Brisbane still riding ‘extreme house price growth’

While the Brisbane property market continues to see 16 per cent house price growth in the last 12 months, driven by strong population growth and units outperforming houses, experts warned that an extreme lack of affordable homes and the rental crisis was escalating.

Furthermore, the outlook was complicated by global instability, as IOR CEO Drew Morland detailed the dire picture of the global fuel shortage situation amid the Middle East conflict.

Ray White Chief Economist Nerida Conisbee noted South East Queensland had seen "extraordinary growth," with Brisbane topping the list alongside the Gold Coast and Sunshine Coast.

Though growth has "moderated a bit" in March and April, the 16 per cent price in the last year was still considered "extreme". Ms Conisbee pointed out that population growth was a "key factor in what is driving things," ensuring demand continues.

Ray White Group Managing Director Dan White emphasised the market’s underlying strength, stating that the number of properties the group sold across Australia in March matched the previous March.

He added that the market is "very fluid" and "far more active and resilient than the headlines would have us believe," with buyers finding "comfort in bricks and mortar".

While overall consumer sentiment is weighing on everyone, open home data remains strong, averaging 3.2 attendees in Brisbane, compared to 2.1 across Australia.

A major challenge is the crisis in affordable housing and rentals. Ms Conisbee stated that affordable housing is "the big challenge," noting that very few homes sub-$750,000 are available now, compared to a decade ago. The rental market is also "very challenging and rent hikes exceed inflation," with any risk to a reduction in rental properties posing a significant problem for renters.

Ray White Collective manages 1200 inner-city private properties but only had 12 available, leading to many instances of "multiple applications" exceeding the number of physical inspections.

Investor activity has overtaken Victoria, which is currently unattractive due to high taxation, leading to owner-occupier lending reaching record highs. The Federal Government’s 5 per cent deposit scheme for First Home Buyers (FHB) has been "very popular". Haesley Cush noted the Federal Government’s decision to raise the FHB threshold to $1 million simply saw prices jump to that level, ensuring FHBs in fact "bore the brunt of this" policy.

Ms Conisbee said the inner-city transformation is fueling a luxury boom, making it "hard to overcapitalise now in Brisbane" despite rising construction costs.

The city’s top prestige Matt Lancashire, who has just launched a new group for properties over $4 million called Ray White Collective Luxury, revealed that buyer inquiry for homes over $5 million was up 60 per cent, while stock was down 40 per cent.

His prestige buyers are often "young money," with five sales over $10 million in the last six months bought by people in their 30s. Mr Lancashire noted that apartments were increasingly being bought by “downsizers and right sizers,” as many families seek "house like units that they can lock and load".

Ray White Collective elite sales agent Christine Rudolph highlighted that wave of people moving to Brisbane weekly, drawn by its reputation as the "safest city in the world to bring up a family" and a skilled labour shortage.

Exciting new developments like the Gabba precinct, set to become a "vertical city," and the Northshore Hamilton industrial land transformation, will create a "CBD scale density" post-Olympics.

Ray White Collective CEO Haesley Cush stated: “We are bullish on Brisbane. We are advocates for growth and we love this city.” He reflected on the shift since 2014-2019 when units struggled to attract buyers.

The panel also addressed the global fuel shortage driven by the 52-day old conflict in the Middle East. Drew Morland, IOR CEO, confirmed a critical partnership with the Federal Government to procure additional fuel supply, particularly for regional Australia.

Mr Morland stated that 80+ per cent of his company’s supply comes from the Strait of Hormuz, with current supply secure to June. He described the post-June to July period as "uncomfortable," with potential for a "break in supply". He stressed that commercial customers supporting the transport industry are facing restrictions, with his heavy haulage customers encouraged to scenario plan restrictions in supply and prices reaching "$3, $4 and $5" per litre.

Ms Conisbee agreed that cost of living pressures were compounding, with the market pricing in a 70 per cent chance of another interest rate hike in May. “Fuel prices are up, interest rates are up, food prices are up," she said, with the RBA closely watching unemployment data, but interest rates alone cannot control the fuel price spike.