The CoreLogic Home Value Index report for July 2024 indicates a continuation of growth in the Australian housing market, albeit with some variations across different regions and property types. Nationally, home values increased by 0.5% in July, marking the 18th consecutive month of rising home values. However, the growth momentum appears to be diversifying, with some capitals recording declines, including changes in Property Value Brisbane.
Brisbane’s Market Performance
Brisbane’s housing market continues to show robust growth, albeit at a slightly reduced pace compared to previous quarters. Key highlights for Brisbane include:
Monthly and Quarterly Growth:
- Property value Brisbane rose by 1.1% over the month of July.
- On a quarterly basis, property value Brisbane increased by 3.8%, which is a slight deceleration from the 4.7% increase recorded in the same quarter last year.
Annual Performance:
- Over the past year, property value Brisbane has experienced a significant annual growth rate of 16.0%.
- This annual growth reflects a substantial increase in property prices, driven by a combination of high demand and limited supply.
Total Return and Median Value:
- The total return for properties in Brisbane over the past year was 20.6%, which combines both capital growth and rental yield.
- The median property value Brisbane stood at $873,987 as of the end of July 2024).
Source: CoreLogic
Factors Influencing Brisbane’s Market
Supply Constraints:
- The number of homes for sale in Brisbane remains more than 30% below the average for this time of the year, contributing to upward pressure on prices. This contrasts with markets like Melbourne and Hobart, where advertised supply is well above average levels.
Demand Dynamics:
- Demand is particularly strong in the lower quartile of the market, driven by eroded borrowing capacities and affordability constraints. Lower quartile values have led the growth trend across all capitals, including Brisbane.
Rental Market:
- Rental growth in Brisbane has shown signs of slowing. The annual change in house rents is 7.0%, while unit rents also grew by 7.0%. However, both segments experienced a slight decline in rental growth in July, marking the first monthly decrease since 2020.
Source: CoreLogic – Annual change in rents, Houses
Source: CoreLogic – Annual change in rents, Units
Comparative Analysis with Other Capitals
Performance Against Other Capitals:
- Brisbane’s quarterly growth of 3.8% is notable but is outpaced by Perth (6.2%) and Adelaide (5.0%). Despite the deceleration, Brisbane remains one of the stronger performing capitals in terms of annual growth, only behind Perth.
Mid-Sized Capitals Outperforming:
- Mid-sized capitals like Perth and Adelaide continue to buck the slowing trend seen in larger capitals. Perth, in particular, has shown the highest quarterly growth rate among all capitals at 6.2%.
Source: CoreLogic – Rolling three month change in dwelling values State capitals
Investment Trends
Investor Activity:
- There is an increasing trend of investor activity in the Brisbane market, driven by attractive capital growth prospects and relatively higher rental yields compared to larger capitals like Sydney and Melbourne.
Rental Yields:
- Gross rental yields in Brisbane are averaging around 3.7%, which is competitive compared to other capitals. However, the spread between investor mortgage rates and gross rental yields has widened, indicating that opportunities for positive cash flow are becoming scarcer
Source: CoreLogic – Gross rental yields, dwellings
Conclusion
Property value Brisbane remains strong with substantial annual growth and a solid quarterly performance. Supply constraints and high demand, particularly in the lower quartile, are key drivers of this growth. However, the market shows signs of deceleration compared to the previous year, aligning with broader national trends. Investor interest remains high, bolstered by capital growth potential and competitive rental yields, although challenges persist with the widening spread between rental yields and mortgage rates.
See how Australian Property Prices August 2024 have evolved since July, with Brisbane rising and Melbourne facing new challenges.
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