Brisbane now second priciest property market with boom to continue

There has been a significant shift in the rankings of Australia’s most expensive capital city markets.

Brisbane surpassed Canberra to have the second-highest median dwelling value among all capital cities, having overtaken Melbourne earlier this year.

Breaking it down into house and unit markets, we’ve also observed a significant shift in rankings this month.

In May, according to new CoreLogic data, Brisbane’s median house values surpassed Melbourne’s for the first time since June 2008, moving Brisbane from fourth to third place among Australia’s most expensive capital city housing markets, behind only Sydney and Canberra.

Additionally, Brisbane’s median unit values have overtaken those of both Melbourne and Canberra, making Brisbane the second most expensive capital city unit market in the country.

The primary driver of this shift in Brisbane is the significant reduction in total listing volumes, which are down 34.1 per cent compared to the previous five-year average, according to CoreLogic.

Despite this, month on month, total listings are actually up 7.14 per cent.

Simultaneously, sales volumes have increased by 7 per cent over the last 12 months, indicating strong buyer activity. As a result, any new listings are quickly being absorbed by buyers who continue to exert upward pressure on prices.

Brisbane has experienced a renewed acceleration in price growth on a monthly and quarterly basis, with median house and unit values continuing to rise across both market segments.

This suggests that Brisbane’s market is gaining momentum in terms of price growth. This marks a significant change from last month when data suggested the market was decelerating, particularly in the housing sector.

Brisbane continues to be one of the top three capital city markets for growth on a monthly, quarterly, and annual basis, alongside Adelaide and Perth. These markets also exhibit low inventory levels, which likely explains the difference in growth rates compared to other capital city markets across the country.

Throughout May, Brisbane’s auction clearance rate remained steady at 63.9 per cent, consistent with April.

Brisbane property leaps almost $40,000 in three months

In May, Brisbane’s dwelling values saw an increase of 1.4 per cent, marking a strong jump from the 0.9 per cent reported in April. Quarterly growth also increased from 3.1 per cent in April to 3.9 per cent by the end of May. The median value for dwellings in Greater Brisbane has now reached a new peak of $843,230, representing an increase of $15,409 from the previous month and $37,638 from three months ago.

Similar to most other capital city markets, Brisbane has witnessed slower growth in upper quartile dwelling values over the past three months.

Conversely, the lower quartile has displayed stronger conditions, representing more affordable price points within the market. This trend in Brisbane is further reinforced by the stronger performance changes in unit values compared to house values over the last quarter.

In May, median house prices in Brisbane experienced a significant increase of 1.4 per cent, marking a strong uptick compared to the 0.9 per cent growth observed last month. Quarterly growth also saw a shift from 3.1 per cent at the end of April to 3.7 per cent over the three months leading up to the end of May. 

Annually, the Brisbane housing market maintains its position as the second fastest-growing capital city market in Australia, trailing behind Perth. 

The median value for a house in Greater Brisbane now stands at $937,479, reflecting an increase of $17,433 from last month and $27,491 from three months ago. Over the past 12 months, Brisbane houses have seen a median value increase of $129,307 annually.

Unit prices accelerate

Throughout May, unit values in Brisbane saw an acceleration of growth, rising by 1.9 per cent, following a 1.5 per cent increase in April. This brings quarterly growth to 5.3 per cent and annual growth in the unit segment to 18.2 per cent for Brisbane.

The unit sector remains stronger than houses on a monthly, quarterly and annual basis.

The median value of a unit in Greater Brisbane is now $615,429, which has elevated Brisbane’s ranking in terms of median unit values for capital city markets, surpassing both Melbourne ($614,299) and Canberra ($583,587) to become the second most expensive capital city unit market within Australia.

Over the last month, unit values in Brisbane have increased by $15,214 at a median value level, $27,636 over the last quarter, and $94,761 over the last 12 months.

Rental market in Brisbane critically tight

Vacancy rates in Brisbane remain worryingly low, currently sitting at 1 per cent citywide, with several regions throughout the city experiencing even tighter vacancy rates. 

The annual change in house rents in Brisbane has increased to 8.2 per cent at the end of May, slightly higher than last month’s 7.9 per cent. Additionally, the annual change in unit rents in Brisbane is now at 9.6 per cent, a slight decrease from last month’s 10.5 per cent.

While there is a slowdown in rental growth in the unit segment of the market in Brisbane, there seems to be an uptick in the rate of growth in rents in the housing segment once again.

The gross yield for housing in Greater Brisbane currently stands at 3.6 per cent, unchanged from last month, while the gross yield for a unit has decreased slightly from 5 per cent to 4.9 per cent month on month.

Apartment undersupply only getting worse

It appears interest rate stability is sustaining buyer and seller confidence.

While we’ve seen a slight easing in the rate of population growth, worsening affordability pressures from both a purchasing and rental perspective, higher inflation and low sentiment, Brisbane’s low stock has continued to preserve the imbalance between supply and demand.

The only effective way to alleviate pressure is to enhance supply, either by increasing the number of properties listed for sale or by constructing more properties.

In 2023, Brisbane witnessed the completion of 2,200 apartments, marking a decrease of 70 per cent compared to the previous 12 months and significantly below long-term trends. Projections indicate a rise in completions over the next 12 months, with 3,100 apartments currently under construction and expected to be completed this year. However, due to the recent low level of commencements, apartment completions are forecast to decline once again, reaching just 1,200 in 2025.

Considering current market conditions and the time required to construct higher-density projects, Brisbane's apartment market is anticipated to remain severely undersupplied for at least the next few years.  

Whether it’s detached housing or higher-density developments, the same constraints hinder bringing more supply to the market, including planning restrictions, inadequate capacity to facilitate essential infrastructure for land development, high taxes and charges, sluggish approval processes and workforce shortages.

Consequently, an improved supply pipeline seems a distant prospect.