Despite a modest drop in Brisbane house prices over the past 12 months, there are some signs of a turnaround in the south-east Queensland property market.
According to CoreLogic’s Hedonic Home Value Index for June 2019, the Moreton Bay north and south sub-regions are boasting some of the country’s best market conditions. Across the 46 capital city sub-regions, only five areas have avoided an annual fall in housing values.
However, in Brisbane, the performance of housing values across the upper price quartile had weakened as of May 2019, with values down 2.0% over the quarter, while the most affordable quarter of properties recorded a 0.7% decline.
What’s in store for the Brisbane property market?
Domain’s Property Price Forecast report for June 2019 predicts Brisbane house and unit prices will bottom out over the next six months before seeing a modest turnaround. In the second half of 2019, house prices are expected to increase by approximately 1% while unit prices are tipped to remain unchanged. In 2020, house prices are forecast to grow by 2% to 5% and units by around 2%.
The average number of attendees at open houses in Brisbane has also increased by 15% compared to before the election. This upward trend suggests a boost in confidence of prospective buyers and investors, and could signal a more pronounced turnaround of property values over the next 6-12 months.
What’s impacting Brisbane house prices?
Brisbane and wider south-east Queensland’s relative affordability has made it attractive compared to Sydney and contributed to strong interstate migration. This trend is expected to continue, with annual population growth holding steady at 1.75% in 2020. Low mortgage interest rates and a lower Australian dollar are also giving a positive boost to the Queensland economy and property prices throughout the state.
More broadly speaking, the Coalition’s surprise election win and recent regulatory changes are likely to have a positive impact on the Australian property market overall. CoreLogic’s Head of Research, Tim Lawless, said in a statement that multiple factors are contributing to improving conditions.
“The federal election outcome has removed the uncertainty surrounding taxation reform which should see an improved level of confidence amongst home owners and prospective buyers, particularly investors,” he said.
“We now have some certainty around the initiatives announced in the federal budget, a consistent commission structure for mortgage brokers (who comprise around 60% of mortgage originations), and the eventual stimulus for first home buyers in the form of a federal government deposit guarantee, which although limited to 10,000 participants with at least a 5% deposit, will kick off in January next year.”
Reduced serviceability assessments used to qualify borrowers for a home loan will also make it easier for more buyers to enter the market.
“One of the factors contributing to less activity in the housing market has been the challenges involved with accessing credit,” said Lawless. “While there are a variety of other policies that will continue to keep a lid on housing credit, a more practical assessment of borrower servicing capacity is certainly a positive for the housing market demand.”
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