According to the last quarterly property market report from www.domain.com.au, Brisbane properties have risen to an average of $702,455, up by $30,000 in the last three months alone. If one was to calculate this return in business days, that would be a $500 increase per day!
Macroeconomic restrictions were recently introduced by the Australian Prudential Regulation Authority (APRA), to tighten lending rules to prevent homebuyers from ‘over-borrowing”. The flow-on effects of this change will not be felt yet, or perhaps not at all. On the tail end of unprecedented price increases, you would be forgiven for thinking that this boom must surely slow down soon?
The case for 'Running out of Steam'
Only last week, speculators were, well, speculating that the Sydney housing market (which has seen huge average price rises in the last year) may be overpriced and that a correction is coming. Again, in normal circumstances, this would often have meant that there would be a likely knock-on effect in other regions of Australia.
But alas, we no longer find ourselves in a normal time, and we are subject to many factors intersecting to influence the housing market. There is good reason to think that the property market may soon run out of steam, namely:
- The knock-on effect on the global economic downturn Covid
- Disruption to global supply chains.
- The knock-on effect of ongoing geopolitical issues China resulting in reduced imports and trade, as well as a potential housing crash following the Evergrande’s impending collapse.
- Restrictions of overseas travellers and students.
- Tightening of lending rules.
- Average house price increases far outstripping average increases in income.
- Border closures between states.
- The unpredictability of all of the above.
Increasingly, Brisbane and Queensland are becoming 'the place to be'. Picture courtesy of unsplash.
Full Steam Ahead?
Despite this, I can't see the Brisbane region or anywhere in South East Queensland coming to a slow down anytime soon. Sure, there may be certain property types and areas that you might want to avoid (such as some apartments and some inner-city Brisbane dwellings) but these are few and far between.
Why so confident, you ask? Well, we could look at the core logic data and other factors but in many ways, it is the qualitative information that makes the most sense right now. Namely:
- The borders to QLD are about to open. QLD has always been known as the state that guarantees a great lifestyle and never has this seemed more important than ever before. Pent up demand from NSW and the rest of Australia means that net migration to this state is guaranteed.
- Of course, there is simply not enough supply. With supply chains still constrained, there is not enough building taking place.
- Cool Factor. Recently, the Queensland address has become more of a status symbol, and these drive purchasing behaviour. Australians in other states are increasingly attracted to the association and new promise of Queensland.
- The Olympics. With the Olympics confirmed to be hosted here in 2032, increased government infrastructure investment is on the way.
- International Borders: As soon as international borders open, the international buyers will return.
- Brisbane and Queensland are comparatively still affordable versus other cities.
The last point is probably the greatest overriding factor that makes me confident. Compared to Sydney and Melbourne, Brisbane and the surrounding areas never saw the same price rises that they have seen over the past 15 years. By any measurement, the property remains comparatively cheap. Coupled with pent up demand and people wanting more 'lifestyle', even if there is some short term retraction, property values in the South East will continue to grow.
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