Brisbane Market Wrap

The Brisbane market is again performing strongly, coming off a solid end of the second quarter.

Most significantly the clearance rates over the last month have been particularly strong. As we covered in last month’s edition, the normally auction caution Brisbane market is reaching higher and higher up the clearance rate.

July saw the average rate reach 58%, with highs of 65% recorded on the weekends of the 18th and 25th of July. Compared to the average of 54% recorded over June of this year, the Brisbane auction market continues to push at a healthy rate.

Also interesting on an anecdotal level is the interest from interstate buyers.

According to National Property Buyers Queensland State Manager, Steve McGee, Brisbanites have had to contend with significant interest from interstate buyers in a significant way over the last 12- 18 months.

Again, a visit to a few properties to north side suburb, Aspley, this week revealed a number of interstate buyers showing competing interest sight unseen. This is significant because these are suburbs on the outskirts of the CBD where interstate buyers have started to look and will now push local buyers out in a pricing war.

July Auction Snapshot

Brisbane Economic Snapshot

The Lord Mayor’s Brisbane Economic Snapshot came out recently, focusing on the industrial clusters and promoting the Brisbane 2022 New World City Action Plan, and economic strategy outlining the priorities and action to encourage economic growth in Brisbane.

Key to this snapshot is looking at the change from Brisbane’s economy from being based primarily in servicing population sectors with primary products to becoming an economy based more in knowledge industries and traded sectors.

Key industries being promoted in the report as being important to Brisbane’s economic future are the Knowledge-based and Corporate Services, Accommodation and Visitors Economy, Higher and International Education, and the Creative and Digital industries.

Perhaps the best example of looking at Brisbane’s economic breadth from this report is observing the strengths of two very different industries.

The Food and Agribusiness industry in Brisbane is driven primarily by meat and meat product manufacturing. Demand for food is forecast to rise by 35% up from 2007 levels in the next decade. As expected, Asia will be driving the need.

Frozen meat exports are a major export for Brisbane and the city leads the country in volume in this sector, approximately 71% in 2012. Being a traditional export product, the Sunshine State capital will be working to keep the sector strong.

Conversely, Higher and International Education is proving to be a vital cog in the Brisbane economy. The industry is the largest single services export in the city, contributing $3.8 billion in 2014.

The city ranks as the 23rd best city for students and one of the highest ratios of students in the world. Comparative to other capital cities in Australia, Brisbane leads the way in growth in the higher education.

Many of the growth industries in the city are knowledge based and rely on an educated population, so the higher education industry is looking to grow. The flow on affects, particularly for students seeking accommodation, will be of benefit to the city.

Top 5 City Suburbs with Shortest Days on the Market

CoreLogic released data at the end of July revealed the fastest selling suburbs in the capital cities across the country.

According to the data, homes during the month of May were selling close to the fastest rate on record, primarily driven by the extraordinary performances in the Melbourne and Sydney markets.

Brisbane has performed particularly well by this barometer, coming in comfortably under the 37 day average time on the market.

Across all measurements, Holland Park performed the best overall of the top five suburbs for houses. While the suburb took the longest time to sell (35 days, tying with Everton Park), it had the second highest number of sales across the period with 141 transaction and reached the highest median price of $620,000 as well as the highest 12 Month Change of 9.5%. An excellent result considering the high number of stock on supply.

Inner city units again proved their worth, with Herston achieving a superb result of 24 days on the market. In addition, the suburb achieved the highest median price of $516,500 and second highest 12 Month Change with 24.5%.

Coorparoo dwarfed the other suburbs in terms of stock moved. 232 transactions were made over the period and considering the enormous stock compared to the other suburbs in the data set, the suburb had the second lowest median price and most number of days on the market.

Houses

Units

The $6 Trillion Market

Melbourne and Sydney have continued to set the standard for capital gains across the market during July and look to be continuing to do so. Off the back of these performances, the market aggregated value of all dwellings across the country has tipped over the $6 trillion mark. The momentous figure has been reached with an estimated $500 million increase in value over the last 12 months.

Outside of the Melbourne and Sydney juggernauts, Brisbane is the best performing capital city in terms of capital growth. Dwelling prices in the city have increased 3.9% over the last twelve months according to CoreLogic data. Brisbane also remains exceptionally affordable when compared to Melbourne and Sydney. Sydneysiders are paying 72% higher median prices compared to their northern neighbours, while Melbourne median prices are 24% higher than Brisbane.

Compared to capital growth across the country, rental prices are increasing by the slowest rate on record. While dwelling values continue to rise, rental growth has been pushed downward.

Again, Melbourne and Sydney lead the way in rental yields, but in the opposite direction. The two cities offer the lowest yields for house with Sydney down to 3.2%, and Melbourne 3.0%. Unit rentals don’t fare much better, edging close to record lows. According to CoreLogic, both Sydney and Melbourne attract the most interest from investors, so the low rental yield isn’t acting as a deterrent to invest.

Again, it’s Brisbane leading the way in this space in the market. The city is bettered only by Darwin and Hobart in regards to housing rental yields, increasing by 4.4% compared to Darwin (5.7%) and Hobart (5.2%). Brisbane unit housing is again proving the strongest in the country, equalling Darwin in terms of rental yields at 5.5%.

For buyers looking for excellent investment opportunities, Brisbane is again proving to be exceptionally attractive. The strong rental yields recorded across the market and the excellent affordability when compared to Melbourne and Sydney make the Sunshine State capital an excellent option across many aspects of the market.

This is further reaffirmed with the release of valuation firm Herron Todd White’s July 2015 Property Clock, illustrating a broad overview of a market’s cycle. Brisbane and surrounding markets Gold Coast, Tamworth, Toowoomba, and the Sunshine Coast have been positioned at 9 o’clock, meaning they are a rising market approaching the 12 o’clock peak.