It’s Happening Again. Brisbane Property Prices to Surge!

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First published October 8th, 2023 – updated November 24th.

This is not something that we make a habit of doing, but when the writing is on the wall and it’s plain to see, we feel that we must direct our client’s attention toward it. We’re talking about Brisbane property Prices. The last time that we did this was in our blog of December 2020 and as history has shown we were right. [you can read that here]

In truth, property markets nationwide in 2021 surged even more than most people expected, including us, despite some reputable organisations [think Commonwealth Bank] predicting falls as large as 45%.

In what has since become known as the COVID boom, the Brisbane property market was one of the nation’s leaders in that boom, starting late in the second half of 2020 and throughout 2021. This continued into 2022, though somewhat blunted firstly by the floods early in the year and some early warnings of interest rate increases, and then further as interest rates started to bite and continued their rapid rise.

It was not just the rises themselves but the fear of just how long and how far they would go, considering what a sharp turnaround that was to the advice given by the reserve bank governor, Philip Lowe just a year before.

So, what has changed now?

This fear has now subsided somewhat, though not totally, as rates have paused from their rises for 4 months now. It’s still a little early to say that they have topped out but plenty of wary buyers have already decided they have and are voting with their feet.

Add to those the above average numbers of migrants we are accepting into the country, and you have the ingredients of a classic demand pull/ supply l price surge, especially given the interruption to product supplies we have been experiencing and the exiting of so many builders who became insolvent.

This year, 2023, property buyers have gradually adapted to higher interest rates and are more confident that we are at the top, or very near to the top of the cycle with the only way for interest rates to go now being down.

Property buyers are more financially literate these days and, aside from falling rates leading to cheaper loan repayments they also know that lower interest rates can lead to rising property prices.

brisbane property pricesBrisbane at the top of the list.

Consequently, Brisbane property prices have been steadily rising for much of this year. Core Logic recorded Brisbane house prices as having risen by 4% up to the end of August and Prop Track recorded 3.75% for the same period. Unit prices, according to Core Logic were even higher at a 5.9% increase. This bodes well for our developer clients facing higher build prices for their projects.

Brisbane home prices have surpassed previous peaks, recording a further 1.3% increase in September according to Core Logic. The city now looks poised to end 2023 with an 8% increase in home prices.


Index Results As At 30 September 2023

National changes in dwelling values – Core Logic

What lies ahead for Brisbane property prices?

Internal Migration

Brisbane and Southeast Queensland historically enjoy the strongest internal migration from other parts of the country, it’s climate and relaxed lifestyle being some of many factors influencing this. For the year ended March 2023 Queensland recorded almost 3 times the net interstate migration of the next closest state, according to ABS data. That process has now started to be boosted even further by preparations for hosting the 2032 Olympics.

The 2032 Olympics will put Brisbane on the global stage. Investment in sporting, transport and hospitality infrastructure will underpin the Brisbane real estate market for the next decade. Hence, it’s not unreasonable to assume that Brisbane property prices will continue to rise in 2024.

In fact, as interest rates come off their highs, as many predict they will, and migration continues to surge, many experts predict that property prices will surge too. This will also apply to rents.

What about rents?

The Brisbane residential rental market remains tight and is primed for significant growth in rents with vacancy rates persisting around an historically low 1% and little likelihood of change anytime soon. There has been a lot of talk and speculation about whether the Albanese government’s plan to build 30,000 social housing units nationwide would have any impact on market rents. We doubt that, especially remembering it’s for social housing and that’s presuming they will be able to achieve their goal – also doubtful.

Remember the Rudd Government pursued a similar housing initiative in 2009 called NRAS. It delivered around 20,000 dwellings nationwide yet did little to alter rents or housing affordability.

So, as rents rise, as they are highly likely to continue doing, they will play a bigger role in 2024 than usual, attracting investors back into the market and encouraging some renters to try and buy into the more affordable sectors of the market.

Brisbane property prices are still cheap.

With Brisbane’s median house value sitting at just 63% of Sydney’s it shows that Brisbane is still very affordable. Testament to that is the unusually high number of sales that have been settled via cash payment without the need for mortgage finance. According to reports by property transaction firm PEXA, a quarter of all buyers on the eastern seaboard settled with cash this year to date. It’s an increasing trend.

Cashed up buyers from southern capitals and major regional centres, all dearer than Brisbane, attracted by the lure of being debt free and Brisbane’s idyllic climate and easy-going lifestyle have been buying here and will continue to do so as much of the focus of new immigrants to this country is on those southern capitals. Sellers down there become buyers up here.

The lesson here is if you have been delaying getting your project underway, delay no further. Do you want to follow the crowd or lead the way? If you do have a project in mind make contact now – don’t wait until the new year – give us a call now.

Update – November 24th.

Since writing this blog based on information available up to early October, things have changed a little, most notably that the RBA increased the cash rate again by 25 basis points. This has understandably spooked a lot of people. Making matters worse they have released statements suggesting that it, the cash rate, could go higher – and it could – though there is some contradictory evidence questioning why it should. That’s because inflation is actually easing.

So, the question then becomes more about the pace of change, the speed at which the RBA achieves its desired result rather than just getting there eventually. Is it better to meander along, eventually achieving the goal a year or possibly more down the track or could it be sped up?

Has this cloud got a silver lining?

There’s little doubt that a great many people were experiencing substantial financial difficulty and pain prior to this last cash rate increase. That increase just made things worse for them – in the short term. However, that cloud may just have a silver lining.

This is because increases of this nature, as unexpected as it was, along with the threat of potential further increases [sometimes referred to as ‘Jawboning’], is likely to shorten the time needed for the RBA to achieve its goal. The trade-off being a bit more pain but over a much shorter time period before things return to normal and interest rates start to ease.

So, is there any more Silver Lining?

Well, yes there may be – for buyers. The market has been pretty tight without sellers needing to negotiate much if at all. Many buyers have been finding it difficult to get a deal let alone buy at all. This latest interest rate rise, with the potential of more threatening, may ease things a little for buyers. This short period now may be the last opportunity buyers get!

So, how does this affect Brisbane Property Prices now?

That said, as reported by ABC News just yesterday, many sellers were now withdrawing homes from the market. This will exacerbate supply at a time when traditionally the supply of new listings of homes for sale diminishes as sellers concentrate on other things. The same cannot be said for buyers though who traditionally come out of the woodwork later in January looking to buy. The laws of supply & demand dictate that this will create significant upward pressure on house prices, added to in no small way by the continued influx of overseas immigrants, the bulk of whom traditionally arrive in the first 3 months of the year.

All the evidence still suggests that Brisbane property prices are still set to surge regardless of short-term interest rate increases. It is only a matter of when. And that may be as soon as January February 2024.

What’s the latest research say?

Change in national home values from April 2022 peak

On November 23rd, Core Logic Research released its latest National Housing Value Index [HVI]. This is what they had to report.

“Australian dwelling values have regained the losses from the recent downturn and surpassed their previous peak to reach a new record high. After reaching a peak in April 2022, national home values fell -7.5%, finding a floor on 29 January 2023.  Since bottoming out, the national HVI has risen by 8.1%, taking the market to a new record high on Wednesday 22 November 2023.”

Even the traditionally conservative banks are now getting in on the act, loosening the purse strings a little. With confidence in asset value growth and strong rental income streams some banks have recently been active in attracting investors back into the market. The Commonwealth Bank has been offering investor loans requiring as littles as 5% deposit. They only offer 95% LVR if they are confident that asset value growth will minimise their risk fairly quickly.

Our Advice:

Our advice to existing and potential clients is to move quickly. Don’t procrastinate. If you are looking to buy an investment or do a development, get things rolling now. Leaving things ‘til after xmas’ may cost you a heck of a lot of money.

Call us if you need some help or just complete this form 

Phone:- 61 (07) 33697779

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