This article was written with reference to the August 2018 Brisbane Property Market Update Report from CoreLogic.
Brisbane property market update
Here are some key statistics for the Brisbane property market performance up to 31 July 2018:
The Brisbane property market has become one of the best performing capital city markets. However, it’s not because our growth rates have accelerated… It’s because other cities have slowed down at a faster rate!
From start January 2018 to end July 2018, Brisbane dwelling values have risen by 0.4%. This may be a mild result but it’s the second highest growth rate after Hobart. Hobart saw dwelling values up 5.8% over the same time frame.
The local unit market has been the main driver of year to date growth with Brisbane unit values up 1.1% over the first 7 months of the year. In comparison, house values are up a modest 0.3%.
Unit values in the Brisbane property market update are showing early signs of recovery. These include –
Construction peaked almost 2 years ago, so supply is winding down while population growth is ramping up.
However, unit prices need to rise by almost 11% before returning to the previous nominal high (which was more than a decade ago).
Market update for the Australian property market
Since peaking in September 2017, the Australian housing market has recorded a cumulative 1.9% fall in values
However, values remain 31% higher than they were 5 years ago
The May – July 2018 quarter saw –
a 0.9% decline in national dwelling values (the lowest for a quarterly change since January 2012)
a 0.2% decline in combined capitals dwelling values
a 1.1% decline in combined regional dwelling values
5 of the 8 capital cities saw dwelling values slip lower
Hobart as the star performer with growth of 1.7%
Melbourne record the biggest fall in dwelling values of -1.8%
Sydney and Perth weren’t far behind with falls of -1.1% and -1.5% respectively
Sydney and Perth weren’t far behind with -1.1% and -1.5%
This weakness is being attributed to –
Long running declines in Perth and Darwin dwelling values;
The acceleration in the rate of decline across Sydney and Melbourne dwelling values; and
Tighter credit conditions
Key Brisbane property market update statistics:
Capital growth for Brisbane property –
3 months to 31 July 2018 = +0.5%
12 months to 31 July 2018 = +1.2%
A year ago the annual rate of growth was +2.9%. It is now only +1.2% over the 12 months to July ‘18.
Median dwelling price $494,634
Key property market statistics for other Australian capital cities:
Capital growth for Sydney property –
3 months to 31 July 2018 = -1.1%
12 months to 31 July 2018 = -5.4%
Median dwelling price $863,769
Capital growth for Melbourne property –
3 months to 31 July 2018 = -1.8%
12 months to 31 July 2018 =-0.5%
Median dwelling price $709,568
Capital growth for Perth property –
3 months to 31 July 2018 = -1.5%
12 months to 31 July 2018 = -2.3%
Median dwelling price $457,274
Capital growth for Adelaide –
3 months to 31 July 2018 = +0.7%
12 months to 31 July 2018 = +0.7%
A year ago the annual rate of growth was +5.4%. It is now only +0.7% over the 12 months to July ‘18
Median dwelling price $438,163
Capital growth for Hobart property –
3 months to 31 July 2018 = +1.1%
12 months to 31 July 2018 = +11.5% (since January 2017, Hobart’s annual growth was holding at double digits, but it’s now starting to slow)
Median dwelling price $435,833
Capital growth for Combined Capitals –
3 months to 31 July 2018 = -1.1%
12 months to 31 July 2018 = -2.4%
Median dwelling price $650,165
National sales statistics:
The number of dwelling sales fell by almost 10% over the 12 months to 31 July 2018. Every capital city (except Adelaide) saw a reduction in the number of settled sales.
As the market has slowed, inventory levels have risen (advertised stock levels are almost 8% higher than a year ago). This has resulted in higher vendor discounting rates and longer selling times (days on the market).
Sum up for our Brisbane property market update
Can’t see any factors that may halt or reverse the housing market trajectory of subtle decline for the rest of 2018
Availability of housing credit has been a significant factor contributing to this slowdown. Other factors include –
Owner-occupier lending has continued to grow at a relatively strong pace BUT investment lending is tracking at a record low of 1.6% annually
Sydney and Melbourne are still showing the highest concentration of investment lending
Limits to interest-only lending are still in place and providing disincentives to housing market investment
The dim prospects for short-medium term capital gains are also likely to be dampening the demand for investment properties
The number of dwellings under construction are at record highs in Victoria and South Australia, and only marginally under the record high in NSW (unfortunately, “investment grade” projects are numerous). This continues to put downward pressure on prices as demand thins.
Migration trends have also changed –
NSW is seeing more residents moving interstate
Interstate migration to Victoria appears to have peaked
These imply a reduced demand for housing in these states
Conversely, QLD is the major beneficiary of these cross border movements, particularly SEQ. This should increase demand for housing in QLD.
Despite the above, low mortgage rates will continue to provide a support buffer which should help to maintain housing demand.
Owner occupier mortgage rates are at the lowest level since the 1960’s. This is likely to result in owner occupiers consuming a greater share of market activity relative to investors going forward.