Property market conditions are strengthening, even with the prospect
of further rate rises, but supported by the view that we are very close to the
peak of the current RBA tightening cycle.
Stock on the market in Brisbane remains exceptionally tight, with sales
listings 29% below the five-year average, according to
CoreLogic. The article below from Terry Ryder, talks about these key factors that are driving the Brisbane property market.
Brisbane and Queensland are among the biggest targets for property investors in 2023 – and for very good reasons.
In many respects, when it comes to the key factors that drive real estate markets forward, all roads lead to Queensland.
Investors seeking the best place to put their money want to see a strong economy, they want to know that the population is growing, that big money is being spent on new infrastructure and that there is growing focus on the region they’re targeting.
They also want real estate that’s affordable, where demand from tenants is strong and rents are growing, and in many cases in the current climate they want above average rental yields.
Queensland and its state capital tick all those boxes.
With steady population growth, substantial infrastructure spending and the prospect of the 2032 Olympics, the Brisbane property market is expected to outperform many of its capital city counterparts.
After a Covid-led property buying surge in 2021 and into 2022, there was a downturn in Brisbane from early in 2022, although this decline started to lose momentum in the final quarter of 2022.
While there was a drop in sales activity overall in 2022, particularly at the top end of the market, sales levels still remain above historic norms.
Hotspotting analysis shows that the cheapest sectors of the market in the outer ring suburbs have still been performing quite well.
So too have well-priced apartments in the inner-city suburbs.
Some media sources have claimed that Brisbane prices dropped at record rates in 2022, but data from reputable research sources strongly disagrees.
Both Domain and PropTrack record only very minor decreases in property prices – less than 1% in 2022. And SQM Research still has Brisbane values higher than a year ago.
In January 2023, CoreLogic research director Tim Lawless told the ABC: “We’re still seeing Brisbane housing prices about 28% above what they were before the pandemic.”
He said: “The thing to keep in mind is most homeowners in Brisbane are still sitting on a substantial amount of equity.”
There were also signs in early 2023 that more buyers are returning to the market.
PropTrack data shows Greater Brisbane’s auction clearance rate in the last week of January 2023 was up 49% on the previous week, its highest level since interest rates started to rise in May. Improved clearance rates continued in February.
One of the appealing features for Brisbane is that it remains highly affordable, especially when compared to the southern capitals.
At $775,000, Brisbane’s median house price is well below Sydney’s ($1,205,000), Canberra’s ($950,000) or Melbourne’s ($900,000).
Similarly, at $490,000 Brisbane’s median unit price is considerably lower than in Sydney ($770,000), Melbourne ($585,000) and Canberra ($600,000).
With borders open and overseas migrants and students returning, demand from renters and buyers of units has risen – and vacancies have dropped markedly – both in the inner-city areas and across Brisbane generally.
The vacancy rate for Brisbane has been below 3.0% for the last three years, only briefly rising to 2.8% when the pandemic hit in April 2020. It has been falling since and is now 1.1%.
Properties available for rent in the Brisbane market overall dropped significantly in the past year as rental listings fell from 11,500 two years ago, 7,500 one year ago and to about 6,000 now.
The student accommodation market, in particular, is the tightest in the country.
Domain’s quarterly Rent Report (December 2022) found Brisbane had the second highest annual increase among the capital cities in rental prices (after Perth) for both houses and apartments.
PropTrack economic research director Cameron Kusher said rents will continue to rise in 2023.
He said: “There’s just not enough stock. Landlords have had scope to put up rents quite significantly and there’s no sign of that really changing in 2023.”
So, Brisbane is boosted by an improving economy, increased spending on major new infrastructure, and rising demand at a time of low supply, against a background a high population growth.
And, thankfully, the State Government’s ridiculous plan to increase land tax has been scrapped because it was untenable and unworkable.
So Brisbane, overall, is shaping up as a leading market to be in, in 2023 and beyond.
Article courtesy Terry Ryder from Hotspotting 1/3/23
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