Resilient Brisbane Property Market
With the rise of short-term stay listings, the Brisbane property market is experiencing a housing crisis. The shortage of longer leases is also being exacerbated by a predicted immigration increase. According to the CEO of the Real Estate Institute of Queensland, Antonia Mercorella, the resilient Queensland property market is defying the decline in southern states. In the first quarter of 2022, median house prices in Queensland rose by 3.23% while those in the city’s inner suburbs saw an increase of 2.17%.
Population growth in Brisbane
In September 2020, Greater Brisbane will have grown by more than seven thousand people. Meanwhile, Sydney and Melbourne will lose around four thousand. In December 2016, the vacancy rate for residential properties in the inner-ring suburbs was 4.1 per cent. The current rate of accelerated growth will slow over the next year. Nonetheless, Brisbane is a city with a healthy population and a vibrant property market. A thriving property market is a must-have for any buyer.
Forecasted population growth for metropolitan Brisbane is strong over the next decade. According to the Australian Bureau of Statistics, metropolitan Brisbane will add more than 62,410 people every year. This growth is supported by continued overseas migration and the need to build 23,000 more dwellings each year. The biggest population growth rate is expected to occur in family households. On the other hand, growth rates will be higher for lone person households. For this reason, it is a smart time to purchase property in Brisbane CBD.
Interest rate increase
During the March quarter, the Reserve Bank of Australia (RBA) increased the official cash interest rate by 25 basis points. This move came amid concerns about inflation and the potential for more hikes in the near future. The sudden increase in borrowing costs could affect housing activity and the economy, as a high proportion of Australian households are heavily indebted. In the past, changes in the cash rate took several months to take effect. In addition, current high prices and debt-to-income ratios make the market more sensitive to interest rate changes.
In the past few years, house prices in Brisbane have risen at a record pace, thanks to factors like COVID-19 and interstate migration. Since the beginning of the decade, the average price of a Brisbane house has increased by 32 per cent. This is the biggest price gap in a decade. In the next few years, the gap between house and unit prices will close, as new apartments are built at a faster rate than previously.
Discounting in Brisbane property market
Almost half of the houses sold in the Greater Brisbane region have been discounted, according to Domain research. The suburbs with the most property discounts included Carindale, Rochedale South, and Upper Brookfield. Other suburbs that experienced higher discounts included Chermside, New Farm, and Redcliffe. On the Gold Coast, discounting is most prevalent in Blacksoil and Main Beach. However, the city of Brisbane also experienced some discounts.
As the market cools, more vendors are offering discounts to lure buyers. In Melbourne and Sydney, one in ten houses is now on the market at a discounted price. While a drop is welcome, a downward trend is expected to continue into next year. In Brisbane, however, the number of properties sold is expected to remain steady or fall. There are two main reasons why discounting is taking place. First, the red hot market has forced vendors to lower their asking price.
Impact of floods on Brisbane property market
The impact of flooding in Brisbane’s property market was dramatic and far-reaching. While a flood affected property in a high-value suburb may have suffered a severe decline in value, a low-valued home would have recovered faster. In addition, the price of a low-valued property could have increased significantly. The study analyzed residential sales and rental listings in the area affected by the floods.
After the floods in 2011, the property market in the 19 worst affected suburbs was outperformed by the rest of the city. Property prices in affected areas increased by 52 per cent, with prices in these neighbourhoods outpacing other parts of Brisbane. Floods can cause immeasurable devastation, but local authorities responded with assistance and evacuation shelters. The Federal and Queensland State Governments have even joined forces to create a ‘Mud Army 2.0’ to rebuild Greater Brisbane. While floods can impact house prices and shake confidence, history has proven that the Brisbane property market can be resilient.
Dan Croke