Brisbane Housing Market Insights: December 2021

The Urban Developer’s latest Brisbane housing market insights reveals that the city’s house prices is on track to outperform all other Australian capitals during the next 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

Type Month Quarter Annual Median

All 2.9%▶ 8.5%▲ 27.4%▲ $683,552▲

Houses 3.1%▼ 9.4%▲ 30.4%▲ $782,967▲

Units 1.6%▲ 4.1%▲ 12.7%▲ $451,256▲

^Source: Corelogic - December 2021

Brisbane had another bumper month for property prices with both houses and apartments outperforming any other capital city, amid fresh predictions this trend will continue well through 2022. Brisbane well and truly surpassed expectations of a dwelling price rise of 8 per cent in 2021, instead notching a 27.4 per cent jump off increased interstate migration, low stock and heightened demand. Dwelling prices kept a steady 2.9 per cent pace over November and December, the city’s fastest growth recorded through the whole of 2021, inching the annual growth rate upwards. Brisbane’s house prices have increased by a staggering 30.4 per cent in the past year, with the median price now $783,000, following a peak-to-trough fall in values of -1.4 per cent between April and September 2020. This compares to the 12.7 per cent annual growth for apartments across Brisbane which increased at the fastest rate in December, although it was only 1.6 per cent. According to Corelogic, a typical Brisbane house is now about $207,000 more expensive than it was at the beginning of January, while units experienced a gain of $60,000 during 2021. However these properties were providing sellers with a gross yield of 4.1 and 5.1 per cent respectively. Brisbane and regional Queensland were the only regions, apart from Adelaide, where there was yet to be a slow in growth. The rise in value over November and December marked the biggest monthly gains in 28 years. Across greater Brisbane, the hottest suburbs for price growth were found at Point Lookout on North Stradbroke Island up 44.2 per cent to a median of $692,9111. This was followed by Thornlands also part of the Redland City Council district where prices increased 34.5 per cent in 2021, to a mere $493,222. Teneriffe and New Farm also crossed the $2-million median mark with Ascot and Hamilton likely to follow suit early this year.

Brisbane’s housing market: policy updates and trends

Affordability, not interest rates will slow housing market

Concerns about the impact of a possible interest rate rise on the booming property market may be growing, but opinion is sharply divided over what effect it may have, and when. The Reserve Bank of Australia has indicated an interest rate rise was likely to remain at 0.10 per cent in 2022 after dropping to that level in November 2020.

Home buyers the winners as owners rush to sell

Residential listings are set to pile up when the housing market reopens in January with a surge in the number of homeowners looking to sell before prices peak. Requests for appraisals have jumped by 19 per cent in Brisbane indicating that a large number of potential vendors are looking to enter the market in the new year.

Olympics to push Brisbane market’s limits

Brisbane house prices could more than double by the time the 2032 Olympic Games roll around, taking median home values above $1.4 million, economists predict. The growth rate would be consistent with the market’s past performance during the G20 summit in 2014 in Brisbane, when dwelling prices surged 112.7 per cent over 12 years from when the event was announced in 2003 to 2015, a year after it was held.

What the experts are saying about Brisbane's housing market

Tim Lawless Head of Research Corelogic

“The market is yet to show any evidence of a slowdown in the pace of appreciation, bucking the slowing trend that is evident across most of the other capital cities. “Advertised stock levels remained well below average at the end of the year, keeping a heightened sense of urgency amongst buyers. Ongoing low advertised supply levels are another factor supporting higher housing values. “Although we aren’t seeing any evidence of the market slowing just yet, it’s likely conditions will ease through 2022 due to higher mortgage rates, a gradual normalisation in listing numbers and potentially tighter credit conditions. “However, we are expecting Brisbane will be among the best performing capital cities through the year.”

Shane Oliver Chief Economist AMP Capital

“The continuing surge in housing finance commitments to investors in November indicates that the Australian property market is becoming more speculative and maintains pressure on APRA for further measures to slow housing lending. “Australian home price gains are likely to slow with prices falling later in the year as poor affordability, rising fixed rates, higher interest rate serviceability buffers, reduced home buyer incentives and rising listings impact. “Assuming the Omicron wave impact is relatively short we continue to see the RBA starting to raise interest rates from November. “There is also the risk that supply chain disruptions flowing from the Omicron wave accelerate the rise in inflation in Australia much as they have been doing in other countries over the last year.”

Antonia Mercorella Chief Executive REIQ

“Queensland hasn’t experienced this sustained level of demand and accelerated growth before, but after years of modest growth, prices here are playing catch up. “Even as our median prices rise, our state is still demonstrating greater bang-for-buck, with investors looking to make their real estate dollar go further, and southerners making the move keen to lap up our State’s incredible liveability factor. “While predicting what’s next is simply crystal ball gazing, the market is still going strong with 12-month growth averages indicating markets are rising right across the board. “With interstate borders reopening and international border opening to come, chances are we could see a flurry of activity and an uptick in demand well into the new year.”

Paul Riga Director of Property Economics Urbis

“The latest data shows that not only are we seeing a resurgence in Brisbane’s new apartment market, but with more owner-occupiers making the move the buyer profile has shifted dramatically “Approvals for new apartments continue to slide nationally and Brisbane is also looking at a low point in completed apartment supply in 2022 with about 1200 apartments under construction. “The supply picture is looking larger for 2023, but at this stage we could see some supply constraints emerging over the next year.”

Brisbane housing market forecasts

ANZ has tipped house prices to jump by 9 per cent next 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 next 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 over across 2022 as impact of low rates and strong income support begin to fade. Westpac has also updated its property forecasts, with Brisbane real estate prices tipped to surge 10 per cent between 2022 before dialling back -1 per cent in 2023.

Brisbane auction clearance rates

Week Clearance rate Total Auctions

Week ending 5 December 2021 74.6% 273

Week ending 12 December 2021 72.6% 305

Week ending 19 December 2021 N/A N/A

Week ending 26 December 2021 N/A N/A

^Source: Corelogic - December 2022

Brisbane’s auction market is currently red-hot after the city escaped the worst of the pandemic disruption, drawing increased population from disenchanted southerners. However the Christmas break, Omicron and border reopenings may have slowed the market compared to other months with the auction clearance rate dropping back to 73.6 per cent across 578 properties. These numbers recorded in December were still well above the city’s track record as buyers and sellers alike adapted to the speedy market. New and total listings dropped right across the country during the holiday season however this was still almost 20 per cent above the same time last year. Although results were only recorded after the first half of the month, the week up to 12 December was Brisbane’s busiest week for auctions since Corelogic’s records began in 2008. Meanwhile Domain reported an additional 123 auctions for the week to 18 December with a clearance rate of 76 per cent. This was the highest clearance rate in the country outpacing Adelaide at 74 per cent, Canberra at 70 per cent along with Sydney and Melbourne which covered around the 60 per cent mark. The most expensive homes sold in Brisbane for the month included a six-bedroom house in Ascot which sold for $5.35 million and a four-bedroom house in Indooroopilly which sold for $4.6 million. On the other end of the spectrum, the most affordable homes were a three-bedroom house on Bribie Island which sold for $550,000 at auction along with a two-bedroom unit in Taringa for $402,000 according to Domain.

Brisbane residential rental vacancy rate

City Vacancy rate Monthly % change Vacancies Net change

Brisbane 1.3% 0%▶ 4839▲ 169▲

^Source: SQM Research - December 2021

Brisbane, which has boomed during the pandemic from a surge in interstate migrants which saw its vacancy drop to 1.3 per cent and hold steady through December with just 4839 properties available. Residential vacancy in Queensland’s capital has been on a general decline since December 2016 when the rate was at 4.1 per cent and the last time vacancy rates in Brisbane were lower was in 2006 at 0.8 per cent. This compares to the national average of 1.6 per cent, slightly higher than November’s 10 year low rate, with the number of properties available increasing in every city except Adelaide. The impact of open borders across most parts of the country is yet to be reflected in the data, however an influx of international arrivals would be a welcome addition particularly in the inner city markets. Premier Annastacia Palaszczuk announced restrictions for fully vaccinated, international travellers would be lifted on January 22. Border restrictions on domestic travellers were removed on January 15, as Queensland’s vaccination rate neared 90 per cent. SQM Research forecast the outlook for 2022 is for rental markets to continue to remain tight until the anticipated easing in property prices takes effect providing some relief for renters.

Brisbane rent prices

Type Rent Monthly % change Annual % change

Houses $556.80▲ 2.3%▲ 16.5%▲

Units $401.60▲ 0.4%▼ 5.4%▼

^Source: SQM Research - December 2021

House rents hit a record high in Brisbane for the December quarter as combined capital city rents produced the strongest annual growth since 2009 at 7.4 per cent. Domain’s quarterly rental report showed Queensland’s capital had the strongest annual growth in the country for 2021 up 12.9 per cent. It is now more expensive to rent in Brisbane than in Melbourne, and the sunshine state has continued to outpace Victoria since March 2021. Across the country there was also a record difference between the cost of rent for a unit and house, jumping to a $155.20 difference in Brisbane. This likely reflected a desire for more space as people work remotely from home, meanwhile the affordability of smaller, inner-city apartments attracted renters opting-out of sharehouses. There were no signs the rental market in Brisbane would slow down, with houses expected to continue to outpace unit prices. Young professionals and their families were the biggest interstate group to move to the area according to the quarterly report. The most expensive area to rent a house in the greater Brisbane was the Kenmore, Brookfield and Moggill SA3 region where rents had jumped to $638 a week. The cheapest location to rent was Ipswich Hinterland at $365 closely followed by inner Ipswich at $375.

Queensland building approvals

Dwelling Approved Monthly % change

Houses 2198▲ 7.4%▲

All dwellings 3581▲ 20.0%▲

^Source: Australian Bureau of Statistics - November 2021

Australia’s new home building boom is set to continue well into 2023, with about 190,000 homes—including 121,000 houses—tipped to be built nationally this year. Approximately 25,000 new houses and 18,000 units will be constructed in Queensland next year, according to the Housing Industry Association. There were also very encouraging signs that the apartment market would return with a 20 per cent increase in Queensland for November, well above the national average. Brisbane’s house building construction costs, however, have increased 8.0 per cent in the past year. The pace of cost changes rose faster in Queensland than any other state in Australia meanwhile across south-east Queensland there was an ongoing land shortage. The biggest releases of land were seen in corridors including Logan and Ipswich however approvals were also slowing development capabilities.

Queensland home loan lending indicators

Type Lending ($bn) Monthly % change

New loan commitments for owner occupier housing 4.02 5.0%▲

New loan commitments for investor housing 2.21 4.9%▲

^Source: Australian Bureau of Statistics - November 2021

In order to raise a 20 per cent deposit, the typical Brisbane house buyer now needs around $157,000 and unit buyer $90,000. The value of owner-occupier loans in Queensland jumped at the highest rate in 10 months with the average loan size reaching $514,000. However Brisbane property prices are expected to continue to play catch up with Melbourne and Sydney markets in the lead up to the Olympics. This would happen regardless of what happen with inflation and interest rate rises as buyers were attracted to the relative affordability of the city. In September, the Reserve Bank governor, Phil Lowe, ruled out using interest rates “to cool the property market”, meaning low rates were likely to stay until 2024. Lowe said the cash rate would stay on hold until “actual inflation is sustainably within the 2–3 per cent target range”, likely not until 2024 due to low wage growth despite a tightening labour market. Lowe acknowledged that young people were “paying a heavy price” during the Covid pandemic due to lockdowns and public health measures, citing increasing incidence of mental health issues and calls to support services. The latest ANZ-Property Council quarterly survey shows industry players expect a tightening in credit conditions over the next 12 months. New lending finance to owner-occupiers has already peaked while first home buyer finance has been trending down since its peak in January. Home lending to other owner-occupiers has fallen 10 per cent over the past two months. Growth in investor lending is positive after more than doubling in the year to May.

Queensland interstate migration

State Arrivals Departures Net change

Queensland 28,500▼ 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.