It’s been a tumultuous few months with multiple interest rate rises and the new federal government settling in. During that time, there’s been much reporting on where property prices are heading. Generally, the media’s consensus is they are in freefall.
Now is that really the case?
We only focus on Brisbane and the Sunshine Coast, so let’s look at the actual numbers via our friends at SQM Research.
Current Sales Listings/Stock on the Market (all residential properties)
Brisbane Now 21,585 Sept 2022 Lowest 16,057 Jan 2022 Pre-Pandemic 31,101 Oct 2019
Sunshine Coast Now 6,952 Sept 2022 Lowest 4,952 Jane 2022 Pre-Pandemic 9,792 Oct 2019
Asking Sales Prices (houses only)
Brisbane Now $915,909 Oct 2022 Current Cycle Peak $932,509 June 2022 Pre Pandemic $630,689 Oct 2019
Sunshine Coast Now $869,679 Oct 2022 Current Cycle Peak $893,147 July 2022 Pre-Pandemic $572,026 Oct 2019
Rental Vacancy Rates (all residential properties)
Brisbane Now 0.7% Sept 2022 Lowest 0.9% March 2022 Pre Pandemic 2.3% Oct 2019
Sunshine Coast Now 0.7% Sept 2022 Lowest 0.4% Oct 2020 Pre Pandemic 1.5% Oct 2019
Asking Rents (houses only)
Brisbane Now $632pw Oct 2022 Peak $632pw Oct 2022 (yet to peak) Pre Pandemic $432pw Oct 2019
Sunshine Coast Now $677pw Oct 2022 Peak $695pw June 2022 Pre Pandemic $496pw Oct 2019
While we are only looking at four data points, and there are markets within markets. Currently, there doesn’t seem to be a freefall in prices. If you look at the graph for Brisbane and TheSunshine Coast, it seems more like an orderly plateau, meaning interest rises have done their job and taken the heat out of the market. Hopefully, the Federal Reserve will start to pull back on interest rate increases as it feels like we are near the peak of this rising cycle.
On the ground, we are seeing fewer people at open houses, and the frenzy has subsided. We are negotiating a lot more, which was unheard of 6 months ago, and if vendors are serious about selling, then deals are still happening quite quickly. Some vendors are still holding out for a price that might have been achievable in a rising market four to six months ago, but reality will sink in soon, and they have to adjust their pricing to meet the market.
Where to now? As with many locations around the country, there is a chronic shortage of rentals with record-low vacancy rates and rapidly rising rents. Brisbane appears yet to have reached its peak, and while the Sunshine Coast seemed to peak in June, I wouldn’t be surprised if it started to rents increase again in the coming months.
I can’t see a significant property price correction on the horizon for SE QLD. We currently have 3.75% unemployment, overseas student and working holiday visa approvals are returning to pre-pandemic numbers of 55,000 per month, and immigration is also about to ramp up to 195,000 next year. Based on the current intrastate migration numbers, many will no doubt be heading north to Queensland.
SE QLD vacancy rates are hovering around 0.7%; where will all these people live?
The rental crisis has been years in the making, with investors being easy targets over the years with the removal of some depreciation claims, higher interest rates compared to owner occupiers and more onerous lending restrictions imposed by APRA.
Both federal and state governments need to get onto this ASAP, and hitting investors with a stick isn’t going to cut it anymore. We need some proactive policies to bring more investors to the market ASAP. The Queensland government are currently running a housing summit, and the REIQ submitted the following proposals to help increase rental property supply.
Stamp duty relief for downsizing over 55’s
Expand the First Homebuyer Grant to include established properties.
Reward investors with Stamp Duty concessions if they commit to keeping properties in the long-term rental market for a specific time frame.
Introduce a new home loan deposit guarantee scheme for first-home buyers and key workers.
We also think the federal government should get involved and bring back depreciation claims on long-term established investment properties to encourage more investors into the market. Again, it would be an affordable, fast and easy policy to bring more investors into the market.
Hopefully, they will come up with some sensible and logical plans. If you want guidance on where and what to buy in SE Queensland, Click Here to book a time with The Edge Property Buyersfor an obligation and cost-free consultation about your property plans.
