Eagle eyes have zoned in on the Sydney and Melbourne real estate markets this year and most analysts are relatively positive about what's to come. Now, attention is turning to Brisbane with many wondering what the outlook will be for Queensland's sunny capital. Are we going to see a downturn or is there a much-needed upturn on the horizon?
With a noticeable change in the air across the nation, the Sydney and Melbourne markets have seemingly begun to stabilise and the rate of decline for property values is easing across the country. However, Brisbane is still facing slow falls with property values down -0.6% in June.
Those declines are mainly confined to the detached housing sector. Apartment values, on the other hand, have started to rise and were up 0.1% for the same month, as the unit oversupply finally absorbs into the market.
"Despite declining values in the housing sector, analysts are predicting a strong comeback from Brisbane over the next three years"
Despite declining values in the housing sector, analysts are predicting a strong comeback from Brisbane over the next three years. This should be stimulated by the recent federal election outcome in May and the Reserve Bank's interest rate cut. Both events have upped consumer sentiment and have seen improvements to the Sydney and Melbourne markets already.
Let's explore what some of the nation's top economists have to say about the Brisbane property market forecast for 2020 and beyond.
Brisbane property market forecast 2019: influencing factors
Although prices are still falling slowly and auction clearance rates remain weak, there are positive signs of a turnaround for Brisbane. Not only are attendance rates at open inspections up 15% since before the election, relative housing affordability, the bounceback of the apartment market and strong interstate migration buoying population growth are also indications of a close market recovery.
Many other influences are at play that will naturally change the market over the remainder of the year, specifically:
Since the Sco-Mo federal election win in May, APRA has relaxed credit lending restrictions resulting in banks now being able to set their own serviceability buffers, helping more borrowers access a mortgage - and potentially a larger one. With the removal of the 7% buffer, the only restriction now is that banks must ensure borrowers can continue to service their loans if interest rates climb 2.5% higher than currently.
The Reserve Bank has cut interest rates in June from 1.5% to just 1%. To make things more interesting, the RBA has recently hinted that there could be further cuts just around the corner.
With a positive update to credit reporting, with the "Comprehensive Credit Reporting" system, borrowers will likely see an improvement on their credit score. Previously, only negative data was listed, such as bankruptcies or defaulting on loans. Under the new system, effective since July 1st, lenders will have a clearer picture of the borrower's finances with much more information available to them, such as the type of credit applied for, the amount, and the monthly repayments for the previous two years.
The First Home Loan Deposit Scheme will be implemented from January 1 2020 and could create stimulus in the market. Under this scheme, eligible first home buyers will only need a 5% deposit saved to be able to lend up to 95% of the purchase price of the property without needing to pay LMI.
"Under the First Home Loan Deposit Scheme, eligible first home buyers will only need a 5% deposit saved to be able to lend up to 95% of the purchase price of the property."
Brisbane property market forecast 2020: analyst predictions
Let's examine some of the Brisbane property market predictions that the country's leading analysts are forecasting for 2020 and beyond.
- 2019 to 2022: 20% increase in house values and 14% increase in unit values
- 2019: 1% growth in house values and 0% growth in unit values
- 2020: 3-5% growth in house values and 0-2% growth in unit values
- 2019: 0.6% correction in house prices and 1% growth in unit prices
- 2020: 1.9% growth in house prices and 5.8% growth in unit prices
- 2021: 2.3% growth in house prices and 5.3% growth in unit prices
"Moody's Analytics believe Brisbane's apartment market is in for a comeback in 2019... and is set to outperform the rest of the nation."
- 2019: 1.4% growth in house prices and -2.8% decline in unit prices
- 2020: 3.6% growth in house prices and -2.4% fall in unit prices
- 2021: 6% growth in house prices and 0% growth in unit prices
Consumer sentiment in Brisbane
OpenAgent's Consumer Sentiment Report records that Queensland sentiment is presently the second highest in the nation. Post election it has risen from a stable +1.2 to +3.9 on the June index.
Just like in Sydney, where consumer sentiment has turned around and the majority believe prices will be on the rise by the end of the year, the same appears to be happening in Brisbane. Property experts, homeowners and investors are optimistic about price growth, and most agree the market should bottom out by the end of 2019.