PHOTO: Long lines at Brisbane home opens aren’t just hoped for, they are expected. Photo: Shutterstock
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Prospective buyers continue to line up in unprecedented numbers at home opens in Brisbane, prompting agents to extend their openings as the elevated demand for properties pushes the median house price to a record high.
More buyers than ever are active in the market, reflected in the fact that most quality properties sell after the first open home, attracting multiple offers and achieving high prices.
But what’s driving this unprecedented demand?
With the COVID-19 vaccine starting to roll out in Australia, it seems the worst of the pandemic might be behind us.
Our economic environment seems to be a lot better than what governments predicted and consumer confidence has bounced back strongly.
The unemployment rate peaked at 7.5 per cent, far better than what was expected, and unemployment is now falling, with 93 per cent of the jobs lost now recovered.
It is expected that unemployment will return to the 4 per cent to 5 per cent range a lot sooner than what was predicted.
Even loan deferrals data up to January 31 was positive, with 91 per cent of deferred loans having resumed their repayments, leaving only 0.5 per cent of all loan facilities in deferral.
Domestic migration from the southern states has been accelerating into south-east Queensland, further increasing the demand for housing throughout Brisbane.
It seems this trend is set to continue, at least for the foreseeable future.
REA Insights’ weekly buyer demand index recently hit a record high, and compared to the same time last year is up 45.1 per cent.
Australian Bureau of Statistics figures this month showed that building approvals and construction volumes in the higher-density unit market in Queensland seems to have bottomed out.
Multi-residential dwellings data has shown a slight increase in activity, whereas the data for detached house approvals is surging.
This, in part, has been driven by the HomeBuilder grant stimulus. The figures suggest that the current supply shortage off the back of peak oversupply in 2016, may start to slowly recover in the years ahead, but time will tell.
Stock levels are still very low in Brisbane, with total listing volumes down just under 30 per cent year on year. No wonder it is a frenzy out there with more buyers and fewer properties to purchase.
And of course, interest rates are low so there are plenty of cashed up buyers in the market. With the Reserve Bank saying it doesn’t expect to increase rates until 2024 at the earliest, there is a lot of confidence and people ready to spend.
With these positive news stories, more positive outlooks for the Housing Market are being published.
Westpac forecasted 20 per cent price growth for Brisbane across 2021 and 2022, a big change from their dire predictions less than 12 months ago.
And let’s not forget the big news this month. Brisbane is officially the top choice for the 2032 Olympic Games! This is game changing – it is the best opportunity Brisbane has had in generations.
It will turbocharge investment into the city and boost our economic activity. We will see the fast tracking of major infrastructure projects, which will have a knock-on effect for the property market. It’s really an exciting time for our city!
Brisbane median dwelling values
According to the latest Hedonic Home Value Index data by Corelogic, dwelling values in Brisbane recorded an overall median monthly price rise of 1.5 per cent in February.
The current median value for dwellings across Greater Brisbane is $535,618 which is the highest it has ever been.
The quarterly growth in dwelling values across Greater Brisbane was 3.5 per cent and annual growth for the last 12 months was 5 per cent.
Of particular interest is the fact that the upper-quartile properties are leading the growth in Brisbane. These properties represent the most expensive quarter of the market.
CoreLogic said median values for a detached house in the greater Brisbane region increased by 1.6 per cent, in February, contributing to a 12 month gain of 5.9 per cent.
The current median price for a detached house in Greater Brisbane is $593,232, also a record high.
Brisbane’s unit market saw some more positive growth in February, as values rose by 1 per cent, for a 1.1 per cent 12 month gain.
It seems this market has bottomed out and is starting to recover. The current median unit price in Brisbane is $396,183.
Brisbane rental market
The vacancy rate in Brisbane as a whole, tightened further between December 2020 and January 2021, and now sits at 1.7 per cent, according to data from SQM Research.
Brisbane’s rental market is tightest in South East Brisbane (0.6 per cent), Beenleigh Corridor (0.7 per cent), and Northern Brisbane, at 0.9 per cent.
Vacancies are highest in the Brisbane CBD (5.6 per cent) and Inner Brisbane (3.5 per cent), but in all other regions vacancies are either stable on a downwards trend.
Brisbane CBD vacancies in particular are continuing to recover strongly, with current levels similar to the peaks experienced between 2016 and 2018.
This is a remarkable recovery given the extremely high vacancy risk in this area during the peak of COVID-19.
Vacancy rates across most other parts of Greater Brisbane remain tight, and in fact are tightening even further as the demand for rental properties increases.
Rents in the unit market in Brisbane have now recovered and we are seeing some upward pressure on rents with an annual change in unit rents of 0.5 per cent across the city.
Housing rents continue to rise due to the tightening vacancy, with the annual increase in rents for Brisbane houses hitting 4.2 per cent, according to Corelogic Data.
Anecdotally, we are seeing strong rent increases in inner-city locations, especially in the premium housing sector.
Large shifts in the rents achieved when properties are advertised, are being demonstrated. Property management firms that we work with are also confirming this trend.
What did we see on the ground across Brisbane during February?
The Saturday inspection run in Brisbane is becoming chaotic – with big line ups at open homes now expected.
We are seeing some agents extend the inspection time frame from 30 minutes to 1 hour – purely to get the volume of people through the door.
We can’t ever remember a time when we experienced this level of demand in our city.
Quality properties are continuing to sell after the first inspection, when listed for sale by private treaty.
Buyers need to be prepared to submit offers on the same day as they inspect in most cases.
Thankfully, some agents are providing slightly longer timeframes for buyers to submit offers, but this usually means more buyers have time to get an offer in before the closing time frame.
We have been in the running for properties alongside more than 20 other buyers under multiple offers several times this month.
This level of demand is madness! At auctions we have attended there have been several registered bidders and properties are selling well above our appraisal range based on settled sales data.
Of course, in a rapidly appreciating market, relying on settled sales data is a mistake.
We are coaching our buyers through the process, so they understand how much “stretch factor” needs to be applied to the settled sales data. Depending on the location right now, this is between 3-10 per cent.
While the median data for Greater Brisbane shows price growth over the quarter of 3.5 per cent across the region as a whole, we know for a fact that many locations have grown significantly faster than this.
So as a buyer it is important to understand the real-time information for an area or you may simply keep missing out.
The months ahead …
We have no doubt that the future for Brisbane property prices looks positive. For once we actually agree with the predictions that the economists have made.
In fact, there are some areas in Brisbane where I’d argue we could see growth exceed the forecasts over the next two years.
Property prices are driven by the balance between supply and demand. We break down these two elements to understand, at a local level, what this dynamic looks like.
Right now the demand in Brisbane is being fuelled by so many things.
Demand for housing comes from both owner occupiers and investors and right now there are different motivations from these two groups.
Our own enquiry tells us that investors are rapidly coming back into the market, but they are competing fiercely with owner occupiers who are still the main drivers of the current demand in Brisbane.
We expect this demand to continue to increase in the coming months. For how long it lasts, no-one knows. But for now, we do know that for those who own Brisbane property, the future looks bright!