Brisbane Property Market Update December 2020

These are the opening stanzas from our February Month In Review submission where we set out predictions fo r 2020:

Could this be Brisbane’s year?

We’ve been waiting in the wings for about a decade – hoping it’s our time to shine and rocket up the property value charts. We’ve watched Sydney and Melbourne go from strength to strength while our property owners have generally been eking out modest gains at best. Positive moves, to be sure, but not head-turningly stellar.

It seems the long post-mining-boom hangover, which fed into diminishing employment numbers and plummeting net interstate migration all came into play and kept the prices subdued most of last decade.

But things have been looking up of late – and with substance… and it lays solid groundwork for a positive 2020.

You can almost smell the naïve positivity of a life when the pandemic had not even begun to weasel its way into our thinking.

I miss those days of blissful ignorance!

Our outlook was obviously upbeat way back then and we were looking forward to seeing our market bloom as the year progressed. Interstate migration was ramping up, relative affordability was attracting interest and a big spending infrastructure program looked like it would bring jobs growth and added lifestyle appeal.

Our recommendation in February was to stick with the fundamentals. Buying detached homes (not units) as close as possible to the CBD would mitigate risk and boost capital growth potential. Demand for rentals in these near-city addresses is traditionally good too, so these properties seemed a safe bet.

We were keen to let those with slightly more modest budgets know that established family addresses such as Chapel Hill and Kenmore to the west, Stafford Heights and Chermside to the north and Holland Park, Carina Heights and Moorooka south of the river had the right ingredients for 2020.

But then, just a few weeks later in February and March, we were delivered the sobering news that our shoreline had been breached by COVID-19 and, for the sake of our health, it was time to slam shut the borders and hibernate businesses.

You know the rest – no trade meant a dire outlook.

Like everywhere else in Australia, March and April brought uncertainty and dread to Brisbane.

Real estate agents were delivered tough rules around open homes and auctions. In effect, there were to be none.

Also, legislation designed to protect residential renters doing it tough was being debated and it had some investors considering their options.

But anybody who’d been entertaining the idea of selling took a moment to reassess. Why list in a time of uncertainty if you don’t absolutely have to?

The result was that listings dried up. While there were a few bargains to be had in the early days of the pandemic, with plenty of reports about property transacting at a discount on price expectations, there was just too little choice for buyers to bag a bargain.

And so, it proceeded. Less supply, even in the face of lower overall demand, meant that values held firm.

Restrictions eased on 15 May and Queensland saw its real estate industry spring back to life, with the results being open homes and auction events underway and more properties for sale

Then a funny thing happened as we passed through July and August. It appeared that Queensland was one of the most successful states at stopping the spread. Apart from a couple of scares, our state’s hard border stance meant infections were unable to take hold.

Our big city cousins to the south were hit by lockdowns. Suddenly, one-bedroom Bondi flats were feeling very squeezy – and no doubt the disappointment delivered to Melbourne residents being shut in for a second time was immense.

Brisbane and its beautiful south-east Queensland beaches looked incredibly inviting.

We also found that expats hoping to escape tough pandemic landscapes overseas were keen to come home and set themselves up in Brisbane.

So, what we see today is this. As at the time of writing, Queensland’s infection numbers remain enviably good:

And the market has followed suit.

A recent report by the Courier Mail delivered the headline “Sales going through the roof” where local buyer’s agent Melinda Jennison said of family friendly inner-city suburbs, “It’s absolutely frantic out there and anyone expecting to secure a home at a discount due to the predicted “fiscal cliff” is dreaming.”

The numbers have stacked up according to CoreLogic as well. The data behemoth’s latest Property Market Indicator Summary revealed that Brisbane house values had improved by 3.2 per cent in the 12-months to 6 December 2020.

Not a bad outcome for a crisis year.

Drilling down and what we’ve seen is from June to date there was increased demand and activity within the inner, mid-ring, prestige and general lifestyle locations (i.e. bayside, coastal, rural and rural residential) throughout the Brisbane market.

Limited stock coupled with the increase in demand meant these areas saw some improvement in market values.

The outer and fringe suburbs have similarly seen an increase in demand over recent months although with limited capital growth in comparison to the inner and mid ring areas.

Additionally, house and land markets have seen an excellent recovery following the announcement of the Federal HomeBuilder stimulus package on 04 June 2020, with most developers reporting a significant increase in demand for vacant land and subsequent volume of sales. Implementing of the government builder stimulus coupled with the first home buyers grant and low interest rates has prompted first home buyers to get active.

Ultimately, good quality properties in good locations close to the CBD, established nodes or lifestyle features are typically selling quickly in the current environment with secondary properties in secondary locations or outer lying localities seeing slightly longer selling periods and limited demand.

It’s fair to say that the last 12 months have been an unpredictable time for our market, but overall, we’ve been pleasantly surprised by Brisbane property’s resilience.

Strong demand, activity and sales transactions in the prestige sector at this stage was unexpected, but welcome. Likewise, strong demand, activity and sales transactions in the house-and-land market throughout Brisbane is not something we foresaw at the start of 2020.

We in the Brisbane office would like to wish all our readers a merry Christmas and a happy 2021.

David Notley