Brisbane House Prices Forecast To Grow By 9 Per Cent Over The Next Two Years
28th Nov 2018
Brisbane house prices are forecast to rise faster than any other capital city over the next two years, according to new modelling from the Domain Group.
Domain’s Property Price Forecasts report predicts house prices in Brisbane could increase by 4 per cent in 2019, then grow by a further 5 per cent in 2020.
It’s good news for the apartment market, too — unit prices are predicted to bottom out by early 2019 and then grow by about 3 per cent by the end of the year, and increase by another 3 per cent in 2020.
Domain economist Trent Wiltshire said after a tumultuous 12 months for Australia’s property markets, 2019 looked likely to be a year of greater stability across the nation, with Brisbane set to lead the charge.
“After modest price growth in recent years, we expect that Brisbane houses will grow faster than most other markets over the next couple of years,” Mr Wiltshire said.
“Our forecast for relatively strong house price growth in Brisbane is underpinned by a pick-up in population growth and declining unemployment.”
Mr Wiltshire said while his bullish forecast for Brisbane was good news for the property market, it would not precipitate a boom.
“It’s definitely looking more positive but I don’t want to overstate this into a property price boom,” he said.
“What it is is possibly a turnaround from a few years of falls and into some moderate price growth.”
Mr Wiltshire’s forecast is likely to be music to the ears of Brisbane real estate agents, who’ve held high hopes for a growth period following Sydney and Melbourne’s decline.
Place managing director Sarah Hackett said the forecast was in line with her expectations for 2019, following what had been a record period of sales for her team.
“We’ve just had our biggest quarter since 2010. Since the media has highlighted that Sydney and Melbourne has come back, we’ve had a flurry of people from overseas, interstate, expats and Chinese interest,” she said.
“I’ve got at least one Sydney or Melbourne family a week who are flying in to view homes. They see Brisbane as a safe bet to invest and I think that will drive prices up a tiny bit next year. Four per cent is spot on.”
Ms Hackett brokered two record sales for vacant land on Brisbane’s riverfront this year — one at Moray Street, New Farm for $11.3 million and the other at Aaron Avenue, Hawthorne, for $9 million — which she said was a clear sign of confidence in the Brisbane market.
“The boom times in Brisbane are few and far between — I’ve been doing this a long time — but the great thing about Brisbane is that it’s solid and steady,” she said.
“People recognise that and feel a sense of safety in those conditions.”
Suncorp CEO Banking and Wealth David Carter said his outlook for Brisbane in 2019 was also largely positive.
“It’s been pleasing to see Brisbane’s property market remain relatively resilient over the past 18 months and I believe we will continue to experience the same positive conditions as we head into 2019,” he said.
“Population growth in the south-east should continue to support demand for homes and units as interstate migration to Queensland continues. Brisbane property prices provide an attractive option for those moving interstate.
“We’re also seeing an improvement in the local economy, thanks to a weaker Australian dollar and improvements in the resources sector.
“These conditions are evident right across the south-east corridor, and are an encouraging sign for first-home buyers and home owners wanting to upgrade or even downsize.”
Mr Carter was not as optimistic about Brisbane’s unit market as a whole but highlighted the strength of the luxury apartment market.
“While house prices have continued to perform positively over the past 12 months, we have seen a slight dip in unit prices partially caused by oversupply. Despite this, good quality inner-city units appear to be in demand, particularly with people seeking an inner-city lifestyle,” he said.
“We expect this trend to continue to be a positive influence on the market for the coming years.”
But some banks have been far more conservative in their forecast for Brisbane in 2019.
AMP chief economist Shane Oliver said the boom in house prices that many property pundits had predicted for Brisbane over the past several years had failed to materialise — and 2019 would be no different.
“It’s been voted the city most likely to pick up over the past five years and [while] it’s a city that often benefits from any boom in Sydney, it hasn’t really happened,” he said.
“The drag from the end of the mining boom seemed to drag a bit longer in south-east Queensland than I would have thought. And the boom of apartments hitting the market over the past few years has also weighed on the market.
“As state migration growth picks up it might mean some price growth in Brisbane but it’ll be low, about one or 2 per cent,” he said.
NAB’s most recent forecast predicted Brisbane house prices would not move at all next year, and group chief economist Alan Oster said they were unlikely to boom in the next couple of years.
“We see the housing market as flat and I see that continuing for the next couple of years. That’s the big picture,” he said.
“If people are arguing Brisbane is where everyone is going to go next, well, they’re not — they’re all in Hobart.”
But Mr Wiltshire said Brisbane’s underlying drivers of population growth and a decent economic position put it in good stead.
“My forecast of 3 to 5 per cent over the next couple of years is strongish, but it’s not outrageous,” he said.
“House prices have been flat for a few years so this [predicted growth] is what you’d call more moderate growth.
“As with units, we’re only taking about rises of 6 per cent in total over the next couple of years. Taking into account that they’ve fallen about 10 per cent from peak to trough, that’s not even a recovery.”
A CommSec report earlier this year showed that while Queensland’s job growth was the fastest in the nation, and population growth was on a high, it ranked sixth in Australia for economic performance.
“In terms of where the Queensland economy sits, it is one of the laggers but it’s not in terrible condition,” Mr Wiltshire said.
“Unemployment numbers have been positive and there’s signs of wage growth. So even though it may not be performing well relative to other states, the outlook is still reasonable.”
Mr Wiltshire said the biggest threat to Brisbane’s property price growth for 2019 was lending conditions.
“The real risk is that the royal commission will come in and suggest even tighter lending conditions, which would push prices lower,” he said.
“On the other side, borrowers are going to have to adjust their own expectations and say ‘this is what I need to do to prove my income and expenses’. It will take a while for everyone to adjust to that but when they do, that will help support price growth.”