81 Hot Property

HOT PROPERTY

Brisbane’s property market going for gold.

PANDEMICS are never meant to be good for property markets, but the rule book has been thrown out with this one.

More than a year into the Australian property boom that was never meant to happen, it’s evident the forces that have brought the market to a new high are still at play. And while there is some debate over when the market will begin to cool, Brisbane’s successful bid for the 2032 Olympic Games has the potential to turn up the heat even more on the property market in south-east Queensland.

The Olympics have effectively given the already fast-growing region new legs that most analysts agree will support the market in line with the infrastructure spending to come.

We need look no further than the 2018 Commonwealth Games to see how that drove economic activity on the Gold Coast. WORDS NICK NICHOLS

“The Olympics should work as a positive influence on Brisbane housing market conditions,” says CoreLogic’s head of research Tim Lawless.

“The flow-on effects are likely to be gradual and centred on significant infrastructure upgrades and the associated medium-term uplift in jobs and longer-term improvements in transport efficiency.

“Large infrastructure projects tend to have a positive influence on housing prices, with the extra requirement for workers creating additional demand for housing during the construction process.”

That all sounds positive, but it’s obvious that the Queensland property market, especially in the south-east, was doing pretty well even before Brisbane was named a future Olympic city earlier this year..

The Games provide plenty of opportunities for those with a strategic long-term view to property investment.

However, there’s at least one more property cycle to be had between now and then, with the likelihood of interest rate increases shaping future demand.

The current strength of the market is reflected in rising yields for investors with Australia recording the biggest rent increases in more than a decade.

The CoreLogic Quarterly Rental Review revealed rent values for the June quarter were up 6.6 per cent over the previous year.

This compares with average growth of 1.8 per cent over the previous decade.

However, price-growth momentum has started to show some signs of easing over recent months despite the solid headline gains.

CoreLogic’s national home value index revealed that Australian housing values in July rose 1.6 per cent, bringing a combined increase for the calendar year to date of 14.1 per cent.

On an annualised basis, prices are up 16.1 per cent which is the fastest rate of annual growth since 2004.

However, CoreLogic also reveals that monthly growth rate has been trending lower since March when the national index rose 2.8 per cent, or almost twice the July figure.

Mr Lawless attributes this monthly slide to declining home affordability.

“On the flip side, demand is being stocked by record low mortgage rates and the prospect that interest rates will remain low for an extended period of time,” he says.

“Dwelling sales are tracking approximately 40 per cent above the five-year average while active listings remain about 26 per cent below the five-year average.

“The mismatch between demand and advertised supply remains a key factor placing upwards pressure on housing prices.”

Many analysts are expecting housing demand to fall over the next year, pushing price growth back to more normalised levels.

According to the latest NAB Quarterly Property Survey, 2021 will be another big year for property gains.

However, the survey has slightly lowered expectations for growth in dwelling prices to 18.5 per cent for 2021.

Next year, it is forecasting a sharp pullback to 3.6 per cent growth.

“We still see solid growth over the next six months,” says the NAB survey.

“The upgrade to our forecast is relatively uniform across capital cities.”

But if CoreLogic’s national home value index is any guide, price growth in capital cities has been nothing but uniform over the past year.

Darwin, Hobart and Canberra have topped the table with annualised gains of 23.4 per cent, 21.9 per cent and 20.5 per cent respectively.

Sydney has also recorded 18.2 per cent growth.

However, the Olympic city, with all that it has going for it, is lagging at 15.9 per cent.

The median value of dwellings in Brisbane at the end of July was $598,615, which was well below that of Sydney, Melbourne, Canberra and even Hobart.

While this shows housing affordability is not as severe in Brisbane as other capitals, it also positions Australia’s third-largest city as an underdog in terms of the property market.

In short, with the Olympics looming in the distant horizon, this gives Brisbane some room for improvement.

It remains to be seen if it will be a gold-medal performance.