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December 8, 2021 by ash

Brisbane Housing Market Insights: November 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 housing prices grew almost three times as much as expected this past year, with prices set to rise further amid fresh predictions it will outperform all other Australian capitals in 2022.

Brisbane has well and truly surpassed expectations of a dwelling price rise of 8 per cent in 2021, instead notching a 25 per cent jump off increased interstate migration, low stock and heightened demand.

Brisbane’s house prices have increased by a staggering 27.9 per cent in the past year, with the median price now $757,000, following a peak-to-trough fall in values of -1.4 per cent between April and September 2020.

November’s bump in dwelling prices was a modest increase from the previous month, when dwelling values grew at a rate of 2.5 per cent.

House price growth has also seen an uptick and unit prices have lost some momentum after lifting by 2.8 per cent and 1.3 per cent respectively in October.

According to Corelogic, property values rose 2.9 per cent in November—the biggest increase of any capital city—to be up 25.1 per cent over the year, providing sellers with a gross yield of 3.8 per cent.

The rise in Brisbane home values over November, the most in 18 years, was closely followed by Adelaide, which was up 2.5 per cent for the month, the biggest gain in 28 years.

The current median value for a property is now $662,000, and has further advanced an additional $20,000 during November.

A typical Brisbane house is now about $180,000 more expensive than it was at the beginning of January, while units have experienced a gain of $52,000.

Brisbane’s north remains a hot spot for property price growth, with an increase of 24 per cent across the year, while inner Brisbane houses have recorded record rises of up to 28 per cent for the year.

In the past three months, Bunya in Moreton Bay has surged by 12 per cent with a similar increase in Auchenflower in the inner west.

Teneriffe and New Farm have now crossed the $2-million median mark with Ascot and Hamilton likely to follow suit early next 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

Eliza Owen

Eliza Owen
Head of Research

“The housing market is well and truly past its peak for the current cycle, and it makes sense that as more headwinds accumulate, price increases will continue to slow, and more suburbs may see an adjustment in price.

“Fixed mortgage rates appear to be bottoming out, and this will limit the amount of finance that can be taken out as well.

“In the short term, we’ve still got a week or two before we hit the peak spring selling season, so more available listings will reduce price pressures.”

Shane Oliver New

Shane Oliver
Chief Economist
AMP Capital

“By the end of next year, I think the upswing will come to an end, and we’ll start to see price falls as higher interest rates feed through.

“I think later next year, we’ll start to see higher variable rates, and the combination of higher interest rates, poor affordability and increased listings, I think will start to weigh on the property market.

“The overall picture for the housing market is still strong, but it’s slowing, and I suspect that as we go into next year, the pace of growth will slow dramatically.”

Nicola Powell

Nicola Powell
Senior Research Analyst

“The [recent] surge in appraisals is quite revealing, particularly at this point in time as we’re so close to the end of the year.

“I think this shows that more homeowners are thinking of putting their homes on the market, for fear of missing out on the peak, and that will probably come to fruition early next year.

“Housing stock is now building up and rapidly changing the dynamics in the market in favour of the buyers.

Louis Christopher

Louis Christopher
Managing Director
SQM Research

“The win of the 2032 Brisbane Olympic Games is clearly a positive for the city’s economy.

“It is likely to help with the housing market over the next ten years. So we can expect outperformance of the Brisbane housing market compared with other Australian cities over this time.

“It will also benefit over the short term from interstate migration inflows from Sydney and especially Melbourne, notwithstanding any future state border closures.”

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’s auctions market is currently red-hot after the city escaped the worst of the pandemic disruption, drawing increased population from disenchanted southerners.

The market has moved from strength to strength and shows no sign of slowing down, remaining one of the few cities on an upward trajectory a year into the latest property boom and over November recorded a healthy clearance rate of 80.5 per cent across 1053 properties.

The city’s best performing suburbs—Norman Park, Indooroopilly and Camp Hill—have experienced median house price hikes of up to 36 per cent in the past 12 months and are amongst the most sought after on Domain and REA.

According to Domain, Norman Park—which topped its list for house price growth—saw the median climb 36.3 per cent to $1.24 million, with Indooroopilly collecting a 35.9 per cent lift to send the median house price to $1.277 million.

The fast-booming suburb of Camp Hill secured third place with a rise of 34 per cent, which sent the median house price to $1.2 million.

Different supply dynamics are also creating divergent trends across Australian capital cities and placing pressure on agents struggling to find stock.

Across November, the total stock available for sale across Brisbane was 33.9 per cent lower than the five-year average.

Comparatively, stock levels in Sydney and Melbourne have become far more normalised in recent weeks, with Sydney total listings sitting just 2.6 per cent below the five-year average, while stock levels across Melbourne are 7.9 per cent above the five-year average.

The national rental vacancy rate has now fallen to a 10 year low, of 1.6 per cent, as improving economic and health outlook prompts a rush of tenants to lease vacant rental properties.

Fewer properties are being left empty in Australia’s biggest rental markets, with vacancy rates falling or holding steady in each of the capital cities, new figures show.

Rising vacancy rates across the capitals have been brought to a halt, and are likely to fall further in the months ahead as the end of lockdowns and border restrictions near.

This should mean increased rental demand from returning Australians, international students and migrants.

Vacancy rates halted their upward climb in the locked-down cities of Melbourne and Canberra, falling slightly while the rate continued to track sideways in Brisbane.

The vacancy rate in the Brisbane CBD has dropped by 20 basis points so far this year to now be 8.4 per cent.

Since the onset of the pandemic, capital city house rents surged 10.1 per cent, while unit rents stayed 0.3 per cent below pre-Covid-19 levels.

Brisbane’s relatively low impact from the pandemic has meant that house rents have risen for five consecutive quarters—consistent growth not experienced since 2007.

Mount Ommaney has been the city’s top performing suburb after house rents there rose over the last year by $138 per week to now be $690.

Cornubia, Fig Tree Pocket and Seventeen Mile Rocks have all experienced similar rental increases, rising in that period by 19.9 per cent to $535, 17.2 per cent to $700 and 16.1 per cent to $560, respectively.

Bulimba is now the city’s most expensive suburb to rent a house after a 9.3 per cent annual hike sent weekly asking prices to $765 while Kenmore Hills is a close second after prices rose 7.6 per cent to $710.

House rents in South Brisbane suffered an annual 8 per cent drop to $460 while Grange house rents, in the city’s north, also took a dive of 7.6 per cent to $550, with Manly in the bayside south suffering a slump of 5.1 per cent to bring house rents to $490.

For the apartment market, the worst-performing suburbs were Sunnybank and Macgregor, which suffered price drops of 5.1 and 4.8 per cent to bring weekly rents to $370 and $400, respectively.

Australia’s new home building boom is set to continue next year, with about 190,000 homes—including 121,000 houses—tipped to be built nationally.

Approximately 25,000 new houses and 18,000 units will be constructed in Queensland next year, according to the Housing Industry Association.

Brisbane’s house building construction costs increased 7.4 per cent in the past year, and remains one of the most expensive regions to build in the country behind Hobart, Adelaide and Melbourne.

The price of timber has lifted by 12.4 per cent over the year in Brisbane, 31.7 per cent for steel, 7.3 per cent for plumbing products, 2.3 per cent for electrical equipment and has reduced by -2 per cent for concrete.

In order to raise a 20 per cent deposit, the typical Brisbane house buyer now needs around $140,000 and unit buyer $79,000.

In Queensland, the average figure for a loan for buying a newly built home is $461,000 and $489,000 for a loan to build a new home.

The average monthly repayments for an existing home is currently $2075, $1980 for a newly built home and $2100 for a new construction.

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.

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 experienced a net gain of 28,500 people from interstate in the March quarter and 21,465 departures.

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.