The rise in Brisbane property prices last month caught many people by surprise, but experts are divided on whether the surge will continue through the rest of the year.
CoreLogic says values rose more than 13 per cent in 2023 and lifted a further one per cent in the first month of this year.
Regional values rose a tad below nine per cent last year and half a per cent in January.
There was a recurring theme as hopeful buyers inspected a recently listed inner-Brisbane apartment on a muggy afternoon this week.
Buyers still feel FOMO
Phoebe told the ABC the fear of missing out is real.
“It’s the competition really that we’re struggling with. There’s not a lot on offer and places are just getting snapped up super quickly,” she said.
“Prices are skyrocketing and it’s a race against the clock really to get into the market.”
Another potential buyer added: “It’s frustrating as we see things coming up, and by the time we get to the first inspection, an offer has already been made.”
Angus Kizil said he was lucky enough to buy his first home in Indooroopilly last year.
“It’s been a journey, some really fierce competition — [at] the inspection of the property I bought, probably 100 people turned up,” he said.
He believes a lack of government investment to incentivize residential construction is to blame.
“Unfortunately, given that backdrop, I’ve personally formed the view that the market is just going to keep going,” Mr Kizil said.
“You can’t change the rules of the game, so you have to sort of look after yourself, and my partner and I are looking at getting investment property as a result.”
What’s driving the gains?
CoreLogic head of research Eliza Owen said Brisbane’s median property value of almost $800,000 remained attractive to a wide range of people.
“It’s still got a relatively affordable price point with more value for money than what we saw in the major southern capital cities,” she said.
“There’s also been very intense levels of interstate migration.
“It pulled back a little to about 30,000 people over the year to June 2023, but that’s still almost double the decade average of interstate migration levels.
“That, coupled with the return of overseas migration, is really driving up demand pressures across Brisbane.”
Economist Diaswati Mardiasmo said Brisbane was becoming more of a “world city”.
“If we look at all of the buildings that are currently being built, we’re seeing more seven-star hotels, upgraded entertainment centres, really very much kind of becoming a little bit more like Sydney,” she said.
How much will prices increase?
Dr Mardiasmo said the market would cool slightly in 2024 compared to last year’s rise.
“I would say that we’ll see anywhere between a three to five per cent increase between now and the next three months, and then another five per cent at the back end of the year,” he said.
But Ms Owen said she did not expect price rises to continue at the rate seen last month.
“I think we could see a slight easing in the growth rate though for the rest of the year,” Ms Owen said.
“Even though migration trends to Queensland are expected to remain strong, there are lots of headwinds for households in terms of savings, the unemployment rate and how many people can just afford to keep paying for these dwellings.”
After an explosion in popularity following the pandemic, Dr Mardiasmo said regional values would also be marginally cool.
“It’s not going to be that double-digit that we see back in 2021 and 2022 in that post-COVID boom,” he said.
“But we are still seeing that very strong anywhere between 7 to 9 per cent growth in regional areas.”
Low stock levels are also a problem for sellers
With property prices at a record high, you’d be forgiven for thinking homeowners would be eager to cash in.
But Ms Owen said property stock levels were 30 per cent lower than what the capital would historically see.
“In the construction space, we’re still seeing elevated labor and material costs, which have slowed down the rate at which new dwellings are established,” he said.
“Even prospective sellers are in a bit of a deadlock because if they put their property on the market … where are they going to go?”
Brisbane real estate agent Brett Andreassen said the interest in properties lifted last month.
“The main factor for that is the lack of stock on the market,” he said.
“But there’s a bottleneck at the moment for stock where there’s a lot of people who would want to move, but because they’ve got nowhere to move to, they’re staying put.
“And then a lot of people who would typically go and rent somewhere for the short term aren’t moving because of the rental situation.”
What about the rental market?
Ms Owen said a sharp uptick in rental prices had many Brisbane renters looking for roommates.
“We’ve seen a bit of an alarming trend in the past few months with a reacceleration in growth in rents across Brisbane, particularly in the house market,” he said.
“I think the reacceleration in house rents could actually be a result of more share housing occurring, with people looking to spend more on their rental dwelling, but less per bedroom.
“And so in a weird way, it does actually help alleviate rental costs for some.”
