Brisbane's rental market, Brisbane's sales market

The year ahead for Brisbane real estate: What’s YOUR prediction?!

Our self-imposed rule served us well this year! We’re not economists so, despite being flat out selling and managing local property, we don’t make grand predictions about where the Brisbane real estate might be heading at any time. And we’re mighty pleased we didn’t try for 2020!

Of course we all want to know what lies ahead and yes there’s plenty of experts (and real estate agents) filling your inbox with forecasts for 2021. One bank says Brisbane prices will rise 9.5%! But we thought we’d just throw a bunch of data, ideas and thought-starters at you, and then ask for all of YOUR predictions! Prices to continue rising? Rents and vacancies? What say you, dear reader?!

Brisbane’s home prices are up 3.2% over the past 12 months, according to Core Logic. ANZ says our prices bottomed in October and will rise 9.5% in 2021. Westpac says it’ll be 20% over the next two years. We’ve got the Real Estate Agents’ Handbook and we know we’re supposed to loudly broadcast these supremely optimistic estimates far and wide. But they do still sound supremely optimistic (and remarkably precise). Don’t they?

Australia’s consumer sentiment continues to improve, yet the latest Westpac – Melbourne Institute survey says “The ‘time to buy a dwelling’ index moved off last month’s seven year high, declining 5.9% to 124.2. That still leaves the index 4.4% above its long run average but suggests the turnaround in Australia’s housing markets – which are all now seeing price gains – may be starting to shift views on affordability and prospects for bargain buys.”

Brisbane real estate agentHerron Todd White refresh their “national property clock” every month and the latest has both Brisbane’s houses and units at the “start of recovery”. Now this clock tends to move back and forth (like anything but clockwork), and it feels like we’ve been bumping around near 6 o’clock for several years. But HTW are at the coalface of valuations and usually a good barometer of market sentiment.

Turnover of local property eased right back during COVID’s darker days but has rebounded strongly in the second half. For reasons we’ve never understood, government elections always cause a pause in the Brisbane real estate market. Barring an early call by Scomo, 2021 will be election free. Can we get back to a more normal turnover rate for our market? Buyers are active in strong numbers but listings levels are low, so we’re just missing more willing sellers.

Brisbane’s inner city saw a 6% drop in rents this year. We won’t have December data for a few weeks yet but our team’s experience suggests that’s now bottomed, with a slight uptick already underway. This is a simple follow on from the rising supply that resulted from closed borders in much of 2020. After peaking in the mid 4%’s, our vacancy rate has steadied under 2% in recent weeks (well below the 2.5% to 3.5% range the REIQ considers a “balanced” market). Demand outstripping supply should bring landlords greater returns in 2021.

The pace of our inner-city apartment construction continued to ease this year and, while it’s expected to climb again in 2021, the volume of new supply will still be below our long term average. Council also introduced new carparking hurdles for new developments this year, effectively encouraging more 3 bedroom designs and less small apartments. One leading Brisbane architect says he can actually foresee a shortage of 1 and 2 bed stock in coming years.

After a few years of subdued activity there does seem to be more investors coming back to the Brisbane real estate market. Hopes of capital growth are rising, stronger yields (and falling interest rates) adding to the appeal. One bank manager told us he’s expecting a major push for investor lending from his bank early in the new year. Historically Sydneysiders have been the strongest outside interest in our city’s property and there’s no doubt we look cheap to them right now. Their median home price is $860,000 versus our $515,000. Whether or not our state’s pre-COVID population surge resumes, it’s easy to see a lot of southern money coming north in 2021.

So that’s enough from us – please share your thoughts! What do you think will happen to Brisbane real estate in 2021? Are you firmly in the 9.5% price spike camp, or still a little more cautious? Is there another global event that could surprise us all?! Please give your crystal ball a rub and share your forecasts!!