social distancing rules, and high vaccination rates, particularly from young families seeking better affordability, lifestyle, work/life balance, and the expanding jobs market on offer in the state, according to Domain. 

But Domain noted that the competitive rental trends in the city are also seen to attract investor activity, which in turn will help slow down rental price growth. 

The latest rental price data from CoreLogic also showed that rents in Brisbane have reaccelerated, growing by 1.2 per cent over the month of March and by 2.9 per cent over the quarter.

Over the year, rental prices in the city have risen by 10.5 per cent, with the median rent now at $523 per week, according to CoreLogic. 

Separate figures from SQM showed that rents across Brisbane have risen to a record high of $590 a week, the steepest annual increase in the city’s history.

Data also showed rent prices for a house in the city jumped 21.2 per cent in the 12 months to March and 3.5 per cent over the quarter. 

Unit rents in Brisbane also rose 2.4 per cent month-on-month and 7.9 per cent over the year, bringing the weekly rate to a record high of $416 a week.

Brisbane recorded the largest 12-month combined rental increase among capital cities, with asking rents jumping 15.2 per cent on an annual basis.  

Outlook for Brisbane’s market 

CoreLogic said that despite another surge in price growth last month, particularly in Brisbane and Adelaide, “the outlook for housing remains skewed to the downside”.

Aside from rising fixed-mortgage rates and the prospect of higher variable interest rates later this year, factors such as rising inflation, affordability issues, increasing supply, and worsening consumer sentiment are also seen to add the pressure against price growth, according to CoreLogic. 

Ms Owen highlighted that an impending increase in interest rate would be detrimental to Brisbane’s growth trajectory. 

She cautioned that a predicted hike in interest rates could put it on the same downward course as Sydney and Melbourne. 

“We’ve seen a 0.2 per cent fall in values across Sydney over the month of March, but basically what we are seeing in Brisbane now is a little bit lagged to those other capital cities,” she said.

“Brisbane has just come off its peak monthly growth rates in the December quarter and that is the kind of pattern we were seeing across Sydney and Melbourne about halfway through 2021.” 

She said it was hard to forecast how interest rate rises might affect the property market, but it could push Brisbane’s property values down.

“Alongside a change in the cash rate, you don’t know what kind of government policies are going to be in play and you don’t know what’s going to be happening in terms of economic performance necessarily,” Ms Owen added.

“It makes sense to me that higher mortgage rates could be the thing that eventually pushes Brisbane into the downswing, but I think it’s going to be impossible to say how much prices could actually fall.” 

Ms Jennison also acknowledged the rising downside risks for Brisbane’s property market. “We have an up-and-coming federal election, which creates a level of uncertainty for many. We have inflationary pressures whereby a higher cost of living will possibly weigh on housing demand. We also have the risk of rising interest rates at some stage in the future,” she said.

But she stated that Queensland still has advantages over other cities when facing these headwinds. “[Brisbane] still has relative affordability compared to the larger markets of Sydney and Melbourne, and we are also in a very low supply environment, which is very different to Sydney and Melbourne,” she said.

She also argued that Brisbane also boasts an improving economy and low unemployment levels, which could lead to income growth helping to maintain housing demand.

Additionally, Ms Jennison cited the announcements from the recent budget, which presented a new round of incentives for first home buyers. 

It should also be noted lead up to the federal election, both the Coalition and the Labor party have already announced additional support for first home buyers in the form of an extension to low deposit home loan guarantees. CoreLogic highlighted that first home buyers had reacted positively to similar stimulus measures in the past.  

Given that all the fundamental factors are still operating in favor of price growth, Ms Jennison maintained her positive outlook for the city.

“Overall, despite the recent floods, international unrest and other downside risks that have been outlined above, we maintain our view that the property market as a whole in Brisbane remains strong,” she concluded. 

For more industry expert insights on the property market, check out our amazing podcasts. Also, make sure to check our News section for the latest property market reports, insights, news and useful tips and strategies for investors.