Brisbane and QLD property market update - January 2021

In spite of a global pandemic, Brisbane property values have held steady and have even reached record highs. 

Yes, there was a COVID induced downturn but this was true for every state capital - and the impact on Brisbane was less pronounced. Local and interstate investors have also made the most of the relative value and rental returns of this market, which has helped push property values north.

This is against a national backdrop of rising values nationwide over January, with CoreLogic data indicating that, ‘every capital city and broad rest-of-state region recorded a rise in housing values over the month’. 

The national home value index rose +0.9 per cent over January, driving dwelling values to a new record, with the overall index +0.7 per cent higher than its September 2017 peak.

The other noteworthy development is the continued robust performance of regional markets across the country, which outpaced metro markets over January, growing +1.6 per cent vs +0.7 per cent.

With the big picture covered let's take a closer at how Brissie and the Queesland market performed over January, with a deeper dive into data and insights from property experts.

Brisbane market update

Houses

$583,902

Monthly change: +1.0%

Units

$390,785

Monthly change: +0.4%

Overall Brisbane’s market rose a respectable +0.9 per cent over the month to leave it in positive +2.5 per cent territory for the quarter and up +4.0 per cent for the YTD. Houses continue to outperform units, a trend that is unlikely to reverse under the current conditions.

Domain’s House Price Report, indicates that median property prices in Brisbane grew +2.2 per cent over the December quarter, reaching a record median house price of $738,000 in December.

Compared to the median price for a house in Sydney ($1,211,488) and Melbourne ($936,073) and it’s pretty clear that affordability and lifestyle is driving the move to the Sunshine State. 

The report identified a handful of suburbs with healthy year-on-year house price growth, including Logan (+5.6 per cent), Moreton Bay (+5.2% per cent), Redland (+6.2 per cent) and Somerset (+8.6 per cent). 

Units generally struggled to stay in positive territory over this timeframe, but Moreton Bay was an exception, advancing +8.9 per cent quarter-on-quarter and +7.2 per cent year-on-year. 

Regional Victoria market update

Houses

$426,750

Monthly change: +1.7%

Units

$383,645

Monthly change: +1.1%

Overall regional property markets in Queensland are booming up +1.6% over January, driven by high demand in select locations - like the Sunshine Coast and other lifestyle postcodes. Contrast this with Brisbane which grew +0.9 per cent over the month.

Property forecasting site Hotspotting identified a number of regional suburbs to watch, including Coolum Beach and Peregian Beach - based on their popularity with retirees. They also like Noosa Heads, Sunrise Beach, Sunshine Beach, Warana and Yaroomba for their long-term capital growth, as they consistently grow in the region of +5 per cent to +7 per cent per year.

Before COVID hit many of these areas were already with buyers, with CoreLogic reporting that, ‘Out of 88 sub-markets across Australia, the Gold Coast and Sunshine Coast have seen the highest volume of net internal migration, or arrivals minus departures from other parts of the country, for the three years to June 2019’. 

The pandemic induced ‘flight from the cities’ has simply served to accelerate the phenomenon - and Gold Coast and Sunshine Coast house and unit prices reached new record highs at the end of 2020. 

Domain’s quarterly House Price Report indicates that Gold Coast house prices were up +7.6 per cent annually, while units grew +7.1 per cent higher over this timeframe. Meanwhile Sunshine Coast house prices advanced +10.2 per cent over the year, with unit prices up +7 per cent annually.

Queensland rental market update

The Real Estate Institute of Queensland’s (REIQ) reports that vacancy rates are tightening in Brisbane’s CBD, with data for the December 2020 quarter showing the figure is now 3.3 per cent; down from nearly 5 per cent in the June Quarter. 

Rates in Brisbane’s outer-ring suburbs are much tighter, posting a quarterly rate of 1.3 per cent.

There are also signs that unit rents are stabilising in the city after posting an annual change of -0.3 per cent, with houses in positive territory at +3.2 per cent. 

Parts of regional Queensland continue to post record low vacancy rates in the December quarter, including Rockhampton (0.2%), Bundaberg (0.4%), Fraser Coast (0.6%) and Hervey Bay (0.9%).

Gross rental yields in Brisbane are currently 4.3 per cent, while in regional Queensland you get a slightly better return of 5.2 per cent.

The outlook for 2021

So what does all this mean for this market as we move into 2021? Let’s see what property experts and financial institutions think.

Overall CoreLogic is positive, indicating that the property market is on, ‘...a firm footing, setting the scene for further price rises throughout the year’. 

Their outlook highlights:

Increased buyer activity 

An Australian economy in recovery 

Falling unemployment

A decrease in mortgage repayment deferrals

Low interest rates that continue to support the housing market recovery

SQM Research is similarly optimistic, pointing out that, ‘new property listings were up 4.3 per cent nationally over January, with most cities recording year-on-year rises’. They also believe that the, ‘...shortage of stock in capital-city real estate markets was being driven by increased buyer demand rather than any significant drop in new listings’.

Looking to the medium term (2022 and 2023), Westpac Bank recently updated its property forecasts, tipping Brisbane prices to rise +20 per cent. 

Michael Yardney, analyst and property commentator from PropertyUpdate agrees, indicating that, “Brisbane is likely to be the one of the best performing property markets over the next few years, while some locations in Brisbane have strong growth potential, and the right properties in these locations will make great long term investments, certain submarkets should be avoided like the plague;” 

The latter areas he is referring to include inner-city apartment towers which investors have deserted, and where structural issues with the buildings are cause for concern. 

The overriding theme is a positive outlook for this market, though CoreLogic does sound a word of caution - reminding us that a major resurgence or outbreak of the virus could derail all of the above.