Brisbane’s housing market is performing well compared with Melbourne and Sydney, thanks in part to steady jobs growth and interstate migration in the state.
However, Brisbane’s unit market is underperforming, with unit values down by 3.2% over the last twelve months, compared with house values which are up by 4.3%.
We’ve included the Brisbane market update below, along with a transcript.
Welcome to CoreLogic’s Brisbane property market update for October 2017
The Brisbane housing market continued the trend of modest appreciation, with dwelling values up half a percent over the September quarter.
the value appreciation remains largely confined to the detached housing sector, although unit values also saw a subtle level of growth at 0.1% over the September quarter.
Brisbane house values with a median of $528,000 are now less than half the price of Sydney’s, highlighting the affordability advantages of Australia’s third largest city.
With population growth now ramping up and jobs growth improving the outlook for the Brisbane housing market may have some upside.
The slowing in housing market conditions
The slowing in housing market conditions shouldn’t come as a surprise considering the recent history of dramatic capital gains across the Sydney and the Melbourne markets.
Since dwelling values started rising in 2012, Sydney values have surged by 75%, while Melbourne values are up by 57%. Macro prudential measures introduced by APRA at the end of 2014 and more recently in March of this year have played a key role in curbing the pace of appreciation, particularly in Sydney, where investment has been most concentrated. On the back of changed regulations, investors and interest-only borrowers now face a premium on their mortgage rates. Based on the data to the end of August, variable rate investment loans were typically attracting a 60 basis point premium.
While we expect growth rates to continue moderating, at least from a macro perspective, driven by Sydney and to a lesser extent Melbourne, there are likely to be other factors that will keep a floor under housing values. Housing demand fuelled by strong migration has risen during 2017 with the Australian Bureau of Statistics reporting the third highest net overseas migration result on record over the March quarter of 2017. Australia added more than 86,000 new residents from overseas over the quarter, most of which will contribute to demand for Australian housing. Almost 75% of these migrants arrived in New South Wales or in Victoria.
While investors are likely to scale back due to disincentives such as higher mortgage rates and low rental yields, first home buyers are a rising presence in the housing market. Based on July data, first time buyers reached their highest level since 2013. Stamp duty concessions that became available in July for first home buyers in New South Wales and in Victoria helped to push the numbers higher, but other states where incentives were unchanged also saw higher proportions of first home buyer activity. Additionally, mortgage rates are likely to remain close to historic lows. Although the cash rate may rise in 2018, the likelihood of a substantial lift in mortgage rates remains low, considering household debt levels are at record highs.
Overall, we’re expecting that growth rates will continue to moderate across the combined capital cities. However, the slowdown is likely to continue to be influenced by weaker conditions in Sydney and to a lesser extent in Melbourne. We’ll be tracking the movements in housing market conditions along with other key economic and demographic factors at www.corelogic.com.au.