Steady as she goes, then a return to gradual growth
The media is full of doom and gloom about the state of the property market, with talks of crashes as it gets clicks. The market differs significantly from the previous frenzied market 12 months ago. However, numbers tell a different story to the doomsayers. There’s still good news in the numbers for long-term investors in Brisbane and The Sunshine Coast residential property markets. We won’t be surprised if prices rise again in late 2023 or early 2024.
Infrastructure
The buzz term is Brisbane Olympics 2032, but the real story is more about the constant stream of infrastructure projects underway and yet-to-be-formally announced projects. SE QLD is evolving, and the numbers back this up.
Population growth
Queensland’s population grew at a whopping 2% to June 30 2022, compared to NSW’s 0.7% and Victoria’s 1%. However, we are yet to see the full effects of post covid border openings with increased overseas migration, the return of overseas students, ex-pats, backpackers, and increased tourism numbers. These numbers may increase in the coming year.
Unemployment
Still very strong compared to 2019. However, it’s expected to trend upwards due to interest rate rises and a slowing economy.
Jan 2019 Qld 5.1% National 5.0%
Jan 2023 Qld 3.7% National 3.5%
Rental Market
The rental market is a horror story for tenants due to a shortage of available properties, which in turn is causing rent increases of upwards of 10% annually in many locations. We expect rental markets in Brisbane and The Sunshine Coast to stay tight and rents to continue to rise in the near term.
Rental Vacancy Rates (Record lows)
Brisbane Feb 2019 2.7%, Feb 2023 0.8%
Sunshine Coast Feb 2019 1.7% Feb 2023 1%
Rental Listings (Stock on Market)
Brisbane
Feb 2019 11,000
Feb 2023 5,180
Sunshine Coast
Feb 2019 1,350
Feb 2023 1,000
Sales Numbers
While the number of buyers out looking to purchase property in SE QLD is lower than last year, we still see decent investment-grade properties selling with multiple offers in the 1st couple of weeks. The difference from the market’s peak is that we will now be competing against 1-4 other offers instead of 20-50 at the market’s peak.
Days on the market have increased dramatically since the peak of the market. Unfortunately, we are seeing some unrealistic pricing from a few vendors who have yet to accept the change in market conditions.
Sales Listings (Stock on Market)
Brisbane
Feb 2019 under 30 days 8,087 Total 33,800
Feb 2023 under 30 days 4,480 Total 18,244
Sunshine Coast
Feb 2019 under 30 days 1,965 Total 9,919
Feb 2023 under 30 days 1,282 Total 6,248
Interest rates
At its February meeting, the Reserve Bank raised the cash rate by 25bps to 3.35%. It was the ninth rate hike since May 2022. As a result, borrowing costs are now at a level that hasn’t been seen since September 2012.
Recently ING Group forecasted that Australia’s Inflation is expected to stay at an elevated level of 7.4% until the first quarter of 2023 before slowing to 6.4%, 5.1% and 3.8% in the following quarters. Their forecast for 2024 is for inflation to average at 2.5% and in 2025 and 2.7%.
The National Australia Bank estimated first-quarter 2023 inflation at 6.9%, forecasting 5% and 4.3% reductions in the final quarter of 2023. By the end of the 2024 financial year, they predict it to slow to 3.1%.
Westpac is now predicting a peak cash rate of 4.1%
While we seem closer to the end than the beginning of this interest rate-tightening cycle, we must also be aware that things can change quickly in the global economy.
For example, in July 2022, the four major banks forecast the peak cash rate: ANZ 3.10%, CBA 2.10%, NAB 2.85%, Westpac 2.35%
*Data Sources ABS, SQM Research
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