Brisbane Housing Market Insights: August 2022

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The Urban Developer’s latest Brisbane housing market insights reveal that the citys property prices have decreased for the first time in two years after a staggering 33 per cent rise over the past 12 months.

This resource, updated periodically, will collate and examine the economic levers pushing and pulling Brisbane’s housing market.

Combining market research, rolling indices and expert market opinion, this evolving hub will act as a pulse check for those wanting to take a closer look at the movements across the market.



Brisbane median property prices % change

TypeMonthQuarterAnnualMedian
All-1.8%▼-2.5%▼17.5%▼$762,284▼
Houses-2.1%▼-3.2%▼18.1%▼$864,149▼
Units-0.2%▼1.4%▼13.9%▼$501,396▼

^Source: Corelogic - August 2022

Brisbane’s property market has outshone the rest of the country for a year but its reign as the capital growth king is over, with monthly market increases now beginning to reverse. 

The Corelogic home value index declined -1.3 per cent nationally in August, a fourth consecutive month of declines, as Brisbane also edged into negative growth territory for the first time since August 2020, with values down -0.8 per cent.

The retraction is not as great as the fall in median values in Sydney, which fell -2.3 per cent, Melbourne -1.2 per cent, Hobart -1.7 per cent and Canberra -1.7 per cent.

All other capital excluding Darwin showed similar declines in growth rates in median values in August.

The triple whammy of weaker buyer sentiment, rate hikes and rising inflation has spread to Australia’s auction market, sending clearance rates lower.

In total, interest rates have shot up 1.75 percentage points since early May. Economists said that if rates had increased at a more gradual pace, property prices would still likely have fallen the same amount, but over a longer period.

Brisbane’s dwelling prices have enjoyed a record run over the past 12 months, increasing by a staggering 33.3 per cent to be at a median price now of $781,000.

House prices escalated with the onset of Covid-19 when people placed a higher value on privacy with interstate migration to the Sunshine State also propelling Queensland’s property market.

A typical Brisbane house is about $150,000 more expensive than it was at the beginning of January, while the average Brisbane unit is now $67,000 more expensive.

Median values for houses across Greater Brisbane declined -2.1 per cent in August with the current median value for houses being $864,000, around $22000 lower than last month.

The unit market in Brisbane, which from April this year has outperformed the housing market in terms of monthly median price, has now reversed for the first time this year, dropping in August by -0.2 per cent. The current median value for Brisbane units is now $501,000, which is $3000 below last month’s median. 

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



Brisbane’s housing market: policy updates and trends


Queensland housing shortage prompts review of Airbnb-style rentals

The Queensland government is reviewing the impact of Airbnb-style rentals on the broader housing market in Queensland.

The move, which follows a delayed and heavily criticised crackdown in some parts of NSW, has been revealed in a response to a parliamentary question on notice.

Brisbane City Council recently moved to apply higher rates–of about $600 a year–for properties used as Airbnb-style accommodation for more than 60 days a year, amid growing housing availability and affordability issues.

Brisbane and the Gold Coast are Australia's most dire rental markets

Brisbane tenants are now battling one of the strongest landlord markets in more than a decade after rents soared to new record heights across every region of the capital over the recent quarter.

While the figures paint a compelling portrait for landlords and investors it is a grim outlook for some of the city’s already struggling tenants who are being forced to move further out and into shared living in a trend that could strengthen once borders reopen, experts say.

Olympics to push Brisbane market’s limits

The Brisbane 2032 Summer Olympics could fuel the biggest real estate renaissance in the city’s history, with industry experts predicting a gilded decade of property price growth that will push the median house price past the million-dollar mark and see key infrastructure suburbs soar.

Expo 88 put Brisbane on the international map and saw house prices rise by 238 per cent in the 11 years before the event.



What the experts are saying about Brisbane's housing market



Tim Lawless
Head of Research 
Corelogic

“The rate of growth in housing values was slowing well before interest rates started to rise, however, it’s abundantly clear markets have weakened quite sharply since the first rate rise on May 5.

“Although the housing market is only three months into a decline, the national home value Index shows that the rate of decline is comparable with the onset of the global financial crisis in 2008, and the sharp downswing of the early 1980s.



Shane Oliver
Chief Economist
AMP Capital


“The acceleration in rate hikes and rapidity of them has shocked the market, that’s why we’re seeing a rapid acceleration in price declines.

“After 22 per cent growth in national average home prices last year, average home price growth this year is expected to be around 1 per cent and we expect a 5-10 per cent decline in average prices in 2023.

“Brisbane, Adelaide, Perth and Darwin, as well as regional areas are less constrained by poor affordability and are likely to see shallower falls.”




Nicola Powell
Chief of Economics and Research
Domain

“Nationally, vacant rental listings are 45 per cent lower over the year and have fallen across most of the capital cities,” Powell said.

“The rental market remains firmly in favour of landlords across every capital city, with a shortage in rental supply driving up asking rents and further escalating competition between tenants.

“With the vacancy rate dipping to a record low, it’s not an overnight fix.”



Louis Christopher

Managing director
SQM Research


“There are now signs of a peak in the rental market in regional Australia with a larger number of regions now recording rising rental vacancy rates and some falls in rent.

“While capital city rents continue to march higher, it’s possible we could be near the peak in the national rental crisis—outside Brisbane, there was no material decrease in rental vacancy rates over June.”



Brisbane housing market forecasts


ANZ
has tipped house prices to jump by 9 per cent this year in Brisbane before falling by -4 per cent in 2023 as the post-pandemic boom cools.

CBA now expects Brisbane house prices to increase by 9 per cent this year before plunging by -8 per cent in 2023 when the Reserve Bank ramps up interest rates.

NAB is forecasting Brisbane house prices to rise by 5 per cent during 2022 as the impact of low rates and strong income support begins to fade.

Westpac updated its property forecasts, with Brisbane real estate prices tipped to surge 10 per cent in 2022 before dialling back -1 per cent in 2023.



Brisbane auction clearance rates

WeekClearance rateAuctions/SoldTotal sales
Ending 6 August 202238%84 / 28$20,880,500
Ending 13 August 202244%77 / 31$17,166,000
Ending 20 August 202245%83 / 33   $23,473,500
Ending 27 August 202234%91 / 26    $24,113,500

^Source: Domain - August 2022

Brisbane remains the national leader in price growth and has had six straight quarters of elevated sales activity.

However, as household balance sheets become more thinly stretched due to rising interest rates and high prices for essential goods such as fuel and food, there is a renewed level of focus on how homeowners with mortgage debt are traversing the changing environment.

So far the trend in new listings across Australia has followed normal seasonal patterns, with no evidence of panicked selling or a rise in distressed stock coming on the market. 

The flow of new listings is generally in line with last year and shows a little divergence from the pre-Covid average at the macro level.

Residential listings jumped 7.1 per cent nationwide in July, with every capital notching up large rises fuelled by a rapid build-up in older stock, according to data from SQM Research.

Stock levels rose 11.1 per cent in Brisbane, the largest increase across all cities, coinciding with a 1.7 per cent fall in potential buyers.

Supply levels, as measured by listing volumes, are still down -13 per cent in Brisbane, compared with 12 months ago, according to Corelogic, while listings are still trending 30 per cent below the five-year average across the city.

This trend is specific to Brisbane because as in Sydney and Melbourne listings in those two cities are now trending above the five-year pattern.

The number of homes that have been on the market for between one and six months climbed by 14.1 per cent, indicating a surge in unsuccessful sales campaigns.

Queensland’s relative affordability and strong interstate migration underpinned a surge in values with the number of million-dollar markets more than doubling across Brisbane, up 139 per cent compared to this time last year. 

Teneriffe, at a median of $2.8 million has maintained its position as Brisbane’s most expensive house market.

Over the past three months, the suburbs with the strongest price growth were Woolloongabba, up 17.2 per cent, Highgate Hill up 17.1 per cent, Taringa up 15.5 per cent, East Brisbane up 15 per cent and Bridgeman Downs up 14.7 per cent.



Brisbane residential rental vacancy rate

CityVacancy rateMonthly % changeVacanciesNet change
Brisbane0.7%0.1%▲2474▲195▲

^Source: SQM Research - July 2022

Brisbane has recorded the steepest rental price rises in the city’s history as it grapples with higher real estate prices, strong rental demand and a lack of housing, with more upward pressure likely in the months ahead.

Brisbane has now recorded eighth quarters in a row of rising house rents due to higher interstate migration and supply shortages in the private housing market

Brisbane has ticked up to 0.7 per cent in rental vacancies after hitting a record low of 0.6 per cent in June. Vacancy has shrunk from a more manageable 1.2 per cent over the last 12 months.

The suburbs of Strathpine, Northlakes, Caboolture and Chermside are the tightest rental markets in the city, all now sub 0.3 per cent in available rental properties, while Jimboomba, Kenmore and Brisbane Inner are the suburbs with the highest vacancies, hovering around 1.3 per cent, respectively.

Brisbane’s median rental asking price for houses rose 27 per cent in 12 months, while for units it rose 15 per cent. By comparison, Sydney experienced increases of 20 per cent and 14 per cent respectively, although from a higher base.

Domain chief of economics and research Nicola Powell said several influencing factors have contributed to rising rents.

“The numbers that we’re seeing are a result of a combination of high purchasing prices locking people into the rental market longer,” Powell said. 

“Mainly increased home loan costs being passed onto tenants, weaker investment activity throughout 2019-20, fewer building completions, greater household formation, and rental demand being boosted by the return of international students and overseas migration.”

Nationally the vacancy rate is stable at 1 per cent but anything less than 2 per cent means it is still a very competitive market for rentals, Powell said. 

It is worst in Adelaide, where the vacancy rate is 0.3 per cent. In Hobart, it is 0.5 per cent amid slowing rental growth.


Brisbane rent prices

TypeRentMonthly % changeAnnual % change
Houses$620.40▼0.0%▼20.3%▲
Units$453.60▲1.3%▼14.8%▲

^Source: SQM Research - July 2022

While some of the current rental price growth can be put down to the market correcting itself, some cities are surging ahead of their pre-Covid prices. Corelogic head of research Eliza Owen puts this down to a couple of factors.

The most prominent, she said, is the strong economy and rising incomes. According to the Australian Bureau of Statistics' latest wage price index, wages grew by 2.3 per cent annually in December 2021. Welfare payments like JobSeeker have also increased.

“Now that we're starting to see higher wage growth, increases in incomes tend to put upward pressure on rent values,” Owen explained.

Add that to the return of international migrants, combined with years of lower property investment due to government caps and market conditions, and demand for rental properties is currently outstripping supply.

“Investors weren't as active between 2017 and 2019 because of changes to lending, like the cap on investor loans,” Owen said.

“That dampened the investor segment and even at the beginning of Covid, there was uncertainty around investment property purchases before we had government responses.

“There are a couple of factors which have created a surge in demand and supply has been slow to respond. It takes a while for the supply to flow through.”

“Rents will continue to rise at least over the next six months and I think that's because we're going to see increased rental competition from the return of overseas migrants and holidaymakers,” Owen said.

Wage growth is also expected to keep increasing, which in theory means people should have more money to service increasing rents.



Queensland building approvals

DwellingApprovedMonthly % change
Houses2026▼0.4%▼
All dwellings3191▲2.6%▲

^Source: Australian Bureau of Statistics - June 2022

The total number of dwellings approved fell 0.7 per cent in seasonally adjusted terms in June, following an 11.2 per cent rise in May, according to data released today by the Australian Bureau of Statistics.

“The decrease in the total number of dwellings approved in June was driven by a fall in approvals for private sector dwellings excluding houses, which dropped 5.7 per cent,” ABS head of construction statistics Daniel Rossi said.

"Approvals for private sector houses rose 1.2 per cent in June, following a 2.1 per cent fall in May.”

The average approval value for new houses continues to rise year on year, since passing $400,000 in April 2022. 

The average approval value for a new house in June was $409,000, roughly $67,500 higher than the year before and $78,500 higher than June 2019—reflecting a year-on-year rise of 19.8 per cent for June 2022, following weaker rises of 2.6 per cent for June 2021 and 0.7 per cent for June 2020.

Across Australia, the number of dwelling approvals rose in Victoria (6.3 per cent), Western Australia (1.7 per cent), New South Wales (1.5 per cent) and Tasmania (1.0 per cent), in seasonally adjusted terms. 

Dwelling approvals decreased in Queensland by -2.0 per cent while approvals for the private sector declined by -7.8 per cent, in seasonally adjusted terms.

Master Builders chief executive Paul Bidwell said that while future demand for new home construction remained strong, there was some concern amongst the industry that the situation will be short-lived.

“Building approvals for June saw an 8 per cent increase to units, although houses dropped by 8 per cent during the same period. Looking to the three-month trend, total dwellings approved were also up 3 per cent,” Bidwell said.

“However, the real concern is what happens once the work created by the shifts in migration during the pandemic and the HomeBuilder stimulus finishes.

“With cost increases to the tune of around 30 per cent over the last 12 months and no end in sight to the rising costs and shortage of materials and labour, homeowners and banks are very wary of the potential for cost blowouts during the construction phase.”



Queensland home loan lending indicators

TypeLending ($bn)Monthly % change
New loan commitments for owner-occupier housing3.890.0%▲
New loan commitments for investor housing2.88-3.3%▼

^Source: Australian Bureau of Statistics - June 2022

The value of new home lending tanked in July, dropping by $2.62 billion from the previous month in the biggest monthly decline on record in dollar terms.

ABS lending indicators for July showed that owner-occupier lending fell $1.44 billion, or -7 per cent, from the previous month, in seasonally adjusted terms, while investor lending fell by -$1.18 billion, down -11.2 per cent.

Owner-occupier and investor lending figures for July are lower compared to a year ago, but higher than two years ago, when Australia was still in the early days of the pandemic and property prices were on the slide.

The number of new owner-occupier first-home buyer loans fell -10.7 per cent month-on-month in July. In dollar terms, the value of new first-home buyer loans slipped by $427 million in July, as interest rate hikes slashed first-home buyer budgets.

The proportion of fixed loans, including both new loans and refinancing, funded in July was just 5 per cent, in seasonally adjusted terms.

At the peak in July 2021, 46 per cent of all new loans were fixed.

Meanwhile, the national average new loan size for owner-occupier dwellings has continued to dip, down 0.12 per cent or $746, but up $37,048, or 6.48 per cent, compared to a year ago.

Queensland, NSW, Western Australia, and ACT recorded monthly drops, while all other states and territories rose.

The Reserve Bank is prepared to once again increase interest rates as more evidence of a slowdown in new mortgage lending to owner-occupiers has emerged.

The central bank recently announced the fourth increase in cash rates in four months from 10 basis points to 1.85 per cent.

Queensland average loan size

TypeLending Monthly % change
Average loan sizes for owner-occupier dwellings$519,009-0.7%▼

^Source: Australian Bureau of Statistics - September 2022

Over this financial year, owner-occupied lending has increased by $111.5 billion, or 9 per cent, while investment lending is up by $37.7 billion, or 6 per cent. Growth in owner-occupied mortgages has been decreasing since February.

Since the RBA started increasing interest rates, growth in loans to owner-occupiers has moderated from the 9 per cent annualised rate seen in April to 8.6 per cent in June.

According to the Reserve Bank of Australia, around 35 per cent of borrowers have fixed loans, compared with around 20 per cent before the outbreak of Covid-19 in late January 2020, 

About a quarter of these loans are expected to end over the next two years, including large numbers with the big four lenders.



Queensland interstate migration

StateArrivalsDeparturesNet change
Queensland28,500▼21,465▲7035▼

^Source: Australian Bureau of Statistics - March 2021 (series paused due to Medicare data issues)

Interstate migration into Queensland, growing at its fastest rate since late 2003, has remained a tailwind for housing demand.

Brisbane’s population grew by 1.9 per cent during 2019-20, recording the highest growth rate of all capital cities, according to Australian Bureau of Statistics data.

Queensland gained the most people, about 7000, from net interstate migration over the March 2021 quarter, while Victoria lost the most at almost 5000, followed closely by NSW at 4500 people.

In the March 2020 quarter, Queensland recorded the most arrivals across the country at 24,000.

The state also recorded the highest arrivals again in March this year, at 28,500.

Queensland’s population is expected to surge by more than a quarter of a million people in the next four years according to forecasts in the federal budget, as people flood in from other states.

Treasury boffins have predicted Queensland is set to gain around 20,000 people from interstate each year for the next four years—amounting to almost 85,000 new residents by mid-2025.

Next year alone, federal treasury estimates see Queensland gaining 23,800 new interstate residents, while Victoria is set to lose 1200 and New South Wales is tipped to shed as many as 15,500.

With a population of roughly 3.7 million, Queensland’s southeast is Australia’s fastest-growing zone.

Queensland’s population is predicted to hit 5.44 million by mid-2025, up from 5.17 million as of June 2020.

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Article originally posted at: https://www.theurbandeveloper.com/articles/brisbane-housing-market-update