Brisbane Property Market Update - September 2024

by Melinda Jennison - Managing Director Streamline Property Buyers

Introduction

The Brisbane property market has continued to show price pressure and steady growth throughout September 2024, despite signs of slowing momentum. As one of the standout performers among Australian capital cities, Brisbane has demonstrated sustained demand, particularly in the unit market, while the housing sector remains strong but is experiencing a more moderate pace of price increases. This dynamic is largely driven by ongoing supply shortages, coupled with persistent strong buyer demand.

Compared to other capital cities, Brisbane’s performance remains impressive. According to CoreLogic data, Brisbane recorded a 0.9% increase in dwelling values for September, contributing to a quarterly growth rate of 2.7%. While this is slightly below the 2.9% recorded in August, it reflects a consistent growing market, especially when compared to the national average growth rate of 1.0% for the same period. Annual growth in Brisbane dwelling values is 14.5%, placing the city among the highest performers, with only Perth (24.1%) and Adelaide (14.8%) surpassing it in terms of yearly gains.

Source: CoreLogic

Sales volume trends, which serve as a key indicator of buyer demand, have remained strong in Brisbane. Over the last 12 months, sales volumes increased by 7.3%, reflecting continued interest in Brisbane’s property market despite broader economic headwinds such as higher interest rates and cost of living pressures.

Listing volumes, on the other hand, tell a different story. New listings in Brisbane in September were 0.7% lower than in August, and total listings were down 7% month-on-month. This reduction in supply continues to drive competition among buyers, which is putting upward pressure on prices. Total listings in Brisbane are down 11.9% compared to September 2023, contributing to the ongoing issue of demand consistently exceeding supply in the market.

Auction activity remains an essential barometer of market sentiment, and the data for September highlights an active but slightly cooling market. The average auction clearance rate in Brisbane was 58.1%, down slightly from the previous month, while the average number of registered bidders per auction increased to 3.7. Of these bidders, 66.7% were actively participating, reflecting the strong competition for properties. As auction activity stabilises but the average number of registered bidders rises, it indicates that vendors' expectations may be slightly outpacing the market, or at the very least, their expectations on price are increasing more rapidly than those of buyers.

When considering the participation rates of different buyer demographics, investors continue to play a significant role in Queensland’s housing market. Investors currently make up 38.9% of housing finance commitments, while first-home buyers account for 26.3%. This investor activity is partly driven by the attractive rental yields available in Brisbane’s unit market, where gross rental yields are currently 4.6%, compared to 3.5% for houses. These strong gross yields, combined with capital growth potential, make Brisbane a compelling market for investors.

In terms of sales performance, the CoreLogic Pain and Gain Report highlights that Brisbane remains the most profitable capital city for property resales, with 99.1% of sales in the June 2024 quarter delivering a nominal gain. This is a testament to the city’s sustained capital growth over recent years, which has been fueled by infrastructure developments, economic growth, and a strong employment market. The report also emphasises that Brisbane’s property market offers strong long-term returns for both houses and units, with median gains in resale value significantly outpacing losses.

Brisbane Dwelling Values

Brisbane’s dwelling values have shown consistent growth throughout 2024, and September was no exception. The 0.9% increase in median dwelling values for the month reported by CoreLogic reflects continued confidence in the market. This brings the quarterly growth to 2.7%, down slightly from the 2.9% recorded in August. On an annual basis, Brisbane’s dwelling values have surged by 14.5%, underscoring the city’s strong performance compared to other Australian capitals.

Source:? CoreLogic

The median dwelling value in Brisbane now stands at $881,091. This marks a significant appreciation in property values since the onset of the COVID-19 pandemic, during which Brisbane’s dwelling values have increased by 66.4%. This long-term growth has positioned Brisbane as one of the leading property markets in Australia, driven by a combination of low supply, strong demand, and the city’s appeal as a lifestyle and investment destination.

A breakdown of dwelling values by market segment provides further insight into the dynamics at play. The most affordable 25% of properties in Brisbane have experienced a 5% increase in value in the three months up to August, while the most expensive 25% have seen a more moderate1.8% increase. This trend highlights the continued demand for more affordable housing options, particularly units, which have performed exceptionally well in recent months.

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Source: CoreLogic

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Brisbane House Values

Brisbane’s housing market continues to demonstrate solid performance, with median house values rising by 0.8% in September. This brings the quarterly growth rate for houses to 2.4%, down slightly from the 2.5% recorded at the end of August. Annually, house values in Brisbane have increased by 13.5%, reflecting strong demand despite the broader economic challenges affecting the housing sector.

Source: CoreLogic

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The median value of a house in Brisbane now stands at $973,534. This represents a substantial increase in value, driven by both local demand and interest from interstate buyers who see Brisbane as offering better value for money compared to Sydney and Melbourne. However, it is worth noting that the pace of growth in house values has begun to slow, with affordability becoming a key concern for many buyers, particularly in locations where a higher portion of household income is required to service a loan.

The ongoing shortage of new housing supply, coupled with rising construction costs, has exacerbated the supply-demand imbalance in Brisbane’s housing market. This has led to continued price growth, although at a slower pace than throughout the latter months of 2023 and early in 2024. ?

Brisbane Unit Values

The unit market in Brisbane continues to be a standout performer, with median unit values rising by 1.2% in September. This marks a quarterly growth rate of 4.2%, significantly higher than the 2.4% recorded for houses over the same period. Annually, unit values have surged by an impressive 19.4%, reflecting the growing appeal of units as a more affordable entry point into the Brisbane property market.

Source: CoreLogic

The median value of a unit in Brisbane is now $661,925. This strong performance is largely due to the increasing demand for well-located, affordable units in the city’s inner suburbs, where house prices have risen beyond the reach of many buyers. The relative affordability of units, combined with their strong rental yields, makes them an attractive option for both first-home buyers and investors.

Brisbane’s Rental Market

Brisbane’s rental market remains highly competitive, with a vacancy rate of just 1.1%. This tight rental market has continued to push up rents, with annual rent increases of 5.4% for houses and 5.1% for units. However, the rate of rent increases has slowed in recent months, providing some relief for tenants who have faced substantial rent hikes over the past two years.

Gross rental yields in Brisbane are currently 3.5% for houses and 4.6% for units, making the unit market a more attractive option for investors seeking higher returns. Despite the recent moderation in rent price growth, the ongoing supply-demand imbalance in Brisbane’s rental market suggests that rents will continue to rise, albeit at a slower pace than in previous years.

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?Source:? CoreLogic

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Summary

In conclusion, the Brisbane property market continues to perform strongly, despite some signs of slowing growth. Dwelling values have increased by 0.9% in September, with annual growth of 14.5%, positioning Brisbane as one of the top-performing markets in Australia. The unit market, in particular, has been a standout, with values rising by 1.2% for the month and 19.4% over the past year.

The key factors driving Brisbane’s strong performance are the ongoing shortage of supply, strong buyer demand, and attractive rental yields, particularly in the unit market. However, with affordability becoming a growing concern, particularly in the housing sector, the pace of growth is expected to moderate in the coming months.

Looking ahead, the market will also be influenced by the upcoming Queensland state election, with further talk of potential changes to rental legislation on the horizon. The housing industry’s peak bodies have expressed concern over the possibility of rent controls, warning that such measures could undermine investor confidence and exacerbate the current housing shortage.

With school holidays now over, the lead-up to Christmas is expected to be an active period for both buyers and sellers as many look to finalise transactions before the festive season.

Overall, Brisbane’s property market continues to offer strong opportunities for capital growth and rental returns, but careful consideration will be needed to navigate the evolving market dynamics in the months ahead.