Brisbane’s record falls can’t erase rapid pandemic price gains

Just over seven months after prices peaked, the Queensland capital has recorded its swiftest and largest decline ever.

A cocktail comprising the Palaszczuk government’s relatively relaxed pandemic restrictions, a limited number of lengthy lockdowns, and proximity to Sydney and Melbourne, which reported migration losses of 31,232 and 32,166, respectively, during the 12 months to March 2021, saw home values surge 43 per cent throughout Greater Brisbane.

Now, the dust has settled on the city’s property boom. CoreLogic’s latest Daily Home Value Index (HVI) revealed Brisbane home values have plummeted 10.9 per cent since the 19 June 2022 peak and 28 January 2023. 

Head of research at CoreLogic, Eliza Owen, said the city’s market movements, which follow the national daily HVI hitting a record decline earlier this month, see Brisbane join Hobart in experiencing the record declines.

She noted the pair were not exclusively the only markets recording massive value decreases, with Sydney’s peak-to-trough falls currently at 13.8 per cent.

But the researcher did flag that current declines have barely dented the gains registered during Brisbane’s 43.5 per cent value upswing from August 2020 and June 2022, a rise which she categorised as “the fastest trajectory of rising values on record.” 

“This leaves home values across Brisbane 27.9 per cent higher than at the previous trough in August 2020,” she added.

“Brisbane maintains the third highest gain in value of the capital cities since the start of the pandemic.”

According to CoreLogic data, the only historical period of peak-to-trough declines compares to current levels — between April 2010 and January 2012 — when prices fell 10.8 per cent across a 21-month period. Although this decrease occurred over a period thrice as long as the current downturn.

“The second largest period coincided with a national housing market downturn that was fairly broadly based, and partly coincided with the RBA lifting the cash rate 175 basis points between October 2009 and November 2010,” she said.

On average, Greater Brisbane’s dwelling peak-to-trough decline periods last 14 months. 

Furthermore, Ms Owen firmed her belief Brisbane’s market is presently adjusting to sharp increases to borrowing costs throughout 2022’s second half, inspired by the Reserve Bank of Australia’s (RBA) consistent cash rate increases and rising prices, which resulted in median home values in the city jumping approximately $200,000 between the onset of the pandemic and 2022’s conclusion.

Given the city’s position as having been outperformed only by Adelaide and Darwin, Ms Owen stated “there is marginal risk of negative equity for Brisbane homeowners, with the exception of very recent buyers, who purchased around the peak in June 2022 with less than a 20 per cent deposit.”

She highlighted how certain factors may be placing a floor under the market as the pace of price falls across Brisbane has been slowing in recent months. 

“The first factor is relative affordability. Although housing values remain higher than pre-COVID levels, Brisbane retains a lower price point than Sydney, with a $435,170 difference in median house values and $280,749 difference in median unit values,” Ms Owen said.

She added that the disparity between Brisbane and Melbourne housing values — $119,697 for median home values and just below $100,000 for median unit values — “could encourage ongoing housing demand from those willing to migrate to the state or own an interstate investment.” 

Moreover, Brisbane’s interstate migration levels continue to exceed average levels, with the latest demographic data from June last year indicating migration into the Sunshine State was tracking 63 per cent higher than the decade average, the largest of all states and territories. 

City rents increased 13.4 per cent in 2022, which Ms Owen believes suggests an underlying shortage of available housing. 

This is exacerbated by persistent low volumes, “where the volume of advertised stock is trending almost 40 per cent below the previous five-year average.” 

“While Brisbane property values are likely to fall further in 2023, it is possible the rate of decline will continue to slow over the coming months,” she concluded.

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