After a wild 2021 where the Brisbane property market saw many locations experiencing price growth of 30+% and a 7.2 % increase in the First Quarter of 2022, where are we headed next?
What about the 2032 Brisbane Olympics with over $5 billion in infrastructure planned, is there a property boom coming to Brisbane?
And what effect will the recent rate rise have on Brisbane house prices moving forward?
Where do we forecast the Brisbane property market to go in 2022, and beyond to 2023?
- 1. Property Market Crash
- 2. What will happen to Brisbane house prices in 2022?
- 3. Will the 2032 Brisbane Olympics increase property prices?
- 4. Drivers of the Brisbane Property Market
- 5. Suburbs in Brisbane to watch in 2022
- 6. How will flooding affect property prices in Brisbane?
- 7. Brisbane’s riskier suburbs in 2022
1. Will the property market crash in 2022?
Do you remember how early in 2020 property commentators were saying house prices across Australia could plummet by 20%?
And how, instead of crashing, the Brisbane housing market led the charge in the third-fastest episode of annual price growth on record? Just goes to show you how unpredictable housing markets can be.
Commentators had very much changed their tune by the end of 2021 and were predicting future growth in the Brisbane housing market in 2022.
Other property commentators, like Simon Pressley (who got it right in 2020 and 2021) went further, predicting up to 27% gains in 2022:
After 15 consecutive years of lean performance, Brisbane will be Australia’s best-performed capital city in 2022. Somewhere in the vicinity of 27 per cent capital growth is on the cards for 2022, and 35 to 45 per cent over the 2-years ending 2023. Simon Pressley, Propertyology
So with the latest rate rises, high inflation, and some evidence of other major capital cities slowing down, has anything changed? Are we still going to see strong price growth in Brisbane throughout the rest of the year, or are we on the verge of a crash?
Well, it depends on who you ask.
The RBA has warned of “falls in housing prices”, and estimated house prices could be 15% lower than expected over the next two years, in real terms, thanks to rising interest rates.
But Simon Pressley from Propertyology isn’t fazed by the rate rises or inflation. He still believes that the median house price in many Australian locations could double over the next 6 years.
And history appears to support his thesis. 20 years ago, when Australia last had a national property boom, variable home loan interest rates increased 22 times in 6 years. During this same 6-year period, we had a rising property market. The median house price growth in Brisbane was 127 per cent.
It’s not as simple as “interest rates go up, house prices go down”. There are dozens of factors that influence the property market, and interest rates are just one of them.
If a property market has otherwise strong fundamentals (and the Queensland property market has very strong fundamentals), then we should still see price growth over the next 12-24 months.
So whether you’re looking to buy a home to live in, or looking for an investment-grade property, the Brisbane housing market should be a relatively safe bet.
Not all property markets are the same
I think it’s important to remember that Australia doesn’t have one single property market. Each state, each city, and each area has its own stage within the property cycle.
While South-East Queensland should still see some growth in 2022 and beyond, things may not be so rosy in some of our other capital cities – we are sitting at 25.6 per cent growth over the past 12 months to June 2022.
The Sydney and Melbourne markets currently have the weakest property market fundamentals, and they are likely to be hardest hit by any downturns in the market.
We’ve already started to see evidence of a downturn in Sydney, with prices falling by 1.6 per cent last month. And Melbourne prices stalled, falling by 1.1 per cent in June 2022.
Here’s what’s happening in the Brisbane property market
Brisbane is the fastest-growing capital city market in Australia at the moment.
Brisbane property values rose 26.5% over the past 12 months. To put that in context, the median house value grew by $425 per day over the past year. The median value of Brisbane houses is now $784,826, a total rise of nearly $202,000. This is the steepest annual growth in 18 years.
Unit prices have also reached a record high, at $437,034. This represents a 9.3% annual increase and is the highest growth we’ve seen in 14 years.
While the number of home loans for owner-occupied first home buyers has fallen compared to last year, investment home loans have increased as investors see an opportunity for both capital growth and favourable rental returns.
We saw a brief “pause” in the market in early March due to the recent floods, but it was very brief. Auction clearance rates plummeted to 42% and 53% in the first two weeks of March before bouncing back to 64% in the last weekend of March.
Despite the recent floods and concern over interest rate rises, demand remains significantly elevated compared to housing supply.
Brisbane housing conditions remain quite strong, with advertised stock levels 14.9% lower than this time last year maintaining a low supply of new properties selling, while demand from home buyers is still historically high.
Auction clearance rates for the March quarter were just 2% shy of the record high achieved in the December quarter of 2021, at 65%.
2. What will happen to Brisbane house prices in 2022?
So we know that Brisbane has been the top-performing capital city in the past 12 months, but what does the future hold?
Will we see further growth over the rest of 2022 and beyond, or has the market peaked?
In this section, we’ll cover some of the factors that are likely to affect the Queensland property market, and what that means for capital growth in Brisbane for the rest of the year.
What effect will interest rate rises have on price growth?
The RBA recently lifted the official cash interest rate for the first time since 2010, increasing it initially by 25 basis points then a further 50 basis points from 0.1% to 0.85%. They did this in an attempt to curb inflation, which reached 5.1% in March this year.
All four of the big banks have passed on the interest rate increase to home buyers.
It’s almost a certainty that interest rates will continue to rise over the rest of the year, with Shane Oliver from AMP forecasting the official cash rate target to hit 1.5% by the end of 2022 before lifting to 2% in mid-2023.
So what will that do to Brisbane property prices?
In the April Financial Stability Review, modelling from the RBA suggested a 2% increase in the cash rate from current levels could lead to a 15% decline in real house prices over a two-year period. A 15% decline in the current median dwelling value across Australia would take prices close to May 2021 levels.
But this is for the Australian market as a whole, and as we mentioned earlier, each capital city or area has its own market dynamics. Time will well, but it’s likely that the Brisbane property market will continue to see fairly robust growth for the rest of the year, even if the other capital cities see prices starting to decline.
As mentioned above, the median house price more than doubled in value in 6 out of 8 capital cities (Brisbane included) in the 6-year period commencing May 2002, when the standard variable home loan interest rate increased 22 times, from 6.3 to 9.5%.
So just because interest rates are increasing doesn’t mean that property prices will fall.
3. Will the 2032 Brisbane Olympics increase Brisbane house prices?
Can we expect a property market boom by 2032 for the Brisbane Olympics?
Well, it depends on who you ask and their motivation.
Take this article where they are quoting Some experts who are predicting the median house price across Greater Brisbane will soar past $1.2 million within a decade, which is 40 per cent above the 10-year average.
They go as far as to say “Brisbane homeowners are in line for a $200,000 Olympic bonus ” when the city is awarded the 2032 Games.
$200k for not doing anything… Sign me up – sounds pretty appealing right?
Colliers Queensland director of office leasing Matt Kearney says that we are entering a ‘golden decade’ for Queensland and the property sector will be a major beneficiary.
But not everyone is drinking the property boom water fountain.
Simon Pressley from Propertyology calls the Olympics a sugar fix – a quick hit of energy into the market that will burn itself out as quickly as it began and will have no lasting effect.
Looking back at the Sydney Olympics, Melbourne and Gold Coast Commonwealth Games, it looks like there’s certainly no guarantee that Brisbane is going to outperform any of the other cities in Australia due to the Olympics – there are simply too many other factors at play.
However, if you were planning on living or investing in Brisbane anyway, then you will most slightly see higher growth in your property value if you target areas that will benefit from the infrastructure investments and upgrades that will happen between now and 2032.
And remember it’s worth noting that compared to past Olympic games, the 2032 Olympics requires a significantly smaller investment to host it since we’ll be reusing a lot of existing infrastructure with the IOC’s focus on sustainability and economic stability. This could mean there may be less of an impact on property values.
Not to mention the traditional 7 years from announcement to end date has been extended to 11 years, spreading out the investment in infrastructure over a longer time frame, which could dilute its effects.
4. Drivers of the Brisbane Property market
As Simon Pressley from Propertyology says, variations in the value of properties are determined by the relationship between the volume of property assets listed for sale and the volume of willing buyers at a specific point in time.
In other words, prices are ultimately determined by supply and demand.
So what factors contribute to supply and demand in Brisbane’s property market?
Population growth is one of the biggest drivers of housing demand. And Brisbane is currently in the midst of a population boom. Net interstate migration to Queensland in the year to June 2021 (the most recent data available) reached 30,939. This is the largest annual increase since 2004 when Queensland had a net interstate migration of 35,498.
Queensland secured more than 90% of net interstate migration in the year to June 2021. Most of the interstate migrants came from NSW and Victoria, which lost 16,676 and 18,300 respectively.
Queensland did lose 14,366 people to June 2021 in net overseas migration during COVID-19, but even if we take that into account, that’s still another sixteen thousand people looking for a home in Queensland.
That’s a lot of extra people who are looking for a place to buy or rent, which is one of the reasons why Brisbane’s property market has done so well in the past 12 months.
Looking forward to the rest of 2022 and beyond, we can expect Brisbane’s population growth to continue for these reasons:
- Opened international borders
- Better affordability
- Life-work balance
- Expanding jobs market
- The 2032 Olympic games.
- Further economic growth over the next decade
The state of the economy is another major driver of housing demand. To put it simply, if the economy is growing, that means more jobs on offer.
The more jobs on offer, the more people South East Queensland will attract. And increased availability of jobs means that salaries will increase.
If you have more jobs available than there are people to fill those jobs, then companies will be competing with each other, which puts upwards pressure on employee compensation.
So a growing economy has a two-fold effect on housing demand: more people moving to the area, and more money available. If you’re on a higher salary, you’ll be able to save more money and your borrowing capacity will be higher. This means more people will be looking to buy a home.
All of Brisbane’s economic key pointers are heading in the right direction. According to the Brisbane City Council Economic Development plan 2012-2031, Brisbane’s economy will be worth more than $217 billion by 2031.
This is being underpinned by major projects like Queen’s Wharf, HS Wharf, Cross River Rail, the second airport runway, and the Adani Coal Mine.
This brings us to another major driver of the Brisbane property market: infrastructure.
Brisbane is currently experiencing what has been described as a “once in a generation” infrastructure boom. There are currently billions of dollars of major infrastructure projects either underway, or well into the planning stages.
Infrastructure developments have a twofold effect on housing demand. In the short term, they provide employment opportunities and attract migration, both interstate migration and international migration.
In the long term, these infrastructure improvements improve transportation options, lifestyle options, employment opportunities, and tourism offerings.
The new Brisbane airport runway and the redevelopment of Howard Smith Wharves (both completed) are just the beginning.
Some of the major infrastructure offerings currently in the works include the Cross River Rail, Brisbane Metro, Queen’s Wharf, Brisbane Live, Victoria Park, Waterfront Precinct, Herston Quarter, International Cruise Terminal, and West Village.
Here’s a brief overview of the other infrastructure projects currently in the works:
Cross River Rail
The Cross River Rail will bring 4 new stations at Albert St, Boggo Rd, Woolloongabba, and Roma St, plus upgrades to existing stations including Exhibition Station in Herston.
Access to public transport is a key driver of property prices, so this development will likely see an uptick in demand for the following suburbs:
Originally planned to be a high-frequency subway, the Brisbane Metro is an electric busway system that will drastically improve public transport services in Brisbane.
The Brisbane Metro will have two lines. Line 1 will run from Eight Mile Plains to Roma Street. Line 2 will run from the Royal Brisbane and Women’s Hospital in Herston to the University of QLD in St. Lucia.
There are plans to extend the Metro to Chermside and Carindale in the future.
The Brisbane Metro will share interchanges at Boggo Rd and Roma Street, further expanding the utility of this new service. It is expected to start service by the end of 2023.
The following suburbs will benefit from this new infrastructure development:
- Eight Mile Plains
- Upper Mt. Gravatt
- Mt. Gravatt
- Holland Park
- Holland Park West
- West End
- South Bank
- Kelvin Grove
- Red Hill
- Dutton Park
- St. Lucia
Brisbane Live is a $2 billion redevelopment that will replace the old transit centre at Roma Street. This multi-purpose arena has a proposed 17,000 to 18,000 seat capacity and will provide a new hub for sporting, music, and arts events in Brisbane.
There will be retail spaces as well as a “Sky Lounge” that can operate as a function area when there are no events taking place.
Suburbs near to Roma Street should see increased demand once the project is complete, and Brisbane as a whole will benefit from having a major event centre so close to the CBD.
Covering more than 26 hectares across the Brisbane waterfront and the river, Queen’s Wharf is a $3.6 billion dollar integrated resort development that will be a major boost to the Brisbane city culture scene.
The development is already underway and will contain four integrated resort towers with luxury hotels, residence apartments, restaurants, cafes, bars, retail shops, a casino and a Sky Deck.
Development is scheduled to be finished this year.
The Victoria Park golf course was closed in June 2021 to make way for Brisbane’s biggest new park in 50 years. This project will create 45 hectares of public parkland space, more than double the size of the Botanical Gardens.
While golf aficionados are probably mourning the loss, this park will provide some much needed green space and should boost demand in nearby suburbs.
Waterfront Brisbane is another project that is set to transform the Brisbane waterfront as part of the Brisbane City Council City Reach Waterfront Master Plan.
This $2.1 billion dollar project will redevelop Eagle Street Pier, opening up 7,900 square metres of space and improving linkages from the city to the river for pedestrians and cyclists. The old Eagle Street Pier building will be demolished. In its place, there will be two new towers which allow better access to the river and its views.
Kangaroo Point Pedestrian Bridge
Connecting City Reach to the Kangaroo Point Peninsula, this proposed green bridge will dramatically improve access to and along the waterfront. This is another key project to deliver on the City Reach Waterfront Master Plan.
As part of the Cross River Rail project, the area around the Wooloongabba station is set for a major renewal. The plan is to create a “Station-to-Stadium” connection that will link the new station to the famous Gabba stadium, which will also receive a major overhaul as part of this project.
The precinct is slated to be a vibrant mixed-use hub, linking commercial, residential and retail development with access to world-class public transport and one of Australia’s most iconic sports stadiums.
International Cruise Terminal
The Port of Brisbane has a new international cruise terminal in development, designed to cater for the biggest cruise ships in the world. While cruises aren’t running at the moment, when they do start sailing again, this new terminal should increase tourism in Brisbane, which will bring in more jobs.
Redevelopment of the 5-hectare site for the Herston Quarter began in March 2017. This $1.1 billion project is located within the Herston Health Precinct and is proposed to be a mixed-use community which will cater for health, residential, commercial and retail development.
The West Village project is rejuvenating an industrial area in West End, with the aim of bringing more public green space and retail opportunities to the community. Stages 1 and 2 are already complete.
Approved in 2021, the Lamington Markets is a new retail precinct that will aim to bring food, living, commercial and public transport facilities together into one impressive whole. It will boast one of the city’s largest indoor-market halls, an urban rooftop garden and restaurant, a craft brewery, a boutique cinema, commercial spaces and two towers of residential apartments.
Once complete, this development should be a major drawcard and should benefit its host suburb Lutwyche along with surrounding areas.
As you can see, there are billions of dollars worth of infrastructure projects that are either underway or in planning. They will have a direct positive impact on the livability and growth potential of their host suburbs and the surrounding areas.
5. Our suburbs in Brisbane to watch in 2022
Suburbs close to the Brisbane CBD along with the middle ring suburbs are usually a fairly safe bet for buying property. Homes that are close to the city are always going to have strong demand.
But they are not the only suburbs worth watching. Here are some areas that should see outsized returns compared to the market suburb in the greater Brisbane area.
There are a few key forces that make Redcliffe an enticing opportunity for property investors:
- The opening of the new train line to Kippa-Ring in 2016
- Extensive gentrification over the last decade
- Homebuyers looking for an affordable lifestyle
- Significant investment in infrastructure and property developments
In the past 12 months, property sales have increased dramatically, and most suburbs across the peninsula have seen double-digit growth in property values.
Despite this growth, the Redcliffe Peninsula remains one of Brisbane’s most affordable regions. Five suburbs in the area have median house prices at or below $550,000 making it a great choice for first home buyers.
The median rental yield in the area ranges from 3.4% to 4.3% for houses, and 3.7% to 5.9% for units.
Combined with 1-year growth of up to 24%, these suburbs are an attractive prospect to invest in:
Olympic Precinct – Inner South
Brisbane’s Inner South precinct is well-positioned for significant growth over the next few years, and here’s why:
- Major infrastructure projects related to the 2032 Olympics
- The multi-billion-dollar Australia TradeCoast economic development
- A new mega-cruise ship terminal
- Strong population growth.
Historically, this precinct has underperformed other areas in Brisbane, but that’s all set to change in the coming years. Aside from the projects mentioned above, the suburbs in this area will also benefit from public transport upgrades thanks to the Cross River Rail and the Brisbane Metro.
Take a look at these suburbs:
Once voted as one of Australia’s worst towns, Logan has come a long way.
Logan city is one of Queensland’s fastest-growing communities. Located mid-way between Brisbane and the Gold Coast, it has become one of the liveliest property markets in Australia, with over 95% of suburbs in the area seeing increased house values in 2021.
Logan City attracts both homebuyers and investors thanks to its strategic location, excellent infrastructure, and great affordability. You can buy a home for as little as $360,250 in Kingston, or if you’re looking to buy an apartment on a budget you could find a place in Woodridge for just under $190,000.
Brisbane’s North-East Precinct lies within a band 8-18km northeast of the Brisbane CBD. This area has good transport links and will be boosted by the infrastructure investments in Australia’s TradeCoast precinct and the new mega-cruise ship terminal.
This area has performed strongly in the last couple of years, even when other Brisbane sectors were struggling.
This is especially true when we look at the “Three N’s” of Brisbane’s Northside – Northgate, Nudgee, and Nundah. These three suburbs attract consistent demand, and sales in these areas have been rising steadily. Increasing gentrification of these areas should continue to increase demand.
6. How will flooding affect property prices in Brisbane?
With Brisbane receiving over 6 months of rain flow in 48 hours, the most recent 2022 floods in Brisbane have affected over 15,000 houses across the city.
But how will these most recent floods affect the property market in Brisbane?
Looking at the previous major floods in 2011, while there was a drop in the short term to properties that were heavily affected there were no long term impact to Brisbane property in flood-prone areas.
Over the medium and longer-term, history shows that there will be a relatively insignificant impact on the housing market. In the aftermath of the 2011 flooding, there was a modest downturn in prices, although the market was already experiencing relatively flat conditions at around that time, after a preceding boom.
Over the following five years, detached house prices in Brisbane recorded price growth of about 25 per cent, so there wasn’t really a discernible negative impact from flooding.
Insurance in flooded areas does tend to be more expensive, so many investors avoid these areas due to the increased costs but for some home buyers flood-prone areas can represent a relative bargain.
Interestingly this can be seen from areas like Fig Tree Pocket, Bulimba and Yeronga when looking at the 5 year price growth post-2011 floods with most of these areas outperforming the Brisbane house price growth benchmark over the following 5 years.
Research conducted by the University of Queensland supports this data, with their key findings on the effect of flooding on the Brisbane property market being:
- Sales listings: Flood and non-flood affected suburbs showed decreased sales listings between January 2011 and September 2011, at which point both saw an increasing trend in sales listings.
- Rental listings: There was an immediate decrease in rental availability after the flood. From September/October 2011 rental availability increased for medium to high value flood and non-flood affected homes. Listings for low-value flood-affected properties spiked faster in June 2011.
- Prices: Prices in flood and non-flood affected suburbs dipped immediately after in the first quarter after the floods, but continued to steadily rise for the following three quarters. The exception was in the medium-value flood affected properties, which saw an increase in value in the first three months.
So overall the 2022 floods will have an impact to directly effected properties in the short term, but based on historical data properties in this area will recover in the short to medium term.
If you are considering buying in a flood zone, ensure to check out the flood maps in Brisbane, and ensure you can get insurance.
More Info: How to Check if a property is flood-affected
7. Brisbane’s riskier suburbs in 2022
While we have found the banks lending criteria is a bit more relaxed in 2022, if you are looking at buying a unit in Brisbane you might be asked for a 30% deposit by some banks.
(Don’t worry this is not ALL banks)
We have found some banks have created a bit of a blacklist on certain suburbs in Brisbane, where they have applied stricter criteria to loans, could reduce rental income and may ask for more deposit.
Brisbane’s so called ‘riskier suburbs’ include units in:
- Milton (4064)
- Brisbane CBD (4000)
- Fortitude Valley, Herston, Bowen Hills, Newstead (4006)
- Kangaroo Point, East Brisbane (4069)
- Woolloongabba, Brisbane, Dutton Park (4102)
As I mentioned some banks are completely fine with lending in these suburbs, it’s just a matter of working with a Mortgage Broker that understands the different credit policies and can help achieve your goals.
While some banks might try to charge you lenders mortgage insurance if you don’t have a 30% deposit, we have access to banks who do not – and can look at interest-only terms.
If you need help with navigating the changing landscape, get in touch with our team or give us a call on 1300 088 065 to discuss your situation.
That’s it for now
Overall the Australian property market is looking steady for 2022 and we’re looking forward to seeing you this year!
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