Property market update: Brisbane, April 2022

The Sunshine State capital’s month-on-month growth streak — which has not seen a break since August 2020 — is a stark contrast with the sombre scenario unfolding in Sydney and Melbourne, where property values are beginning to flatline or decline.

Brisbane’s strong performance also comes on the heels of devastating floods in February, which raised concerns that the city’s breakneck property values would decline if it falls in step with the trend observed following a similar flooding event in 2011.

But Domain’s latest quarterly report showed that the catastrophic floods are now all but water under the bridge, as the city’s house and unit prices rose strongly by 3.1 per cent in the three months to March and surged by 32.1 per cent and 9.3 per cent, respectively, over the year.

Domain chief of research and economics Dr Nicola Powell said there is a unique cocktail of factors underpinning Brisbane’s buoyant market.

“The special ingredient for Brisbane is that it has been the strongest recipient of population growth; Queensland recorded the strongest annual population growth of all the states, driven by heightened interstate migration,” Dr Powell said.

She added that demand would only be “supercharged” by the easing of international borders, relaxation of social distancing rules and high vaccination rates.

Dr Powell highlighted that interest in the Sunshine State capital would mostly stem from young families in search of affordability, lifestyle, and work/life balance. She also said that the expanding jobs market in the region also adds to Brisbane’s appeal to interstate migrants.

“Also, the 2032 Olympic Games will underpin strong infrastructure, population, and economic growth over the next decade,” Dr Powell added.

But while Brisbane is one of the few cities still posting growth among capital markets, CoreLogic’s research director Tim Lawless noted that the trend rate of growth is still easing in these high-gain areas.

“Based on [the] rolling quarterly change, Brisbane dwellings moved through a peak rate of growth in December last year at 8.5 per cent, slowing to 5.7 per cent over the most recent three month period,” he noted.

He added that while the strong demand and supply dynamics in the city continue to buoy growth, Brisbane is still vulnerable to several risks, particularly the forecast series of rate hikes this year.

It should be noted that as of writing, the Reserve Bank of Australia increased the cash rate by 25 basis points — the first hike in the central bank’s official rate in more than a decade.

Will the rate hike cloud Brisbane’s outlook for the rest of the year? For now, let’s see how the city performed in April 2022.

Property values

CoreLogic’s latest data showed dwelling values in Brisbane recorded a 1.7 per cent increase over April, decelerating from the 2 per cent boost seen in March.

Despite the weaker month-on-month figures, the Sunshine State capital was hailed as the fastest-growing capital market during the period. The monthly gain also brought the city’s quarterly growth to 5.7 per cent.

Over the year, Brisbane’s median dwelling values are up 29.3 per cent, the biggest annual increase among capital markets.

The average price of a property in the Queensland capital currently stands at $770,808, representing a $21,515 increase in prices from March.

Brisbane’s housing market also outperformed other capital markets, posting a 1.7 per cent increase month on month. The figures are also slightly higher than the 1.6 per cent seen in March.

Over the year, values of detached houses are up 32.1 per cent, with the median price of a house in the city now at an all-time high of $880,332. This represents a price increase of $23,601 from the previous month.

Meanwhile, the city’s unit market saw a 1.4 per cent increase over April, slowing down from the 1.6 per cent gain recorded in March.

The 12-month growth for units across the city is now 15.1 per cent, bringing the current median unit price to $487,967, which is $8,405 more than one month ago.

Melinda Jennison, the managing director of Streamline Property Buyers, said the monthly figures are a testament to Brisbane’s resilience in the wake of the flood.

“Despite the floods in late February, there has been no pullback in property prices throughout the city,” the local expert stated.

She also noted that the market is moving in a different direction compared to the scenario in the aftermath of the flood that occurred more than a decade ago.

“After the 2011 floods, the trend was very different. At that time, the macroeconomic conditions were also very different, and it confirms that property values are driven by a variety of interrelated factors that underpin supply and demand,” Ms Jennison explained.

Supply and demand

Brisbane continued to see a shortage of available properties in April, unable to keep up with the strong demand and increasing the FOMO sentiment among home buyers.

SQM Research’s latest data showed total residential listings rose by 7.8 per cent over the month from 17,278 in March to 18,632 in April.

Despite the monthly gain, the annual trend showed listings in the city are down by 26.4 per cent, making Brisbane the biggest decliner on a year-on-year basis.

New listings (or properties that have been on the market less than 30 days) rose by a mere 0.4 per cent from 7,946 in March to 7,978 in April. Compared to April 2021, new listings in the city are down by 14.2 per cent.

Meanwhile, data showed that old listings or property listings over 180 days rose by 2.2 per cent from 2,022 in March to 2,067 in April. Year on year, old housing stock in Brisbane has declined by a staggering 60.7 per cent, indicating strong absorption rates in the city.

Separate data from CoreLogic showed that the total advertised inventory in Brisbane is 20.6 per cent higher than levels seen a year ago and 40 per cent lower than the previous five-year average.

The persistently low levels of property listings help to explain the strength across the smaller capitals and regional markets, according to the property data provider.

Mr Lawless also noted that rapid interstate migration was the main driver behind the strong demand for housing in the city.

Auction markets

Brisbane’s auction market also revved up throughout April, recovering from the downturn seen during March. And while the Queensland capital is still no auction central like its bigger southern cousins, local experts are noting the growing popularity of putting properties under the hammer among Brisbanite sellers.

Brisbane’s clearance rates stood at 68.9 per cent in April, according to Domain. This is a significant uptick from the 57 per cent clearance rate recorded in March — during which the market was still reeling from the destruction from the flooding.

Commenting on the figures, Ms Jennison said: “In general, we are starting to see fewer registered bidders at auctions throughout the city, a sign that the buyer demand has softened.”

But she argued that while the demand has softened, buyers are still outnumbering sellers and are causing prices to continue rising.

“We are also seeing agents and auctioneers working harder to close the gap between buyers and sellers – a sign that sellers’ expectations have not yet slowed down to align with the buyer activity,” the local expert added.

The latest data also showed that Brisbane’s median auction house price is close to a record high in April, sitting at $1.2 million. Over the year, the average price of a house sold at an auction has risen by 23.9 per cent.

Meanwhile, the average auction price of a unit in the city stood at $681,500 during April.

Separate data from CoreLogic showed that over April, a total of 679 properties went under the hammer in the city, with a final average clearance rate of 63.4 per cent.

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

Domain’s data showed Brisbane’s rental vacancy rate continued to be at an all-time low, further bolstering the case for rental price increases for the city’s landlords.

According to the latest data, the city’s vacancy rate stood unchanged month on month at 0.7 per cent. The figures are the lowest vacancy rate recorded in the city since Domain’s records began.

The areas with the highest vacancy rates across Brisbane and Gold Coast were Jimboomba (1.7 per cent), Brisbane Inner (1.5 per cent), Mt Gravatt (1.2 per cent), Sherwood – Indooroopilly (1.1 per cent), Brisbane Inner – West (1 per cent).

Meanwhile, the areas with the lowest vacancy rates were Nerang (0.2 per cent), Strathpine (0.2 per cent), North Lakes (0.2 per cent), Narangba – Burpengary (0.2 per cent), and Robina (0.3 per cent).

Rental market

The increasingly short supply of rental properties not just in Brisbane but across the country is driving up weekly asking prices to record highs, according to Dr Powell.

“Many cities are sitting at record high asking rents with all capital cities seeing an increase in median rents for the first quarter of 2022 (except Sydney houses which remain steady at a record high),” she said.

Dr Powell added that things are likely to worsen for renters in the post-COVID era. “The current tightening conditions swing favour to landlords and bolster the likelihood of any future potential rental price increases post-COVID as rising investor activity and elevated rental demand will further worsen conditions for tenants.”

Meanwhile, CoreLogic reported that rents for units are now starting to catch up with houses.

“On a rolling quarterly basis, we are now seeing unit rents rising faster than house rents, especially in Sydney and Melbourne where rental conditions across the unit sector were previously much softer,” Mr Lawless commented.

“The shift in rental demand towards units reflects both rental affordability pressures, which are deflecting more demand towards the ‘cheaper’ unit sector, and the return of overseas migrants and visitors. Rental demand from overseas arrivals tends to skew towards inner-city and higher density precincts.”

In the last 12 months, Brisbane house unit rents have risen 12.2 per cent and 7.2 per cent, respectively. Notably, the annual change in Brisbane house rents has been recorded as the strongest rental market growth, compared to every other capital city.

Outlook for Brisbane’s market

Contrary to its southern counterparts, the outlook for Brisbane continues to be bright in face of a potential series of rate hikes throughout the year.

Ms Jennison said that like most headwinds the market overcame, Brisbane’s market is seen to also shrug off the impact of the recent rate hike.

“We expect Brisbane to remain a fairly resilient market in many areas amid higher interest rates due to our relative affordability, low levels of supply, and the continuing strong interstate migration flows,” the local expert said.

She explained that her positive outlook stems from the strong underlying fundamentals in the market.

“A higher volume of people relocating is supporting the demand for residential property, and this is not a trend that we expect rising interest rates will change,” Ms Jennison said.

“Unless we see a huge increase in the number of properties that become available for sale, prices will remain strong in the months ahead,” she concluded.

Mr Lawless had a more nuanced prediction for the market’s prospect, stating that while the first rate increase would be “manageable”, further rises would put pressure on household finances and inevitably impact price growth.

“The RBA will probably be lifting rates every month all the way through to the end of the year, so all of a sudden, you’re getting a cash rate that’s already up by say, 150 basis points,” Mr Lawless said.

“It won’t be too long before we see the cash rate normalising, getting back to average levels, or maybe even getting beyond that.”

Additionally, CoreLogic research director Eliza Owen also highlighted that historical data had painted an inverse relationship between the property values and the official cash rate.

“When interest rates start to rise, CoreLogic expects growth in housing to come down,” Ms Owen said. “That will probably be the factor that ticks most of Australian housing markets into a downswing phase.”

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