Brisbane house prices continued to rise last month, surprising many, but experts are divided on whether the upward trend will continue until the end of the year. CoreLogic data shows Brisbane house prices will rise by more than 13% in 2023, and by a further 1% in the first month of this year.
What is driving house prices to continue rising?
CoreLogic head of research Eliza Owen said Brisbane, with a median property value of nearly $800,000, appealed to a wide range of demographics.
Brisbane has surpassed Melbourne to become the third most expensive city in Australia for property prices since last year. Sydney, Canberra and Melbourne have long been considered the most expensive cities in Australia for property, but after three years of COVID-19, Brisbane has risen in the rankings as many people move in from other states.
"In the year to June 2023, that number falls back slightly to about 30,000, but that's still almost double the 10-year average for interstate migration. "That, combined with overseas people starting to move in, is really driving up demand pressure across Brisbane."
Economist Diaswati Mardiasmo said Brisbane was becoming a more "international city". "If we look at all the buildings that are being built at the moment, we see more seven-star hotels, upgraded entertainment centres, it's really becoming a bit like Sydney in many ways."
How much will house prices rise?
Dr Mardiasmo said the market would cool slightly in 2024 compared to last year’s surge: “I think we’re going to see price growth between 3% and 5% between now and the next three months, and then another 5% by the end of the year.”
But Ms Owen said she did not expect price growth to continue at the rate seen last month. "I think for the rest of the year we're likely to see a moderation in the rate of growth. While migration to Queensland is expected to remain strong, households are facing a number of headwinds in terms of savings, unemployment and what people can actually afford to spend on housing."
After a surge in popularity following the pandemic, Dr Mardiasmo said suburbs growth would also cool slightly. "We're not going to see the double-digit growth that we saw during the post-COVID boom in 2021 and 2022, but we're still seeing very strong growth in the suburbs, between 7 and 91 TPPs."
Low supply also becomes a problem for sellers
With property prices reaching record highs, one would think homeowners would be eager to sell and cash in. However, CoreLogic's Ms. Owen said that the inventory of homes in capital cities is 30% below historical levels. Millions of homeowners made a profit of $3,000 in January, but the Australian property market seems unstoppable, with capital city property prices expected to continue rising by approximately 6% through 2024.
“In the construction industry, we’re still seeing high labor and material costs, which is slowing the pace of new home creation. Even potential sellers are at an impasse because if they put their property on the market… where are they going to live?”
Real estate agent Andreassen told the ABC that interest in buying homes increased last month. "The main factor is the lack of supply on the market. There are a lot of people who want to move, but because they don't have anywhere else to go, they choose to stay put. Many people who have a lot of short-term rentals also haven't moved because of their rental situation."
What about the rental situation?
Ms Owen said the sharp rise in rental prices had left many Brisbane tenants looking for flatmates. "Over the past few months we've seen a slightly alarming trend where rental growth in Brisbane has accelerated again, particularly in the residential market."
"I think the resurgence in residential rents may actually be due to more people choosing to share homes. People are paying less per bedroom for more expensive properties."
"So in a weird way, it actually does help alleviate the cost of rent for some people."
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