Brisbane remains one of Australia’s strongest property markets, despite house prices having ground to a halt in recent months.
As prices in Australia’s two biggest cities fall deeper into a downturn, Brisbane’s housing market has officially flatlined, with figures from the latest Domain House Price Report, released on Monday, showing an annual fall of 0.1 per cent in the Brisbane local government area.
This equates to a $750 reduction in the overall median house price from $670,750 in March 2018 to $670,000 in March 2019.
The median house price fell by slightly more in the first three months of the year though, after finishing 2018 on a median of $675,000 compared with $670,000 in March 2019.
Median house prices
The figures for Greater Brisbane, which include the five LGAs of Brisbane, Ipswich, Redland, Moreton Bay and Logan, showed the annual median house price was down slightly by 0.3 per cent.
Domain senior research analyst Nicola Powell said Brisbane’s negative number was still considered a good outcome, particularly in the context of what was happening elsewhere in other capital cities across the country.
“Brisbane housing has had six years of continued annual growth, but now we’re seeing those house prices are flatlining,” Dr Powell said.
“However, I will say that a fall of 0.3 per cent is negligible. Home owners in Brisbane may not be reaping big capital gains right now but it’s important to remember Brisbane is still a much better performer than most other capital cities.”
Median unit prices
Brisbane’s property market remains fragmented, with houses outperforming units for the seventh year in a row.
Unit prices in Brisbane’s LGA dropped 3.4 per cent over the year to March 2019, as did units in Greater Brisbane, where units fell by 5.4 per cent during the same time.
Dr Powell said Brisbane units had fallen almost 10 per cent below their price peaks in 2016.
There was a significant silver lining. “It means buyers are now buying units for the same price they would have paid in 2013, so the affordability is there,” she said.
“Listings-wise, the number of units listed for sale is shrinking, but they’re not shrinking enough to translate into price growth. That will still take time.”
Jason Adcock, of Adcock Prestige, who sells some of Brisbane’s most expensive riverfront properties, said the most noticeable shift between now and 12 months ago was days on market.
“Where I used to sell a property in 30 to 60 days, they’re now taking around 75 to 100 days to get the same property sold,” he said.
“Price-wise, we’re tracking about the same. I’ve sold six multimillion-dollar properties in the past four weeks and all for good prices — none have been sold for less than what I thought they were worth.”
Adcock said he expected the market would pick up again after the federal election.
“Two to three weeks after the election, all the people who have held back from coming to the marketplace will come to the marketplace and reinvigorate it,” he said.
REIQ chief executive Antonia Mercorella said she held concerns about the future of Brisbane’s property market, with the federal election leaving its fate hanging in the balance.
“Brisbane [both Brisbane LGA and Greater Brisbane] median house prices growth has been modest but steady over recent years. However, that consistent, steady growth is plateauing in the face of strong headwinds,” she said.
“The REIQ would like to be optimistic that, with rents holding steady and proving reasonably resilient in the south-east corner, this would encourage investors to continue buying investment properties.
“However, with Labor’s negative gearing reforms on the cards, it’s unlikely we’ll see investors overcome their fears and continue to invest. The financial benefits are simply not there.
“This will have dire effects on the market, and it’s likely that the modest plateauing in house prices that we’re seeing at the moment will become a more significant dip if Labor forms government.”
Brad Robson, of Place Graceville, said prices had flatlined in his area following a flurry of activity in January but that sheer buyer numbers meant properties were generally still selling within 25 days.
“Buyers are still having children or still having kids move out and needing to downsize. Everything is still exactly the same as what it was,” he said.
“What is happening is that buyers are quite comfortable to seek out exactly what they’re wanting, as opposed to compromising and saying ‘let’s just do it because we might miss out otherwise’.
“I feel as though that’s the attitude at the moment — people are quite comfortable to pay what’s fair and reasonable, they’re just not willing to pay a record price.”
Peter Hutton, director and principal of Hutton & Hutton at New Farm, said Brisbane unit owners were more inclined to meet the market and lower their prices than house owners.
“Firstly, there’s a greater numbers of investors in the market, so there’s more competition,” he said. “But the other thing is the people who own houses around here enjoy a high degree of equity, which means they can choose to hold their property and not sell if they can’t get the price they want right now.
“That’s what a lot of house owners are doing. There’s been a lot of stock withdrawn from the market since September last year — they didn’t sell so they’re not off the market. They’re not going to be forced to take a lower price and they’re relaxed about it.
“In New Farm, there’s always times where prices flatten out and we go into a period of being flat — that’s the trend now. We may not see any price growth for a little while. I think personally next year we’ll see rising prices in those desirable suburbs like New Farm.
“It’s not a bad situation to be in – it’s just a pause. I do think any buyer who secures a property today that appears to be a saving compared to 18 months ago, they are the winners in this. It will only be another six months until we’re back in another good year.”
Land developers call bottom of property market
Land developers AV Jennings and Villa World have called the bottom of the property cycle after a year of slumping sales and consumer caution blew a hole in their profits.
AV Jennings said the current property cycle has “bottomed” and that it will deliver a stronger result next financial year, after its profits were cut in half to $16.4 million by wary homebuyers steering clear of big commitments.
“General market sentiment is clearly beginning to improve … a modest uptick in visitor numbers to sales offices and online is evident and is expected to be sustained during FY20,” AV Jennings said.
Villa World chief executive Craig Treasure said soft consumer sentiment, tight credit conditions and the uncertainty caused by the federal election had created “difficult headwinds”.
“We are seeing that sales enquiries have started to improve across Villa World’s projects, however buyers remain cautious,” he said.
Villa World’s profit after tax of $23 million was also shredded compared to the previous year when it earned $43.6 million.
“This result is consistent with commentary disclosed to the market since December 2018 and reflects the decline in the Australian residential housing market and softer consumer sentiment,” Mr Treasure said.
Villa World’s land projects are concentrated in Queensland and Victoria.
All metrics for the group suffered: earnings per share were down 48 per cent to 18.2c, total revenue fell 11 per cent to $391.6 million, and sales numbers slumped to 870, down from 1788 the previous year.
The property pain was similar at AVJennings where turnover fell 20.3 per cent to $296.5 million and profits crashed by 48 per cent.
“The lower profit reflects softer market conditions, particularly in Melbourne and Sydney,” the company said.
It paid an interim dividend of 1c on 22 March and will pay another 1.5c dividend on 20 September this year.
Villa World has agreed to a takeover by AVID Property group for $2.345 per share. It will declare a fully franked dividend of 31c, as a portion of the total takeover price if it goes ahead.
Brisbane Prices Could Be Headed For Recovery
Brisbane prices are at their lowest level in the cycle, according to the latest national property clock from Herron Todd White (HTW).
The house values in Brisbane, Bundaberg, Ipswich, Rockhampton, and Toowoomba were at the bottom, according HTW.
Meanwhile, prices in Cairns, Gladstone, Mackay, Townsville, and the Whitsundays are starting to recover, the data showed.
There was momentum for the price growth in Brisbane, given that the capital city had been “bouncing along the bottom for some time now”, HTW Brisbane managing director Gavin Hulcombe told The Courier-Mail.
“I think it will be (a) steady rise, but my suspicion is in a couple of years’ time we might look back and think it (now) probably wasn’t a bad time to buy. Some areas are likely to perform better than others,” he said.
Brisbane units are also at the bottom of the price cycle, along with Bundaberg, Ipswich, Mackay, Rockhampton, Toowoomba, and the Whitsundays, according to HTW.
Apartment prices in Cairns, Emerald, Gladstone, and Townsville are already rising, the figures showed.
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