Affordable Brisbane suburbs lead city's lengthy run of property price hikes

August was another strong month for the Brisbane property market, which continues to show month-on-month growth amid varying economic conditions at a national level. Brisbane remains a standout among Australian capital cities, continuing its trend of strong price growth over the past year.

According to CoreLogic, Brisbane’s dwelling values rose by 1.1 per cent in August, the same rate of growth as the previous month.

The quarterly growth rate in Brisbane, has slowed more noticeably between May (4.1 per cent) and August (2.9 per cent). This indicates a potential easing in demand as the market becomes less affordable.

Compared to other capital cities, however, Brisbane’s market remains one of the strongest performers.

Perth leads the national market with a 2.0 per cent increase in dwelling values in August, followed by Adelaide at 1.4 per cent and Brisbane at 1.1 per cent. On an annual basis, Brisbane’s dwelling values have risen by 15.0 per cent, placing it behind Perth (24.4 per cent) and on par with Adelaide (14.9 per cent) in terms of capital growth​. 

Brisbane’s unit market continues to outperform the housing market, demonstrating stronger growth across monthly, quarterly, and annual measures.

This sustained trend highlights the increasing demand for more affordable and accessible property options within the city, as rising house prices have pushed buyers to consider units as a viable alternative.

The strength within the unit market underscores its appeal to a diverse range of buyers, from first-time purchasers to investors seeking better gross rental yields.

Looking at the supply and demand indicators within the local market, Brisbane has seen an increase in both sales volumes and new listings. Sales volumes in Brisbane have grown by 7.5 per cent over the past 12 months, indicating strong demand from buyers does still exist, despite the quarterly growth rates easing across the city. 

New listings in August were 13 per cent higher than in the same month last year and 2.4 per cent higher than in July 2024, giving buyers in the market slightly more choice than in previous months.

The buyer profile in Brisbane continues to be diverse, with investors accounting for 38.2 per cent of housing finance commitments in Queensland, while first-home buyers make up 25.2 per cent. The participation of investors remains strong.

In many parts of the state, this is driven by the attractive rental yields, however, in Brisbane, especially in the housing sector of the market, it’s more the potential for capital growth.

Auction activity eased slightly between July and August, with the average clearance rate dropping from 61.8 per cent in July to 57 per cent in August. The number of registered bidders per auction remained steady at 3.1, while the proportion of those actively participating in the bidding process declined slightly from 63.6 per cent to 57.9 per cent over the past two months.

Affordable Brisbane suburbs rate highest

The upward trajectory in Brisbane’s dwelling values continued in August, with a 1.1 per cent increase for the month according to CoreLogic. This brings the quarterly growth to 2.9 per cent and the annual growth to an impressive 15.0 per cent.

The median dwelling value in Brisbane now stands at $875,040, reflecting a significant appreciation since the onset of the COVID-19 pandemic, during which values have surged by 65.1 per cent.

Since the rollercoaster of soaring prices during the pandemic and subsequent sharp retraction, Brisbane property prices have been rising steadily since mid-2022.

A breakdown of the dwelling values by market segment reveals a more nuanced picture. The most affordable 25 per cent of properties in Brisbane have seen a 5.6 per cent increase in values over the past three months, while the most expensive 25 per cent have grown by 3 per cent over the same period.

This suggests a sustained strong demand for more affordable housing, likely bolstered by the stronger performance in the unit segment, which sits at the more accessible end of property values compared to the housing market.

The housing market in Brisbane has also shown solid performance, with median house values increasing by 0.9 per cent in August according to CoreLogic.

Over the quarter, house values have risen by 2.5 per cent, and on an annual basis, they are up by 14.1 per cent. The median value of a house in Brisbane now stands at $966,382, highlighting the city’s sustained growth despite broader economic challenges.

The unit market in Brisbane continues to outperform the housing market, with CoreLogic reporting a 1.7 per cent increase in unit values for August. This strong performance brings the quarterly growth rate to 5.0 per cent, while annual growth stands at 19.4 per cent. The median value of a unit in Brisbane has now reached $653,325, reflecting the growing appeal of units as a more affordable entry point into the market​. 

Brisbane’s rental market still tight

Brisbane’s rental market remains competitive, with vacancy rates holding steady at a low 1.1 per cent throughout August.

This tight rental market has continued to push up rents, with annual increases of 6.0 per cent for houses and 6.2 per cent for units.

Unit rents are growing at a slightly faster pace than house rents, however, there has been a substantial fall in the rate of rental price growth in recent months.

This will be welcome news for tenants who have had to withstand rent price increases of more than 20-30 per cent over the last few years in Brisbane.

Gross rental yields in Brisbane are currently 3.5 per cent for houses and 4.7 per cent for units, making the unit market a more attractive option for investors who may be looking for higher cashflows.

The rapid increase in property values in recent years in Brisbane has led to a compression in the gross yields, particularly in the house market within inner city and middle ring areas.

Despite this, the ongoing imbalance between supply and demand in the rental market suggests that rents may continue to rise, but certainly not at the pace that has been experienced in the last 2 years. 

Infrastructure driving market gains

Throughout August 2024 Brisbane has reaffirmed its status as one of Australia’s most resilient and robust property markets.

The city continues to experience steady growth in dwelling values, with houses and units each showing strong performance. The tight supply and high demand in the market is driving up prices, while the rental market remains competitive, with low vacancy rates and rising rents, albeit at a slower rate of increase.

Although the rate of growth in Brisbane is clearly slowing, housing values remain supported by a long-term shortage of new supply, a situation that has been further intensified by ongoing challenges in the residential construction sector.

Brisbane’s property market is expected to remain strong, supported by ongoing infrastructure development, economic growth, and low unemployment.

The recent opening of the Queens Wharf project is just the beginning of several major developments that will further enhance Brisbane’s appeal as a leading investment and lifestyle destination.

Affordability is becoming an increasing concern, particularly in areas where property values and rents have risen significantly. Following the state election in October, the market may see increased certainty, providing further confidence for home buyers and investors.

Housing values in Brisbane cannot continue to rise at the same pace broadly speaking as affordability becomes increasingly strained. This is especially true given the current environment of elevated interest rates, a loosening labour market, and mounting cost of living pressures.