Things to look forward to: Brisbane's Summertime market boom
While it’s expected that the Australian property market will have the biggest boom in 20 years by the end of this year, for once the boom is not predicted for Sydney or Melbourne. As Summer rolls around this year, it’s forecast that Brisbane will be enjoying its time in the capital growth sun.
BIS Oxford Economics are forecasting a 20% jump in house prices in Brisbane over the coming 3 years, the strongest growth of all capital cities. We agree wholeheartedly with this prediction, and believe Brisbane homeowners will be rewarded by the strong capital growth delivered by our lifestyle-rich city.
This is strongly reflected in what we see on the ground each week at open homes, with excellent foot traffic at open inspections and consistently strong registration of buying interest. In addition to this, we’ve seen many buyers willing to make strong, unconditional offers to secure off-market properties, and high clearance rates at our auctions.
In April this year, we posted an article titled “6 Reasons To Stay Positive”, focusing on residential real estate in the midst of the pandemic-driven ‘economic meltdown’.
In it, we outlined some of the key factors shielding Australia’s property market from economic devastation, despite initial fears that the Covid-induced downturn would hit real estate hard.
Brisbane’s affordability as a capital city, the government stimulus provided this year, and record low interest rates were all factors set to buffer the blow of Coronavirus, so let’s revisit the situation now in late 2020.
We can start by saying this: the property market has had a very strong Spring selling season, fuelled by a range of factors to have emerged in the latter half of 2020.
Low stock levels are currently the single largest driver of the strengthening market conditions. According to Simon Pressley, head researcher at Propertyology.com, a trend in extreme property shortage on the market across 30 Australian cities currently exists. Many homeowners have taken a ‘stay put’ approach as they keep a watchful eye on the economy, and on the path out of this pandemic. Combine these low stock levels with a sudden, uniform improvement to buyer sentiment across the nation, and you get a boom in values. It is a simple equation: low supply and high buyer demand will increase prices in the short term.
Australia’s federal government has done a stellar job of managing the pandemic’s effect on our economy, and continued stimulus appears to be directly preventing any long term damage to the buying power of home buyers. With the A$130 billion jobs-rescue plan unleashed in April and continued until the end of March 2021, unemployment has not reached those levels initially forecast.
Interest rates have continued to plummet further since earlier this year, and we now find ourselves in the situation many were waiting for: mortgages are the cheapest ever seen. For first home buyers, the time has never been better to enter the market, and record low interest rates are allowing buyers of all types to borrow more. The Reserve Bank of Australia has indicated we will be in this low interest rate cycle for some time to come.
The current interest rates for cash in the bank are unattractive to say the least, so it follows that both the stock market and the property market should be the beneficiaries of investors chasing a better return. As often is the case in times of uncertainty, there’s something settling about an investment you can touch and see, and we suspect investors will return to ‘bricks and mortar’ in both the short and medium terms.
Terry Ryder, managing director of Ryder Property Research, predicts that the recent fast-tracking of South East Queensland infrastructure projects is another factor driving the oncoming spike to property values in Brisbane. The Winter of 2020, while quietened by Covid-19 on many levels, has been an excellent period for construction projects to tear ahead. With fewer people using public transport and less traffic on roads, the $5.4 billion Cross River Rail project has surged ahead during 2020, promising to increase CBD access to numerous suburbs and consequently, increase those suburbs’ values.
The combination of the low Australian dollar and the virus-driven return of expats to Australia, translates to a high demand for property purchases amongst this demographic. Many of these expats have traditionally returned to our larger Southern neighbours, Sydney and Melbourne, however it’s understandable that the last six months have seen expats choosing Brisbane as a stable base, proving resilient to virus transmission.
This goes hand in hand with the fact that Brisbane offers better value and outstanding lifestyle attributes, particularly those that have been illuminated during the lockdown period. No one is arguing that Brisbane’s median price should be equal to Sydney or Melbourne, however, history has shown that once the differential gets out of hilt, buyers quickly head North. While Brisbane’s market has not yet seen the same level of growth the Southern markets have been enjoying, we think it’s now Brisbane’s time to shine.
As we explored in our June article “Suburbia in fashion post-Coronavirus”, a home-owning revolution of sorts further favours Brisbane’s inherent real estate offerings. In the aftermath of the lockdown experienced earlier this year, it’s Brisbane’s leafy, spacious suburbs that hold the kind of lifestyle being sought in this post-Covid attitudinal shift towards work-life balance and work-from-home. We at Dixon Family saw this in the form of a renewed appreciation for suburbs like Yeronga, Chelmer, Fig Tree Pocket and Kenmore, for their abundance of green space, bikeways, and larger lot sizes. All of these features have suddenly come front of mind in the search for a home, and we expect this to further fuel the demand for Brisbane’s abundance of suburban homes.
As we ease into the festive season, we’re accompanied by an outcome to the US election and good news regarding Covid-19 vaccines. These forms of closure to what has felt like a long year of uncertainty, all contribute to an improvement in consumer sentiment, and Australians are once again beginning to make plans for the future. Home ownership being core to our way of life here, it’s no surprise that we’re seeing such a sudden increase in demand on the property market.
