One of the nation’s biggest banks, ANZ has quelled fears of a housing crash by changing its outlook, tipping a surge in Brisbane house prices next year. Something we and other property experts have been saying for many months now!
In the lead up to the COVID-19 outbreak, price growth in the Brisbane property market had been subdued compared to Sydney and Melbourne, but whilst these two markets saw declines of -0.6% and -2.2% respectively over the past quarter, Brisbane values moderated rather than faltered and have begun rising again over the last few months, with the latest Corelogic hedonic home values index recording an increase of 0.9% over the past quarter and an annual increase of 3.5%.
In fact, dwelling values increased in each of the smallest four capital cities, which have remained more resilient than other cities during the downturn, with prices in Brisbane, Adelaide, Hobart and Canberra reaching new record highs.
Corelogic head of research Tim Lawless said housing markets were responding to the stimulus of low mortgage rates and improved sentiment.
“Consumer confidence has consistently improved since the virus curve has once again flattened and Australians respond positively to measures announced in the federal budget,” Lawless said.
Economists at ANZ believe their earlier forecast of a 10% drop in capital city house prices is “too pessimistic”, and are now predicting gains in Brisbane of 9.5% in 2021.
“An early vaccine rollout and the resulting lift to sentiment could drive larger price gains than we currently anticipate,” ANZ economists Felicity Emmett and Adelaide Timbrell write in the bank’s latest housing outlook report.
Low interest rates, government stimulus measures and a bounce in confidence as the second wave of the pandemic comes under control are expected to mitigate the risks imposed by higher unemployment and low population growth in 2021.
“The housing sector is turning a corner. After falling since April, national house prices were flat in October and look set to rise over coming months,” the economists write.
Economists at Westpac who were also forecasting price falls of 10% at the start of the year are now predicting a 20% rise in Brisbane property prices over the next two years — the highest of any capital city.
Factors driving Brisbane property price growth
Apart from the stimulus of low mortgage rates and improved sentiment, there are many other market fundamentals driving the price rebound in Brisbane.
Relative affordability remains extremely strong in Brisbane with the median property price roughly half of Sydney, but median household incomes only 13% less than Sydney. This will ensure local and investment demand continues in the coming years. In addition, as at November 2020 Brisbane has a healthy vacancy rate of just 2% according to SQM research.
Although temporarily slowed, population growth is expected to pick up again and continue to grow above the national average once restrictions ease and state and national borders begin to reopen. According to new ABS data, Some 25,017 people left Melbourne in the June quarter while 23,217 left Sydney, meanwhile, Brisbane’s population increased by 3,210 people in the same period, the highest gain of any capital city.
Brisbane has a significant lifeline in the form of it’s $15B infrastructure pipeline being led by the $3.6 million integrated resort Queen’s Wharf, which is expected to create 8,000 jobs and add $4 billion to the state’s economy on completion in 2022. The $2B Brisbane Live precinct at Roma St Station, and the $6.8B Cross River Rail Project improving the connectivity of Brisbane are also key projects driving growth.
Tourism and Education
The tourism industry will also be critical, especially after sporting teams relocated during the pandemic, including the Melbourne Storm NRL team, several interstate AFL teams and the entire Super Netball series. Games are now being played in Brisbane, Cairns, Townsville, the Gold Coast and Sunshine Coast.
Further, universities such as Griffith, Bond and Southern Cross will also drive growth in surrounding suburbs.
Queensland also stands to benefit from the states expanding resource industry including Sun Metals $450M zinc refinery expansion just outside of Townsville and The Ravenswood Gold Mines return to large-scale open pit mining, extending the mine’s life to 15 years.. Townsville economist Colin Dwyer indicated there were dozens of north and central Queensland construction projects, in a range of industries, that would start soon or had high confidence in proceeding. For example, 270 construction jobs were expected to be created from November when a technology innovation complex was built at James Cook University. “We’re creating jobs. They’re high-income jobs and … they’re going to be spending their money, hopefully, in local businesses,” Mr Dwyer said. This will have positive flow-on effects in coming years for Brisbane’s economy.
In short, Brisbane’s property market is ripe for investment and is currently in our top three recommended investment locations. It has weathered the pandemic far better than Sydney and Melbourne, the economy is improving, property remains affordable, the population is on the rise and it has an incredibly strong infrastructure pipeline. The key challenge for investors is which property to buy and which Brisbane suburbs will outperform the rest. That of course is where our expertise lies and where the inSynergy team can help!
Article sources: The Urban Developer, Corelogic, SQM Research, BrisbaneDevelopment.com, MyBrisbane.com, RealEstate.com.au, SmartPropertyInvestment.com.au, ABS, ABC News