20% capital growth for Brisbane. Really???

A few weeks back BIS Oxford Economics made a big call, suggesting that the median Brisbane house price could rise by 20% or by $113,000, over the next three years.

20% capital growth for Brisbane. Really???

This made the front page of several newspapers and split the online real estate community with many sharing the prediction as if it was the gospel truth and others saying it was BIS, but without the I.

I too entered the digital foray, suggesting that before folks blindly like or resend this information that they check out BIS’s past calls.

I did this to gauge the level of interest in my comment and on some platforms, my comment attracted higher online activity than the original post/share.

So, I have decided to look into this in more detail.

I like to ask myself a few questions when this type of stuff hits the newsstands.  These questions include:

  1. What has been forecast in the past?
  2. How do these forecasts compare with what really happened?
  3. What does the current forecast look like against present and/or future trends?

I have included two tables and two charts in this post.

Table 1: BIS Oxford Economics Brisbane house price forecasts
Time period$ change% changePrice range
Past forecasts
2014 to 2016$73,00016.4%$445,000$518,000
2016 to 2018$67,00013.2%$508,000$575,000
2017 to 2019$34,0006.5%$526,000$560,000
Current forecast
2019 to 2021$113,00020.5%$552,000$665,000

 

Table 2: Brisbane moving annual median house price
Year ending JuneMedian $Annual changeThree year change
$%$%
2009$444,750-$14,500-3%$94,50027%
2010$485,250$40,5009%$79,25020%
2011$457,750-$27,500-6%-$1,5000%
2012$444,500-$13,250-3%-$2500%
2013$462,500$18,0004%-$22,750-5%
2014$491,500$29,0006%$33,7507%
2015$512,750$21,2504%$68,25015%
2016$539,750$27,0005%$77,25017%
2017$554,250$14,5003%$62,75013%
2018$564,250$10,0002%$51,50010%
2019$552,000-$12,250-2%$12,2502%
Price Finder

20% capital growth for Brisbane. Really???

20% capital growth for Brisbane. Really???
My comments

BIS Oxford’s recent past calls haven’t been that far off the mark. Brisbane Table

Well two out of three ain’t bad!  Revisit tables 1 and 2.

Whilst the predicted % change – revisit chart 1 – looks possible, the actual quantum of the forecast price change – revisit chart 2 – looks far less probable.

For mine, three things need to happen if this forecast is to come true:

  1. Queensland needs to create a lot more full-time work and those jobs need to be high paying ones.  Recent trends suggest otherwise.
  2.  A lot of the buyers will have to come from elsewhere, being from interstate or overseas.Interstate migration to Queensland is increasing and there is evidence to show that they pay more for a property than the local market, but unless their numbers increase dramatically, their impact on the overall market is likely to be limited.Overseas buyer interest, in contrast and despite some Murdoch motormouths trying to talk it up, is on the wane.
  3. Australia’s economic, social and demographic outlook would need to change and probably significantly.

End note

I hope that BIS Oxford’s call comes true. Brisbane City CBD, Queensland, Australia

I do so for a selfish reason; we are planning to sell our home and downsize in the next year or so.

Our age and being an empty nest have more to do with our timing than any market analysis or trying to pick the peak.

But I think that the market forces against such a gain are too many.

I don’t hold much stock in exact price forecasts.

I think that understanding the general shape of things to come is more important than trying to put an accurate number on something so uncertain.

Having said that, if I was to guess and based on some luck coming Queensland’s way, then I think a gain of between 8% and 10% or up to $50,000 in Brisbane’s median house price over the next three years is probably more realistic.

NOW READ:  Will the Brisbane property market really grow by 20% in the next few years | MASTERCLASS

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Michael Matusik

About

Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive


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