Are you wondering what will happen to the Brisbane property market moving forward?
Well… based on how the market has been performing so far it’s likely that will see high double-digit Brisbane house price growth in 2021, with most segments exhibiting strong price appreciation other than the inner city and high-rise apartment market.
And despite Covid related challenges buyers and sellers are still transacting and Brisbane property values:
- increased 0.6% over the last week
- increased 1.8% over the month of September, and
- 19.4% over the last year
And there is still plenty of growth left, as Brisbane property is still very affordable compared to the other east coast capital cities.
What a turnaround from all the pessimistic forecasts all the banks made in the middle of last year.
Currently, the Sunshine State capital is shining but it’s not too late to be early in this cycle – there is plenty of growth ahead – for the right properties.
Outstanding demand for lifestyle areas as well as extremely strong demand for detached houses in Brisbane, particularly in the inner and middle-ring suburbs has delivered 5.3% overall growth in the last 3 months, with Brisbane’s more expensive properties outperforming.
The resurgence of buyer interest in the Brisbane property market has meant that auction clearance rates have consistently been in the 70% range, which is unusual for Brisbane considering this city is not known for its auction culture like its southern cousins, but this is just another suggestion that there are more buyers than there are sellers and this always leads to higher property prices.
At Metropole’s Brisbane office we are noticing more investors are getting into the Brisbane market recognising that while there are no bargains to be found, in 12 months’ time the properties they purchased today will look like a bargain.
Not that long ago Westpac Bank updated its forecasts and tipped Brisbane prices to surge 20 percent between 2022 and 2023, meaning Brisbane is likely to be one of the best performing property markets over the next few years.
Of course, while some locations in Brisbane have strong growth potential, and the right properties in these locations will make great long-term investments, certain submarkets should be avoided like the plague.
Increased demand for Brisbane houses has been underpinned by increasing consumer sentiment, historically low interest rates, and internal migration considering the relative affordability of houses in Queensland compared to Sydney and Melbourne.
Similarly, popular areas of the Gold Coast and Sunshine Coast have enjoyed strong demand considering the increased flexibility of being able to work from home and commuting to the big smoke less frequently.
At the same time, property investor activity has been strong, particularly for houses, not only coming from locals but from interstate investors who see strong upside in Brisbane property prices as well as favourable rental returns.
But be careful…there is not one Queensland property market, nor one south-east Queensland property market, and different locations are performing differently and are likely to continue to do so.
Houses remain a firm favourite of prospective home hunters, with demand rising post-lockdown and it remains significantly elevated compared to last year.
However, apartment demand has been sliding and, in general, apartments in Queensland are a higher risk investment than houses, particularly due to a high supply of apartments that are unsuitable for families or owner-occupiers.
To help you make an informed investment decision, I’m going to examine what’s going on in the Sunshine State in detail in this article.
But be warned…it’s a little longer than normal, so if you’re looking for a particular element of the Brisbane property market, use these links to skip down the page.
There are multiple markets in the diverse sprawling city of Brisbane; divided by geographic location, price point, and property type.
And just to make things clear…I’m talking about the property market in Brisbane – not the Queensland property market.
That’s a very different animal!
If you’ve been following my property investment strategy, you’ll know I only invest in capital cities and that’s why I avoid the Sunshine Coast, the Gold Coast, and Queensland’s regional markets which have very different (and fewer) growth drivers than Brisbane and are therefore more volatile.
And not all Brisbane properties will perform well.
In Queensland, houses are the preferred style of accommodation over units, and investors who buy rental apartments in high supply areas are taking a high risk with both equity and cash flow risks materially increasing over buying the right house.
So how long will this cycle continue?
If you would have asked me this question a couple of weeks ago I would have suggested that our property market would continue growing at the rate of 6 to 7% per annum throughout 2022 until eventually, affordability slowed the market down.
Remember the current upturn phase of the property cycle only commenced a year ago, in October 2020.
Normally the upturn stage of the property cycle lasts a number of years and is followed by a shorter boom phase which is eventually cut short by the RBA raising interest rates or by APRA introducing macroprudential controls to dampen the exuberance of property investors and home buyers.
However, this time around we have experienced an unprecedented rate of growth seeing our property markets perform even more strongly than anyone ever expected, with the rates of house price growth at levels not seen for a number of decades.
While a lot has been said about the 20% increase in property values many locations have enjoyed so far this year, it must be remembered that the last peak for our property markets was in 2017, and in many locations housing prices remain stagnant over a subsequent couple of years and it was really only earlier this year that new highs were reached.
This means that average price growth was unexceptional over the long term, averaging out at around 4 percent per annum over the last 5 years
But recently there seems to have been a change of sentiment about our housing markets from our financial regulators, the banks, and even our treasurer.
The Council of Financial Regulators, the club of four main financial watchdogs, showed concern about the increased level of home lending in the first half of the year.
In particular, they signaled their concern about the number of mortgages taken out at more than six times the borrower’s income.
The council has asked APRA to put together a list of potential measures, but this is going to be a challenge and their response will need to be measured so as not to create unintended consequences such as a severe property downturn.
Just look back to 2014 when APRA checked house price growth by targeting investors and restricting the size of what they could borrow relative to the value of their housing collateral.
While tougher lending standards will certainly take some heat out of Australia’s property markets by restricting the number of people that can get home loans, or lessen the amount they can borrow, the move could backfire in the short term as investors and homebuyers try to rush and buy to beat the buzzer on the upcoming tightening of lending conditions.
Back to the question of when will this property cycle end – there is little doubt that Macro-Prudential controls will have a negative impact on our property markets and slow the rate of growth of housing values.
After all, that’s what they’re intended to do.
Whether the markets will just experience slower growth or stop dead in their tracks will depend on what measures are introduced.
Targeting debt-to-income ratios will have a limited impact on higher-wealth households, who often have multiple streams of income.
However, it will affect lower-income households and those purchasing property for the first time.
If you think about it, first homebuyers don’t have a “trade-in” of a previous home and therefore need to borrow higher loan-to-value ratios.
On the one hand, the government says it wants to encourage first homebuyers, and on the other hand, it is encouraging the regulators to sideline them.
So in the meantime, it’s just waiting and see what our regulators choose to do.
I hope they have learned from the results of previous interventions, otherwise, if history repeats itself, there will be some unintended consequences.
Watch this space.
However, in the meantime, there is likely to be a mini-boom as home buyers and investors bring forward their property purchases to beat the buzzer of more restrictive lending criteria.
So…is it the right time to get into the Brisbane property market?
Anyone who buys an A-grade home or investment-grade property in Brisbane now will look back in a couple of years’ time and recognise they bought a bargain, as this new property cycle still has some years to run.
There is a perfect storm of positive growth drivers that will have Brisbane house prices performing strongly in 2021 and 2022 and the recent announcement of Brisbane winning the 2032 Olympic games will underpin strong infrastructure growth, economic growth, and population growth over the next decade.
This suggests that South East Queensland will continue to be a preferred destination for many Aussies from interstate due to lifestyle, health, and affordability reasons.
But, as I have explained, there are multiple housing markets within Brisbane, based on price point, geography, and type of property and as always, you can’t just buy any property and count on the general Brisbane property market to do the heavy lifting over the next few years, so careful property selection will be critical.
Article Source: propertyupdate.com.au
Brisbane’s western suburbs rents skyrocket by 20 per cent-plus
Soaring demand for affordable family-friendly homes close to schools and parks has sparked a rental boom across some of Brisbane’s leafy western suburbs, with prices climbing by up to 20 per cent in just 12 months.
The latest Domain Rent Report, released last week for the September quarter, revealed the steepest rent hikes were collected in the middle and even outer city rings of the Queensland capital, with Mount Ommaney claiming the crown for top performer after house rents there rose a massive $138 per week to $690 over the last year.
Cornubia, Fig Tree Pocket and Seventeen Mile Rocks were all hot on its heels after rents rose 19.9 per cent to $535, 17.2 per cent to $700 and 16.1 per cent to $560, respectively. Houses in Scarborough, in the bayside north, saw an increase of 16.3 per cent bring weekly rents to $465.
In the nearby bayside suburb of Woody Point, units topped the leader board after rents jumped 15 per cent to $345, with Camp Hill – in the coveted inner east – winning the silver medal after a 13.9 per cent rise raised weekly prices to $410.
While rents across the city collectively rose to record heights in the September quarter, not all suburbs posted positive growth. House rents in South Brisbane suffered an annual 8 per cent drop to $460. Grange house rents, in the city’s north, also took a dive of 7.6 per cent to $550, with Manly in the bayside south suffering a slump of 5.1 per cent to bring house rents to $490.
In units, the worst-performing suburbs were Sunnybank and Macgregor, which suffered price drops of 5.1 and 4.8 per cent to bring weekly rents to $370 and $400, respectively.
Despite the price fluctuations, the individual suburb data has revealed a growing shift towards affordable lifestyle suburbs amid a new set of rent conditions that Place Estate Agents director of property management Cathie Crampton said were, more than likely, here to stay.
“Demand in the city’s lifestyle suburbs [is higher than ever] and we are seeing people moving to places like the bayside now,” she said. “The typically traditionally strong rental suburbs of Norman Park and Bulimba are still going through the roof in terms of both rentals and sales … but our most improved suburbs are Graceville and Indooroopilly, where people want to move into those school catchments.
“And that’s where we’ve had 0 per cent vacancy in our rent roll.
“But our best performing suburb has still got to be Bulimba,” Ms Crampton said. “It has continued to perform and we’ve had one of the lowest vacancy rates in that suburb for over nine months now.”
According to the Domain report, Bulimba is now the city’s most expensive suburb to rent a house after a 9.3 per cent annual hike sent weekly asking prices to $765.
Kenmore Hills came in at second place after prices rose 7.6 per cent to $710.
While the city’s blue-chip suburbs saw more subdued growth over the past year, it was the hunt for an affordable home close to amenities that sparked the price surge in Mount Ommaney, said Ray White Centenary letting manager Debbie Swales, with the suburb undergoing a coming-of-age off the back of a booming sales market.
“It’s certainly picked up a hell of a lot and when I get a good property – particularly a good family home now – people are desperate,” she said. “There are just too many people needing to rent and it’s mostly because house prices have gone up so much.
“Queensland is just really booming because there’s a lot of push from down south … but I think with Mount Ommaney, in particular, it’s a beautiful suburb and the rent is not astronomical compared to other suburbs. Then you’ve got the shopping centre, it’s really safe and there are the parks and the river.
“I’m now getting people ringing me from the Sunshine Coast and from even the north of Brisbane and they say they are moving here because it’s close to the city but also Ipswich – it’s just so accessible.”
It’s a sentiment shared by Ray White Holland Park department manager Kaitlyn Schneider, who said rents had jumped by up to $150 in the past six months alone as tenants moved further out from the city.
“I think we’ve got great access to the highway … and we’re still affordable and that’s bringing so many people to these places,” she said. “I would say Holland Park to Camp Hill and the pockets between [are on fire].”
The rental renaissance has swept across the city’s once-stigmatised Redcliffe region, said One Agency Redcliffe and Northlakes principal Stephan Siegfried, with prices soaring to record heights off the back of a pandemic-induced lifestyle shift.
“With COVID, people have rediscovered this area – and that happened particularly when we had distance restrictions [last year],” he said. “At one point Margate Beach was like Bondi – you couldn’t move and there were tents and people sunbathing. So Redcliffe has been discovered.
“People have realised this is a great place to be and we’re close to Brisbane. But the other thing that has happened [to push up prices] is the rental stock has been shrinking somewhat because landlords have cashed in on properties, and that’s shrunk the pool a bit.
“And now we’ve got people who have been priced out of the market and have to go further afield,” Mr Siegfried said. “In fact, we’ve seen a large jump in prices and that’s visible and there’s a social disturbance for long-term Redcliffe residents who have lived in affordable properties and are now finding that’s no longer the case.
“While for investors this is great – and I’m really excited because this is a coming of age for Redcliffe – about 12 days ago we had an elderly woman in our office who was in tears because she said she couldn’t afford to live here anymore. So there are two sides to the story.”
The Domain report revealed house rents on MacLeay Island, in the bayside south region, soared by 19.3 per cent over the past year to $325, while Margate house rents rose by 12.5 per cent to $428, with Redcliffe houses rising by 10.5 per cent to $420.
As for Brisbane’s cheapest suburb to rent a house, the report showed the outer pocket of Russell Island boasted a meagre weekly rent price of $300, despite prices rising by 15.4 per cent over the past year.
For units, Sandgate was the city’s most affordable suburb at $255 per week, with prices sliding a slight 1 per cent over the past 12 months.
Article Source: www.domain.com.au
House prices to rise 22 per cent this year, and grow further next: Westpac
Westpac has tipped property prices to rise by more than 20 per cent this year, increasing its price forecast yet again as the market continues to boom despite extended lockdowns.
The bank expects property prices to climb 22 per cent this year, up from a forecast of 18 per cent, and has also lifted its outlook for next year from 5 to 8 per cent.
However, it has warned the property boom is entering trickier territory, with a correction expected from 2023.
Senior economist Matthew Hassan said the property market, fuelled by record low-interest rates, had blasted past price expectations – going well above earlier forecasts for 15 per cent growth this year – with only a slight dampening effect from the latest COVID lockdowns.
Prices rose across the country another 1.5 per cent in September, taking the nation’s median dwelling price to almost $675,000, according to the latest CoreLogic figures. Values are up 17.6 per cent since January, and more than 20 per cent over the past year, marking the fastest annual growth seen since 1989.
Mr Hassan expects prices in Sydney to jump 27 per cent before the end of the year, with values in Brisbane and Hobart also expected to climb more than 20 per cent. Annual price growth of 18 per cent is forecast for Adelaide and Melbourne, and 15 per cent growth is tipped for Perth.
ANZ also expects national growth of more than 20 per cent, revising its forecasts upwards in recent months, while CBA increased its forecasts to 20 per cent, and NAB forecast 18.5 per cent growth back in July.
Westpac’s increased forecasts come after the Australian Prudential Regulation Authority (APRA) announced banks had to lift the buffer rate applied to loan serviceability assessments from 2.5 to 3 per cent, which is estimated to reduce maximum loan sizes by about 5 per cent.
The move came earlier than expected, Mr Hassan said, though he felt its impact on the market would be marginal, given more than 80 per cent of borrowers were not taking out the maximum loan size available. However further tightening of lending restrictions, such as a crackdown on high debt to income ratios, may have a bit more of an impact – particularly on investors with multiple properties.
Still, he expected investor activity to lift from its comparatively subdued levels – accounting for just 25 per of the value of loans over the last 12 months, compared to close 40 per cent over loans over 2015-17 – as affordability constraints squeezed out owner-occupiers.
“That is the real risk factor for the market. The investor segment has been pretty subdued throughout the boom so far… but if there’s a segment that’s going to sustain the boom for longer it’s likely to be investors,” he said, which could drive more persistent price gains near term but also result in a more material correction.
“This is the pointy end of the price cycle, where affordability strains start to price people out of the market altogether, and even if you do have investors coming in in a big way that’s a riskier environment in terms of sustainability in price gains and the tolerance of regulator. We are getting into much trickier territory and the policy side of things is now in play.”
Already, the Sydney and Melbourne markets are 18 per cent and 10 per cent, respectively, above their previous price peaks in 2017-18, a time when both had major affordability problems.
Mr Hassan expects the market to have run out of steam by 2023, forecasting a pullback of 5 per cent as official interest rates rise – though the Reserve Bank still has the first cash rate hike pegged for 2024.
“Even though rates will still be low, it’s about the shift in the direction …the sentiment will be that there is no more scope for [rapid] price growth … and I think that will be the thing that tips us over into a correction,” he said.
Dwelling completions, at a time of low population growth, could also weigh on prices, he added, with more than 200,000 dwellings completed this year – more than double the increase required with slower populating growth.
Oversupply had so far been limited to certain pockets, given the prolonged period of underbuilding that proceeded the latest building cycle, but that may shift if the return to significant net migration inflows takes several years to come through.
Article Source: www.domain.com.au
Queensland tenants secure more rights
The Housing Legislation Amendment Bill 2021 was approved earlier this month
Legislation has passed in the Queensland parliament that will provide more rights to tenants in coming years.
The new laws enact minimum quality standards for Queensland’s 1.8 million renters starting September 2023.
They disallow property owners from issuing a notice to leave ‘without grounds’ providing tenants with more certainty.
They allow tenants to have pets within rental properties in certain conditions. The pet clause commencement date is not yet known, but the changes to renting with pets will allow a property owner to refuse a pet on prescribed reasonable grounds that cannot be addressed by prescribed reasonable conditions.
The laws requires owners to consider the specific circumstances or the specific attributes of a pet request and deter blanket “no pets” rules.
They extend protection for renters who have experienced domestic and family violence.
The Palaszczuk Government passed its new tenancy legislation with some amendments, calling it “striking the right balance between renters and property owners.”
Penny Carr, CEO of Tenants Queensland, the state’s tenant advisory specialists, welcomed the finalisation of the first stage of the reforms, but said they fell short of modernising the laws.
“Our focus will now be to ensure all Queensland renters understand the new laws, how to exercise their rights and meet obligations, without fear of eviction.
“Renters will find it somewhat easier to keep a pet and to have repairs attended to but they will wait until 2024 for minimum standards and will still be subjected to arbitrary evictions.
“These laws are not ones for a modern Queensland as they don’t offer strong enough protections from unfair evictions,” said Ms Carr.
The REIQ says the laws had swung distinctly in favour of tenants.
“Property owners have lost the right to end a periodic tenancy by providing notice,” REIQ CEO Antonia Mercorella said.
“Unless owners can establish limited prescribed grounds (such as the sale of the property) they will never be able to terminate a periodic tenancy.”
The Housing Minister Leanne Enoch has committed to stage 2 of rental reform to begin in the first half of 2022.
Article Source: www.urban.com.au
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