Brisbane Property Market Update July 2022
Although there are still a number of shoppers in the market throughout the city, a large proportion of the shoppers seem to be scared and are taking a position to sit on the sidelines and watch the market activity, rather than to participate in active bidding on properties. Other buyers are preparing to take advantage of any opportunities that current conditions may present.
When combined, the median trend in house values over the month of July showed a decline of -0.8% in Greater Brisbane. This contraction is not as large as the drop in median values in Sydney being -2.2%, Melbourne -1.5%, Hobart -1.5% and Canberra -1.1%. Other capitals, including Adelaide,and Darwin, showed low growth rates of median values over the same period. It is clear that the slowdown in house price growth across Australia coincided with the start of the first interest rate hike in May, and the resulting shift in consumer sentiment has been very obvious.
As consumer confidence hit new lows in July, it is evident that the rate and pace of deterioration is comparable to previous major shocks such as the global financial crisis and the onset of the COVID-19 pandemic. Respondents who were part of the most recent Westpac Consumer Sentiment Survey identified inflationary pressure, interest rates, the domestic economy and international conditions as the top concerns at the current time.
The rate of change in median value trends over the past two months has been more evident in the housing market than in the Brisbane unit/townhouse market. Median home values in Greater Brisbane fell -1.1% in July. The current median home value is $884,336, down $7,797 from last month.
In the Brisbane unit market, the median value INCREASED in July by 0.7%. Brisbane’s current median unit value is now $504,520, $3,446 MORE than last month.
We have seen the shift in demand over the past few months away from housing and towards townhouses and quality units. This may have been boosted by affordability constraints due to the rapid growth in property prices in Brisbane over the past 18 months. A budget of $500,000 used to be enough for a reasonable home on its own land less than 30 miles from Brisbane’s central business district, but now that budget usually has to be much higher.
Instead of moving further and further away from the CBD to buy a home with a similar budget, buyers have chosen to compromise on the type of property they buy and are looking for townhouse or unit options. much closer to downtown locations.
This shift in demand is a trend also seen in the data. Since April this year, the housing market has outperformed the housing market in terms of median monthly price growth in Brisbane. This month, despite negative house price growth for the first month in two years, the unit segment of the market continued to see an increase in value.
While the majority of markets around Australia are now moving into a different stage of the property cycle, Brisbane retains many favorable advantages over the major cities of Sydney and Melbourne in terms of future prospects.
First, Brisbane has a relative advantage when it comes to affordability, which it has for many years. Despite the narrowing of the gap during the most recent growth cycle, there remains a significant affordability advantage for property buyers in Brisbane in the housing sector as well as in the market unit sector. This puts Brisbane in a better position to weather the uncertainty in the months ahead.