Brisbane Property Market Update June 2022

However, it is important to note that in general Brisbane property values ​​do NOT decrease. In fact, CoreLogic data at the end of June 2022 confirms that the median home value in Brisbane increased very slightly, by 0.1%, throughout June. The new record median value for Brisbane homes is $784,826, up $4,934 from last month.

At the moment it is difficult to spot patterns of change because in the same suburb we are seeing high demand properties selling very quickly and fetching high prices, while at the same time we are seeing other properties either sitting on the market with little interest from buyers, or we see properties going up for auction with little bidding activity. It is very specific to each property and the demand that each individual property generates.

We are also seeing a shift in demand in some places from the housing stock to the unit and townhouse market, likely due to affordability constraints. This is demonstrated by more people showing up at open houses, which usually results in more offers due to more competition from buyers, and the result is a faster sale. It’s no surprise as there was much stronger year-over-year growth in the Brisbane housing market, up 27.4%, compared to the housing market, which was up 15, 8% over the same period.

Units and townhouses offer a more affordable option for buyers who are happy to compromise on property type to stay in their preferred locations. The median home value in Greater Brisbane is now $892,133, while the median unit value is well below $501,074.

In fact, throughout June, Brisbane housing market median values ​​remained unchanged, according to data from CoreLogic, while the unit market rose 0.8%. Remember that houses make up a much larger share of the total number of homes in Brisbane, compared to units.

For two months we have now seen the unit market in Brisbane outperforming the housing market. This corresponds to the demand that we have seen on the ground for the different types of properties.

A significant contributing factor to the changing circumstances in Brisbane is the negative sentiment that exists across the broader market. Following the sharp rise in inflation, we have seen a somewhat marked increase in mortgage rates.

While the RBA interest rate hikes were a necessary step in bringing rates back to more normal levels, the hysteria surrounding the reporting of these moves has caused a lot of concern among many buyers. Mass media can have a significant influence on consumer sentiment, and it’s no surprise that many shoppers feel uncertain about the future, given the many reports that have emerged of proposed price cuts. real estate in the future.

The reality is that a shift in consumer sentiment could be enough to fuel Brisbane’s property market again. This is because Brisbane has very strong underlying housing market fundamentals.

According to CoreLogic, supply levels, as measured by listing volumes, are still down 18% in Brisbane, compared to 12 months ago, and listings are still well below the city’s five-year average. . This trend is specific to Brisbane, as when we look at enrollments in Sydney and Melbourne, enrollments in these two cities are now above the five-year trend. The lower volume of properties available for sale, combined with a lower volume of building completions, limits the number of choices available to property buyers and therefore suppresses the amount of supply available across the city.

While we are now definitely seeing suppressed demand due to the rising interest rate environment and the impact this is having on consumer sentiment, there is still a sufficient level of demand across Brisbane to match to properties for sale.

We have to remember that in Queensland, job growth has been exceptional over the past 12 months and we now have record unemployment. It is very likely that we will start to see wages increase in this environment.

The rate of interstate migration to Queensland has also increased significantly, with most settling in the southeastern corner of the state. And now, with the reopening of international borders, housing needs are greater. More and more people are in need of a home, and while not everyone is buying when moving to a new area, there is also a lack of rental properties available for those who choose to rent at home. square.

Brisbane’s citywide rental vacancy rate is now 0.6%. There is a city-wide rental crisis. Given the lack of rental supply, coupled with increased rental demand, price spikes were evident across the city. Below is a summary of vacancy rates in each area of ​​Greater Brisbane, according to SQM Research.

Region

Vacancy rate May 2022

(change from April 2022)

Beenleigh Corridor

0.4% (-)

Brisbane CBD

1.6% (-0.2%)

East of Brisbane

0.6% (-0.1%)

Brisbane interior

1.1% (-0.1%)

Ipswich

0.5% (-0.1%)

North of Brisbane

0.5% (-0.4%)

south east brisbane

0.6% (-0.5%)

South of Brisbane

0.8% (-0.1%)

West Brisbane

0.6% (-0.1%)

Median data from CoreLogic indicates house rents have risen 13.2% in Brisbane over the past 12 months, driving house rental price growth across Australia. In contrast, unit rents increased by 8.8% over the same period, trailing unit rent growth in Melbourne, Sydney and Adelaide. In some areas, rent increases have been much steeper than that, with increases of more than 20% in some city suburbs.

Source: CoreLogic

Due to rapidly rising rents, we are now seeing an improvement in gross rental yields in Brisbane. Across all units, gross rental yields are now 3.6%, up 0.1% from last month. It also provides an inflation hedge to investors as they avoid the volatility that comes with financial markets.

Perhaps due to the fact that interest rates have been falling for so long, many people are not used to or have forgotten that interest rates go up and down. Rate changes have a significant impact on demand, and particularly on consumer sentiment when messages about interest rate hikes can have such an influence on a market. What they don’t change are the underlying fundamentals relative to a market.

We are very unlikely to see many struggling sales in Brisbane, especially as we have record employment participation rates and relative affordability. This will help homeowners meet their debt repayment obligations, despite rising interest rates and high inflation. We must also remember that there has been a substantial increase in repayment margins as borrowers have built up their savings safety net during the pandemic. Additionally, anyone who has purchased a home recently will have been priced at a mortgage rate scenario of 2.5 basis points above the original rate they were offered, and that actually increased to a rate of valuation which is now 3% higher, since October 2021.

Despite the general weakness in the market, there will always be areas and properties that perform well, and others that may not. We will continue to see strong demand for some properties and little to no demand for others. As we enter a market in transition, such as the market we currently find ourselves in across Brisbane, understanding the fundamentals becomes essential as the rising tide will no longer lift all ships. There are markets within markets, and local supply and demand drivers will become even more important in identifying which locations will continue to perform, over others.

Although many commentators suggest property values ​​in Brisbane will fall, we remain of the view that quality properties which are in high demand, despite wider market conditions, will hold their value now and continue to grow in the market. future.

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Brisbane Property Market Update June 2022




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Last update: July 05, 2022

Posted: July 06, 2022