Why are Brisbane property prices going up by so much?

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A perfect storm of increased demand from both home buyers and investors at a time of low stock, even lower interest rates, wage growth, and a global pandemic has catapulted Brisbane’s property market into a period of the strongest growth in 18 years.

According to a recent Commsec Economic Insight quoting Corelogic stats, Aussie home prices continued to make solid gains in October, defying an expected slowdown from Delta virus outbreaks in Australia’s southeast.

Fig1

Home prices are up 21.6 per cent higher over the year — the strongest annual growth rate in 32 years.

But now price growth is slowing.

Covid-19 restrictions, rising fixed mortgage rates, affordability constraints, and new regulatory measures to tighten serviceability requirements for new mortgages are slowing home price growth in the larger capital cities.

Across all capital cities, home prices lifted by 1.4 per cent — the slowest pace in 9 months.

But capital city home prices are up 20.8 per cent over the year to October – also the strongest annual pace in 32 years.

House prices climbed 1.5 per cent and apartment prices rose by 1.1 per cent.

House prices were up 24 per cent a year ago — the fastest annual rate in 32 years.

And apartment prices climbed 11.8 per cent – the strongest annual pace in 11 years.

Home prices diverged across capital cities in October.

Home prices were higher in seven capital cities, led by gains in smaller cities, such as Brisbane (+2.5 per cent, the strongest growth rate in 18 years), Adelaide, and Hobart (both up 2 per cent), and Canberra (up 1.9 per cent).

But prices in Sydney (up 1.5 per cent), Melbourne (up 1 per cent), and Darwin (up 0.4 per cent) lagged and prices in Perth edged lower by 0.1 per cent.

Home prices were higher than a year ago in all eight capital cities in October:

  • Sydney (+25.2 per cent);
  • Melbourne (+16.4 per cent);
  • Brisbane (+22.3 per cent);
  • Adelaide (+20.1 per cent);
  • Perth (up 16.4 per cent);
  • Hobart (+28.1 per cent);
  • Darwin (+19.3 per cent); and
  • Canberra (+25.5 per cent).

Fig2

Commsec report that homebuyer anticipation of higher mortgage borrowing costs, an easing of virus restrictions, and solid pent-up demand ahead of Christmas should continue to support capital city home prices in the near term.

Home prices in regional areas continued to outperform capital cities in October, supported by a home buyer desire for either a ‘seachange’ or ‘tree-change’ and more flexible working arrangements.

In fact, regional home prices advanced 1.9 per cent to be up 24.3 per cent on the year — the strongest annual growth rate in 17% years.

House prices also lifted 1.9 per cent to be up 24.6 per cent on the year.

Apartment prices rose 1.6 per cent in the month to be up 22.5 per cent in the year.

Fig3

Home prices rose in 79 out of 88 SA4 regions in October, with median home prices hitting record highs in 69 regions.

The strongest home price growth was in regions accessible to Greater Sydney, such as the Southern Highlands & Shoalhaven, NSW (up 3.5 per cent) and the Hunter Valley excluding Newcastle, NSW (up 3.3 per cent).

And Greater Brisbane suburbs featured prominently with home prices in Brisbane-South, QLD (up 3.1 per cent); Brisbane-West (up 2.9 per cent); Ipswich, QLD (up 2.7 per cent); Moreton Bay-North, QLD (up 2.6 per cent); and Logan-Beaudesert, QLD (up 2.5 per cent).

And home prices in the Gold Coast, QLD were up 2.6 per cent.

Source: Commsec Economic Insights

ALSO READ: Top 10 Brisbane school zones for house price growth

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au


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