Brisbane is doing what it’s done for the past five years. It’s performing solidly, with most markets recording price rises in the past year, but it’s not a compelling growth market. As I commented recently: “Brisbane is like a car where the engine is revving but it can’t move forward because the handbrake is on.”
Hotspotting’s Winter survey of sales activity shows a reduction in the number of growth markets, measured by patterns in dwelling sales quarter-by-quarter. Prior to this, Brisbane had recorded a rising trend for three consecutive surveys. But now the engine has stalled.
Brisbane continues to perform quite well on price growth, with 66% of suburbs delivering annual growth in their median house prices, which means 135 suburbs with median house prices higher than a year ago. The figures for apartment markets, however, are much less positive, which reflects unit over-supply in recent years.
The number of suburbs with growing demand had risen from 19 to 29 to 33 to 44 in our previous surveys, but the number of growth markets has dropped to 24 in our Winter survey. In the early part of 2019, Brisbane has been impacted by some of the national factors, such as tighter credit and uncertainty prior to the 18 May election.
We expect some revival in the second half of 2019, helped by the series of fortunate events since 18 May, including cuts to taxes and interest rates, plus the prospect of improved infrastructure spending by the Queensland Government. In the meantime, Brisbane continues to be steady but unexciting.
Some sub-markets are doing better than others. The clear market leader is the Brisbane-north precinct, which comprises the northern suburbs of the Brisbane City Council area – essentially this is Brisbane’s middle market on the northside. Brisbane-north has 10 suburbs with growth momentum (almost half of the growth markets in the Brisbane metro area), including solid middle market areas like Alderley, Everton Park, Kedron, McDowall, Sandgate, Stafford and Wavell Heights.
Quarterly sales in Alderley have been 28, 37, 48, 50 and 52 – and its median prices have risen 6% for houses ($860,000) and 15% for apartments ($425,000) in the past 12 months. Sandgate has had a 15% rise in its median house price ($750,000).
Before the Winter 2019 survey, the Moreton Bay Region in the far north had been the No.1 market in Greater Brisbane for some time. It had lifted the number of growth suburbs from 7 to 10 to 12 in the previous three surveys. But now the Moreton Bay LGA has faded – it now has only five growth suburbs, with 33 suburbs which are either plateau or consistency markets. The remaining suburbs with growth momentum are Everton Hills, Ferny Hills, Kippa-Ring, Murrumba Downs and Warner.
I expect revival in this market, or sections of it, later in the year, helped by infrastructure like the new university campus in the Petrie area.
A number of Moreton Bay suburbs recorded good price growth in the past 12 months, including Bellara (up 11%), Bray Park (6%), Cashmere (10%), Joyner (9%), Sandstone Point (11%), Caboolture (6%), Upper Caboolture (6%), Scarborough (8%), Strathpine (11%), Woody Point (9%), Burpengary East (11%) and Murrumba Downs (8%).
This reflects a well-established pattern in real estate that prices often remain strong for some time after sales activity has faded.
Elsewhere across the Brisbane metro area, the most notable markets are those marked by consistency and solidity (like Ipswich City and the Brisbane-south precinct) and those where the trends are more negative (like the Brisbane-inner precinct and Logan City).
The number of danger markets in Brisbane is gradually reducing – the seven that remain are primarily inner-city suburbs impacted by the apartment oversupply, which is gradually being absorbed. A couple of inner-city markets, notably Kangaroo Point and Milton, have lost their danger ranking in this survey as the data gradually improves.
But the highly-regarded western suburb of Fig Tree Pocket has been classified as a danger market, because sales activity have declined significantly, the median house price has dropped 25% to $890,000 and vacancies in this postcode are 4.5%.
The price data for the Greater Brisbane Area is noteworthy, because it shows that the generalised figures published in mainstream media are highly misleading. The latest figures from sources like SQM Research, Domain and CoreLogic have Brisbane houses showing little or no growth in the past year, but our suburb-by-suburb analysis shows there are many outperformers.
Hotspotting analysed 287 suburban markets – 205 house markets and 82 unit markets – looking at the latest figures showing annual growth rates. The results for houses are a lot more positive than those for units.
Of the suburb house markets, 135 (66%) have median house prices higher than a year ago, including 44 where medians have grown more than 5% – headed by West End (up 16%), Windaroo (16%), Sandgate (15%), Hemmant (23%) and East Ipswich (19%).
A total of 70 suburbs (34%) have median house prices down in annual terms, but most are down by less than 5%. Only 12 suburbs have recorded median house price decline above 5%.
The apartment market shows a different pattern, impacted by several years of over-supply which drove up vacancy rates, especially in the inner-city areas. Of the suburbs with unit markets, 38% have higher medians than year ago and 62% have recorded decline in their median prices.
It’s notable than 26 or the 38 Brisbane markets where median prices have dropped more than 5% are apartment markets. The median apartment price for inner-city Bowen Hills is down 19%.
Overall, Brisbane is solid market – or a series of mostly solid markets – awaiting a catalyst. It’s likely to get at least part of the boost it needs from recent national factors, including the election result, the APRA easing, the reductions to interest rates and the tax cuts.