Property market update: Brisbane, April 2021

Despite the property market boom cooling at the start of the second quarter, Brisbane continues to show strength. Over the last year and during the first quarter of 2021, market conditions in the city have been mostly stable. Brisbane is less reliant on international migration that has been impacted by border closures and has even received a boost from internal migration as Aussies flee from big cities such as Sydney and Melbourne. 

Data shows that dwelling prices in the city have surged to record heights for the seventh consecutive quarter, underpinned by tight stock levels, positive consumer sentiment and strong demand.

Investors have also made their way back into the Sunshine State capital’s property markets, and competition is heating up. 

Additionally, demand is being supported by the expectation that interest rates will remain at their record lows for an extended period of time, with the experts forecasting that the RBA will not be budging on cash rates until 2024 at the earliest. 

As the outlook for the Sunshine State capital continues to be bright, here are the highlights of Brisbane’s property market in April 2021. 

Property values

According to the latest CoreLogic home value index, Brisbane’s dwelling prices have risen by 1.7 per cent in April, marking an annual increase of 8.3 per cent. This brings the current median value for dwellings in the Sunshine state capital to $558,295, about $10,000 higher in value compared with the previous month. This is slightly less price growth than we saw in March, which might suggest a deceleration in the rate of price growth. 

House prices in the city advanced a further 1.8 per cent during April, driving it up 6.2 per cent for the recent quarter and 9.6 per cent for the year to date. The median house price of $621,806 continues to attract interstate migrants from the larger markets such as Sydney and Melbourne. 

Meanwhile, the median unit price in Brisbane increased 1.0 per cent month on month to $405,902, which is $5,000 more than one month ago. Annually, the city’s unit market saw a 4.1 per cent increase. 

The most recent data showed a divergence between the rate of price growth at the upper end of the Brisbane property market, which is growing at a much faster pace, compared with the lower end of the real estate market. In the last three months, the upper quartile of capital city housing markets saw an 8.8 per cent rise in dwelling values compared with the 4.1 per cent growth in values across the lower quartile.

CoreLogic’s research director, Tim Lawless, noted that the rate of capital gains could lag further over the coming months as inventory levels continue to rise and affordability constraints dampen housing demand. 

Supply and demand 

Brisbane is experiencing one of the tightest markets in a decade, as high demand coupled with extremely low supply helped propagate a FOMO (fear of missing out) sentiment among home buyers. 

Reports show that while the total number of  listings rose across the country, strong demand is keeping overall advertised stock levels low.

CoreLogic has reported a significant increase in fresh listings to the market through April, with the figure revealed to be 14 per cent above the five-year average level and substantially higher relative to the previous two years. But total advertised stock levels were 25 per cent below the five-year average in late April. Mr Lawless said that the low total listing numbers, at a time when new listings are above average, reflects the strength of buyer demand, fueling the current rapid rate of absorption.

Data from SQM showed that property listings in Brisbane rose by 2.2 per cent from 24,763 in March to 25,314 in April. Compared with 12 months ago, listings in the city fell 10.6 per cent. 

Experts say that property owners are coming out of the woodworks, as strong market conditions boost vendor confidence. Louis Christopher, the managing director of SQM Research, said that property owners have clearly responded to all the talk about a property boom and have aggressively lifted asking house prices over April.

According to Mr Lawless, the rise in new listing numbers indicated that sellers are becoming more confident about market conditions. “More home owners are taking advantage of strong selling conditions while they remain skewed towards vendors rather than buyers,” he said. He highlighted the strong auction clearance rates (which have held in the upper 70 per cent range throughout April) as a main indicator of strong selling conditions in the market. 

Auction markets 

The resurgence of buyer interest in the Brisbane property market has caused clearance rates to consistently clock in within the 70 per cent range.

For the week ending 2 May 2021, 104 properties went under the hammer in the city and recorded a clearance rate of 76 per cent, according to CoreLogic. This comes after a 76.2 per cent clearance rate in the prior week, which saw 105 properties up for auction.

Clearance rates across April were particularly higher for houses compared with apartments, reflecting broader trends across the Australian auction market. Hot spots were identified to be located in Brisbane’s inner city, inner east, inner west and the inner north – where house prices jumped by 13 per cent over the past year to $1.2 million, 13.2 per cent to $1.053 million, 10.4 per cent to $1.17 million and 13.1 per cent to $1.1 million.

Rental market 

Rents in the unit market in Brisbane are continuing to rise. The annual change in unit rents now is at 2.1 per cent across the city, up a further 1 per cent from last month. 

Housing rents continue to see strong growth, with the annual increase in rents for Brisbane houses now at 6.4 per cent, according to CoreLogic data, which is 1.2 per cent higher than a month ago.

With property price growth in Brisbane now outpacing rental price growth, we are beginning to see rental yields fall. Gross rental yields for dwellings across all of Greater Brisbane are now at 4.2 per cent, which is still well above Sydney at 2.7 per cent and Melbourne at 2.9 per cent. 

Vacancy rates  

In April, Brisbane’s rental markets experienced a tightening of supply, with vacancy rates currently at 1.4 per cent.

Data from Domain showed that the tightest vacancies across the city include Capalaba (0.2 per cent), Caboolture Hinterland (0.2 per cent), Nerang (0.3 per cent), Gold Coast Hinterland (0.3 per cent) and Coolangatta (0.4 per cent). 

Meanwhile, the areas with the highest vacancy rates in Brisbane are Brisbane Inner (3.8 per cent), Sherwood – Indooroopilly (2.8 per cent), Brisbane Inner – West (2.7 per cent), Nathan (2.3 per cent) and Mt Gravatt (2 per cent). 

Outlook

Has the recent property market boom reached its peak? Some experts believe that after reaching record highs, the property market will begin to see a broad-based weakness. 

Record-low mortgage rates, additional stimulus measures, persistently low stock levels and a surge in consumer confidence have boosted the Australian property market following a tumultuous 2020, but according to CoreLogic’s Mr Lawless, the market could be reaching its peak. 

“This isn’t to say housing values are about to reverse; a more likely scenario is the housing market is moving through a peak rate of growth and the pace of capital gains will gradually taper over coming months,” he explained.

He pointed to the slower pace of capital gains, lower clearance rates, higher vendor activity, higher new housing supply and less incentives as some indications that we may see a downhill trajectory in the coming months. 

But Nicola Powell, the senior research analyst for Domain, thinks that the ‘boom still has some legs’.

“Brisbane is still affordable compared to other capitals, and buyers moving from Sydney and Melbourne will have deeper pockets, so I think the fundamentals are there for continued price growth,” she said.

“We’re still seeing robust activity in the marketplace, so I think we will continue to see price growth, although it won’t be as high as what we saw in that first quarter,” she added.