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

Just over seven months after prices peaked, the Queensland capital has recorded its fastest and biggest drop ever.

A cocktail made up of the Palaszczuk Government’s relatively relaxed pandemic restrictions, a limited number of prolonged lockdowns and the proximity of Sydney and Melbourne, which reported migration losses of 31,232 and 32,166 respectively in the 12 months to March 2021, home values ​​rose by 43 per person. cent throughout Greater Brisbane.

Now the dust has settled on the city’s property tree. CoreLogic’s latest Daily Home Value Index (HVI) has revealed that house values ​​in Brisbane have fallen by 10.9 per cent since the peak of 19 June 2022 and 28 January 2023.

Eliza Owen, head of research at CoreLogic, said the city’s market moves – which follow national daily HVI hitting a record decline earlier this month – saw Brisbane with Hobart experiencing the record declines.

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

But the researcher did note that current declines barely dampened the gains registered during Brisbane’s 43.5 per cent value surge from August 2020 to June 2022, a rise she categorized as “the fastest trajectory of rising values ​​on record”.

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

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

According to CoreLogic data, the only historical peak-to-trough period compares to current levels — between April 2010 and January 2012 — when prices fell 10.8 percent over a 21-month period. Although this decline occurred over a period three times as long as the current downturn.

“The second largest period coincided with a national housing market downturn that was fairly broad-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 housing peak-to-decline periods last 14 months.

Furthermore, Ms Owen confirmed her belief that Brisbane’s market is currently adjusting to sharp increases in borrowing costs during the second half of 2022, inspired by the Reserve Bank of Australia’s (RBA) consistent cash rate hikes and rising prices, resulting in median house values ​​in the city around $200,000 jumped between the start of the pandemic and 2022’s conclusion.

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

She highlighted how certain factors could put a floor below the market, as the rate of price decline across Brisbane has slowed in recent months.

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

She added that the difference between Brisbane and Melbourne housing values ​​- $119,697 for median house values ​​and just under $100,000 for median unit values ​​- “could encourage continued demand for housing from those willing to migrate to the state or own an interstate investment “.

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

City rents are set to rise by 13.4 per cent in 2022, which Ms Owen believes points to an underlying shortage of available housing.

This is compounded by persistently low volumes, “where the volume of advertised inventory is trending nearly 40 percent below the previous five-year average”.

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