An insider’s look at the Brisbane property market
The latest stats show Brisbane property now has the fastest growing prices in the nation, up 29% in a year. But there’s lots more to the story that the data doesn’t tell. Why are there so few properties for sale? Who’s buying and is FOMO actually still strong? And what’s really going on with tenants and rising rents – is the rental market as ‘out of control’ as the media report?
Our sales and property management teams are busy across Brisbane’s inner-city and here’s what we’re witnessing right now:
The sales market:
Prices are rising. It’s a tangible thing to watch – buyers outbidding the asking price and each other, and lifting their offers to uncomfortable levels; our team’s optimistic appraisals being exceeded; sellers recognising this opportunity to cash in. Apartment prices are gaining momentum especially but with a median Brisbane price of $458,000 they still look extremely good value. Especially to southerners.
The ABS lending data says investors are back in big numbers but they’re not the only ones wanting a piece of Brisbane property. Bees Nees Sales Manager Rebecca Herbst says, “We have the whole range of buyers looking at the moment – first home buyers, owner occupiers, downsizers and investors. The majority have pre-approved finance or have started the process and are nearly pre-approved – and to win the properties from other buyers we definitely have some cash offers coming through.”
Buyers are quick to move. They’re doing their research in rapid time and are not afraid to commit to an offer as soon as they’re told about a new listing. Unsurprisingly a lot of sales are happening ‘off-market’ to our database so, while the data shows a big drop in advertised listings (realestate.com says Brisbane is down 26% in a year), lots of places just don’t make it to the advertising portals.
If a sale isn’t handled well it can still disappoint. In July a 2 bedroom West End apartment was sold at auction by a big name local agency for $460,000. The Bees Nees team resold the same apartment in November for $563,000. There’d been no renovation or changes – but we did take the time to fully explore the market and test buyers’ limits, with 5 written offers submitted. Most would not have been able to bid at an auction. As with any market, great results do still take some effort.
In suburbs like Milton and West End last year’s turnover of apartments was almost double 2020’s sales numbers (up 90% and 83% respectively), yet the supply is clearly not enough for current demand. Our phones run hot for each new listing. Many Brisbane property investors are waiting for tenancies to end before they put them up for sale and this has further added to the shortage of listings. Yet our team find it rarely matters if a tenant is in place as the growing investor market love a property with a long-term tenant who’d like to stay.
This rising tide has lifted all boats: We’re aware of one CBD apartment that’s recently sold after spending more than 4 years on the market. Yes that owner did get their price – eventually!
No-one knows when this exceptional run in the market will end but many are taking the opportunity to sell in the strongest sales environment we’ve witnessed since 2007.
The rental market:
We have 99.3% of our landlords’ properties rented right now so that doesn’t leave much for new tenants to choose from! While the REIQ reported an inner-Brisbane vacancy rate of 2.3% (97.7% occupied) at the end of December, we know the border closure stifled demand for a time. Once they opened the phones rang loud: in January alone the Bees Nees property management team had 1,644 new tenant enquiries. This compared with 968 in December.
Interstate arrivals were noticeable as soon as the borders opened and Bees Nees Leasing Manager Josh Lewis says student enquiry has really increased in recent days. “I’ve had quite a number of overseas students apply for property, especially furnished, with a number from the USA and UK especially.”
Crowded inspections are common. Josh had 29 tenants at the first and only viewing of a Milton 2 bed apartment, with that landlord able to choose from 5 applications. Despite what some property managers think, landlords can accept a rent higher than the asking price (we just can’t ‘auction’ or encourage rent bidding). Josh urges caution however: “I’m not seeing this happen a lot. We’re setting ambitious asking rents to start with. And a tenant’s offer of high rent can often be an attempt at masking some other problem with their application.”
Our property managers report lease renewals are almost always at higher rents, but many are still being held below true market with landlords supporting tenants who’ve done their bit – taken care of their property and upheld their obligations. Our leasing team commonly achieve $50 to $90 weekly rises when properties do become vacant: in recent days we secured tenants for a CBD 3 bed apartment at $170 per week more than its previous, long term tenants had paid.
The only reliable data on Brisbane property rents comes from the Residential Tenancies Authority when they receive each new bond, and they report a rent increase of 6% across the inner-city during 2021. But it seems clear this will rise while the supply of available rental homes shows little sign of changing.
Realestate.com says rental homes advertised in Brisbane in December was 12% down on a year earlier and homes are on the market for just 17 days. Our team know one clear reason: tenants are staying put! Our agency’s average tenancy length is now over 23 months. We recently put a new tenant into a Kangaroo Point apartment on a 3 year lease (with agreed annual rent increases).
With plenty of reasons to buy, investors are now more active in our market. It will be interesting to see if there’s enough of them to help supply catch up with tenant demand.
Please share your comments below. We’d love to hear what you think of the current Brisbane market – and give us your tips on what happens next!!