Looking to make Brissie home or maybe invest in the Brisbane housing market?
Then you will want to know how this market performed, and what 2020 could hold for real estate in Brisbane. Let’s start by looking at how the Brisbane market performed in 2019, followed by what analysts and local agents predict for the year ahead.
What did the property market in Brisbane look like in 2019?
Overall the national market has been defined by a continued slump in the first half of the year, followed by a turnaround just after winter - what many are hoping is the bottom of the downturn. Factors that have contributed to this include:
- The Coalition’s surprise election victory, for a party that is perceived as more business and market-friendly
- Continued cuts to interest rates by the RBA, prompted by a sluggish local economy
- Easier access to finance, prompted by the Australian Prudential Regulation Authority (APRA) relaxing lending requirements
Brisbane property values have struggled, disappointing analysts and investors alike after many thought 2019 would see at least moderate growth. According to SQM Research’s Boom and Bust Report 2020, dwelling values in Brisbane dropped -1.1% for the year to October 2019.
According to SQM Research dwelling values in Brisbane dropped -1.1% for the year to October 2019
Real estate agent Karen Renouf of LJ Hooker (Cleveland, Queensland) felt the pinch in the first half of 2019. “It’s been flat. The first part of the year we saw values dropping half a percent in the first 6 months of the year. There was an election and the banks were massively risk averse. Those were the real dynamics - a lot of uncertainty. We then saw it go dead quiet over the end of financial year and it has only started to pick up in the back half of the year with the election out of the way”.
“The first half of 2019 was flat, with values dropping half a percent. There was an election and the banks were massively risk averse. Those were the real dynamics - a lot of uncertainty”
Karen Renouf, LJ Hooker
Brisbane property market forecast 2020
Most analysts expect modest, positive price growth for the Australian market in 2020, even though buyer activity has edged upward from the middle of this year. One should bear in mind that this is a broad view, and recent gains have been driven by activity in the country’s largest markets - Sydney and Melbourne.
Louis Chrisopher, of property analysts SQM Research, predicts “moderate price gains” for Brisbane in 2020, with the possibility of more significant price growth in 2021. QBE predicts median house price growth to average +6.4% per year over the next three years, for a median price of $660,000 in June 2022.
Domain identifies two factors that could continue to constrict price growth in this market, namely:
- An elevated unemployment rate of 6% in Queensland
- Significant apartment stock coming onto the market in 2019/20
On the plus side, the relative affordability of Brisbane property continues to make it attractive compared to the Gold Coast - as well as Sydney and Melbourne. This, together with low interest rates and a weak Aussie dollar should all help contribute to strong interstate migration and its tourist dependant economy.
Andrew Oostenbrink of Belle Property (Carindale, Brisbane) is upbeat on 2020 noting, “Since APRA has changed the borrowing guidelines and interest rates have come down down, I’ve seen a massive change in the number of sales of units and townhouses. A lot of renters are now in a position where they can afford to buy rather than rent”.
How are Brisbane house prices expected to change in 2020?
NAB’s Residential Property Survey expects moderate growth of +4.5% across all capital cities in 2020, but only a +0.2% rise for houses and -1.3% for units in Brisbane. On the plus side interstate migration remains strong to south east Queensland, so they believe the prospects for the region are positive in the medium to long term.
Domain forecasts growth of +3% to +5% for houses in Brisbane, though they believe units will be flatter at 0% to +2%, which is not great news considering they are down -10% from their peak in 2016. This is primarily due to the oversupply of apartments in the city, with developments still coming onto the market this year.
"Domain forecasts growth of +3 to +5% for houses in Brisbane, though they believe units will be flatter at 0% to +2%"
Moody’s Analytics points out that the Brisbane market is underperforming and, “experiencing weaker-than-expected outcomes” and predicts, “flat or mildly positive returns” - with houses set to advance +1.4% in 2020, and units a more positive +5.6% over the same timeframe.
SQM Research predicts the Brisbane market will advance between +3% to +6% in 2020 - based on an unchanged cash rate (0.75%), a recovering economy and minimal regulatory changes to lending rules. Their worst case scenario has the Brisbane market -3% to +1%, based on a scenario where trade talks collapse, the economy weakens and the RBA is forced to cut rates to zero in 2020.
Brisbane house prices 2020: An agent's perspective
For an agent’s perspective, Oostenbrink believes affordability is the key driver for first home buyers in this market in the year ahead, “...the big driving factor is interest rates dropping, which has been a key indicator to the affordability for the younger generation”.
On the other hand, Renouf is predicting modest growth but less volatility moving forward and, “a slightly steadier market and maybe some minimal capital growth over the next 12 months. The Bayside is a fairly steady market, it doesn’t see the same volatility as some of the other markets. We never see the big growth but then we never see the big declines either”.
Brisbane apartment market: What’s it like?
As we have seen the Brisbane apartment market remains soft, after the median unit price fell -6% in 2018/19. Domain believes this trend is likely to continue for the next year at least - as oversupply continues to impact price growth.
QBE projects Brisbane’s median unit price to advance a modest +3% to $435,000 by June 2022 based on the issue of oversupply, but this will largely be confined to areas close to the CBD.
The Brisbane rental market
With unit supply set to tail off, vacancy rates should begin to drop in 2020, which together with steady population growth - projected to be +1.75% in 2020 - should continue to accelerate this trend over the next few years.
"With unit supply set to tail off, vacancy rates should begin to drop in 2020 which, together with steady population growth, should continue to accelerate this trend over the next few years"
SQM Research forecasts Brisbane rents to increase +3% to +5% in 2020, from their current weekly asking of $463 (houses) and $376 (units). This is above the 0% - +3% weighted capital city average projected by them, and more than Sydney and Melbourne.
Best suburbs to invest in Brisbane
If you have an eye on a home or investment property in 2020, then you should research the following 5 Brissie suburbs, which could tick all the right boxes in terms of location and growth prospects.
- Kurwongbah has a median house price of $660,000 and a gross yield of +4.3%
- Mount Gravatt has a media house price of $655,000 with a gross yield of +3.6%, while units have a median of $440,000 and an attractive gross yield of +5.0%
- Highgate Hill has a median unit price of $530,000, where values have advanced +3.12% over the past year, and where the median gross yield is +3.9%
- Chermside has a median house price of $570,000 with a gross yield of +3.6%, while the median unit is $380,000 with a gross yield of +5.3%
- Logan Reserve has a median house price of $436,000, where prices have advanced +6.22% over the last year, and where the gross yield is +4.8%