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There’s a lot of speculation in the housing market about what could happen next. Over the past few years, we’ve seen a boom across the country, and now with rising interest rates, some think this will be coming to an end.

However, there is also some discussion surrounding the resilience of Brisbane property prices, and how they will fair over the next few years.

The rise and fall

The recent interest rates rise has played a part in falling property values across the country.

Data from CoreLogic shows home values in Melbourne are around 1.8 per cent lower than their peak in March, while home values in Sydney are about 3 per cent down from their February peak.

“There’s still probably another potentially 12 months ahead of us in this downturn,” said Tim Lawless, CoreLogic’s founder and research director.

These rising interest rates have come at a time when the price of household essentials is also increasing.

“If the market’s forecast for interest rates comes to fruition, then Australia’s discount variable mortgage rate will more than double to 7.1 per cent by mid-next year, taking rates back to 2011 levels,” Founder of MacroBusiness, Leith van Onselen wrote.

“The difference this time is that Australian dwelling values as a share of household disposable income are 50 per cent higher than they were in 2011. Thus, Australian house prices are much more vulnerable to a correction as interest rates are lifted.”

Time will tell just how much interest rates are increased, and the subsequent impact this will have on the Australian property market.

The Brisbane forecast

While experts are pointing to a potential slump in property values across most major Australian cities, Brisbane seems to still be on the up (for now, at least).

In fact, while auction clearance rates in Sydney, Melbourne, Perth, and Canberra are lower than they were this time last year, Brisbane’s clearance rates are actually higher. Last year, Brisbane had an auction clearance rate of 59.5 per cent, with a current auction clearance rate of 65.4 per cent.

This data seems to show that the housing demand in Brisbane isn’t slowing.

Why Brisbane?

There are many factors that separate the Brisbane property market from the general Australian housing market.

Green & gold

In 2021, it was announced that Brisbane had been chosen as the host of the 2032 Olympics.

Winning an Olympic bid can have a positive impact on a city. It not only brings tourism but also means more infrastructure is built.

Sydney experienced a growth spurt in the lead up to the 2000 games.

Economist Terry Rawnsley estimated the city’s economy grew at a rate of almost 5 per cent in the two years leading up to Sydney 2000. This was, however, preceded by a sharp fall-off afterwards.

The Sydney games also lead to a preemptive clean-up of the city, with the NSW government spending more than $130 million to curb pollution spread across 400 hectares between 1992 and 2000.

It’s easy to see why Brisbanites are hopeful that the lead-up to the 2032 games will have a positive impact on the city’s economy, and a potential flow-on effect for the Brisbane property market.

Potential falls yet to come

According to Digital Finance Analytic’s Martin North, Sydney’s simply the first city of many to experience the drop.

“This is something which isn’t just a Sydney/Melbourne problem,” he said.

“What tends to happen is Sydney tends to react first because of the significant leverage that there is there. Then Melbourne follows and then other areas tend to follow perhaps 12 to 18 months later.”

North goes on to note Sydney’s fast property slowdown.

“We’ve seen Sydney slow down quite dramatically, it’s the fastest slowdown over a six-month period since 1989,” he said.

If Brisbane follows this trend, we may see prices beginning to fall over the next year or so.

Mass interstate migration and a housing shortage

Interest in Brisbane is booming, as Queensland experiences high migration numbers. During the March 2021 quarter, the Australian Bureau of Statistics reported that Queensland gained 7000 people, the most of any state.

Social researcher, Mark McCrindle said this was largely due to younger people realising they could have housing affordability in a place with an expanding job market.

“It’s the Millennial migration, it’s the younger generations moving into an area and the benefits of the diversity of generations heading into an area is that it creates broader demand for schooling, education at university and tertiary, there’s a stimulus to the labour market as people work,” he said.

This mass interstate migration has no doubt played a part in the housing demand and shortage across Brisbane. In February, Brisbane’s vacancy rate was just 0.7 per cent.

Brisbane City Council Opposition Leader, Jared Cassidy called the current housing affordability crisis the “worst we’ve ever seen”.

“This is an extraordinary housing crisis and we think governments of all levels, council, state and the federal government, should be doing everything they can and finding new and innovative ways to address these concerns,” he said.

In 2020, Queensland saw an increase of 30,000 new residents from interstate, while New South Wales and Victoria experienced losses of 18,800 and 12,700, respectively.

Metricon Queensland general manager, Luke Fryer said new home sales saw an 80 per cent increase in South East Queensland.

“The major relocation companies are quoting 400 per cent increases in quotes to people who are wanting pricing to relocate from Sydney and Melbourne up to the Gold Coast and Greater Brisbane,” Mr Fryer said.

“We are seeing a significant increase in domestic migration. The level of enquiry and level of people committing to building a new home on the Gold Coast and south-east Queensland has really been phenomenal.”

University of Queensland business professor, Shaun Bond said large rental increases and high construction costs were also impacting the cost of living for Australians.

However, he also noted that buying activity could reduce due to affordability constraints.

“Population growth pressures may also ease as rental shortages limit the appeal of moving and a strong job market keeps people in the major cities,” he said.

The Brisbane housing market is likely being in part propped up due to the high volume of interstate immigration we’re currently receiving.

Cheaper average house prices

In March 2022, the Brisbane median property price was $830,000. This was considerably lower than the median prices in Sydney and Melbourne, making the Brisbane property market a more affordable choice for Australians willing to move.

Many people are leaving Sydney and Melbourne for Brisbane in order to get into the housing market.

With the RBA anticipated to continue their rate rise, Real Estate Institute of Queensland’s Antonia Mercorella said the sunshine state could fair okay.

“This is also where our relative affordability is an advantage, as our average home loan rate is much lower than in capital cities like Sydney and Melbourne, so the impact will be felt less here,” she said.

“We remain confident in the resilience of the Queensland market because the need and demand for housing is irrespective [of interest costs], and an interest rate rise simply causes people to rethink what they are prepared to spend and how big a loan they are prepared to enter into.”

Sell Your House Today

Just what will become of the Brisbane property market over the coming years is the question on many minds. While we have a lot of factors working in our favour, the past few years have shown that markets can be unpredictable.

If you’re interested to find out more about the Brisbane property market or are looking to buy or sell, get in touch with our team for a friendly chat.