Brisbane property market update, December 2024

In comparison to other capital cities, Brisbane stands out as a high-performing market. Sydney and Melbourne, the two largest property markets, both recorded monthly declines in December at -0.6 per cent and -0.7 per cent, respectively. Adelaide (0.6 per cent) and Perth (0.7 per cent) edged ahead of Brisbane (0.5 per cent) in December, yet the deceleration in rate of growth in these two capital cities is more pronounced than it is in Brisbane based on quarterly growth figures. This underscores Brisbane’s ongoing prominence as a preferred destination for buyers and investors alike​​​.

Brisbane’s median dwelling value of $890,746 represents a near 100 per cent increase from $490,000 in 2015, reflecting the city’s transformation over the past nine years into one of Australia’s most dynamic property markets. Sales volumes increased by 5.1 per cent over the last year, while total listings, according to SQM Research, have fallen.

Source: SQM Research

Key drivers of demand include strong interstate migration, sustained employment growth, and infrastructure investment. Forty per cent of housing finance commitments in Queensland are from investors, while first home buyers make up 25.2 per cent. The rental market remains exceptionally tight with a vacancy rate of just 1 per cent​​​.

Challenges persist, however, with housing affordability continuing to decline across Brisbane. The affordability index, according to the Housing Industry Association, was sitting at 54.3 in September 2024, which reflects levels not seen since June 2008, when interest rates were significantly higher at 7.25 per cent. This decline in affordability has been exacerbated by rising interest rates, escalating living costs and stagnant wage growth, leaving many prospective buyers priced out of the market. Over the past four years, housing affordability has deteriorated by 71 per cent, a stark reminder of the mounting barriers facing both first home buyers and those looking to upsize or invest​​.

Adding to these pressures, construction activity in south-east Queensland (SEQ) has failed to keep pace with demand. Dwelling commencements in 2024 fell short of the SEQ Regional Plan targets by more than 12,000 dwellings, marking a significant shortfall in new housing supply. This gap highlights the challenges of meeting the region’s ambitious development goals, particularly as SEQ is projected to grow to almost 6 million residents by 2046, requiring an additional 900,000 homes to accommodate the influx​​.

The situation is further complicated by soaring construction costs and ongoing labour shortages. High material prices, combined with delays caused by limited trade availability, have increased the cost of building substantially, making many projects financially unviable. These cost pressures have disproportionately impacted medium- to large-scale developments, leading to project delays, cancellations, and a preference for smaller or high-value niche projects that can justify the additional expenses​​.

Supply constraints are particularly acute in Brisbane’s inner-city unit market. In 2024, only 1,523 units were completed, which was more than 50 per cent below initial forecasts. Looking ahead to 2025, just 2,691 units are proposed for completion, with nearly 10 per cent of these projects yet to commence construction, making it unlikely that this target will be met. This ongoing shortfall in unit supply, especially in prime locations, is expected to keep upward pressure on prices and rents, further straining affordability for renters and buyers alike.

Brisbane dwelling values

In December, Brisbane’s median dwelling value increased by 0.5 per cent, following a 0.6 per cent rise in November. Over the quarter, dwelling values rose by 1.3 per cent, while the annual growth of 11.2 per cent firmly establishes Brisbane as a leading market in Australia. The city has now recorded a remarkable 67.7 per cent growth in dwelling values since the onset of COVID-19​​​.

Source: CoreLogic

Brisbane’s dwelling value growth significantly outpaces the combined capitals’ average of 4.9 per cent for the year. The city’s resilience is further highlighted when compared to Sydney and Melbourne, which experienced annual growth rates of 2.3 per cent and -3.0 per cent, respectively. The quarterly breakdown shows Brisbane trailing Adelaide (2.1 per cent) and Perth (1.9 per cent), but still maintaining solid gains​​​.

The lower quartile of Brisbane’s market continues to outperform, driven by heightened demand from first home buyers and investors seeking affordability. This trend underscores the shifting preferences of buyers amid worsening affordability across Australia​​.

Source: CoreLogic

Brisbane house values

Brisbane’s median house values increased by 0.4 per cent in December, according to CoreLogic, bringing the quarterly growth to 1.1 per cent. On an annual basis, house values have risen by 10.2 per cent, positioning Brisbane as the second most expensive capital city in Australia based on median house prices.

However, PropTrack data offers a contrasting perspective, reporting no change (0 per cent growth) in Brisbane’s house values during December. The median house value in Brisbane, according to CoreLogic, now stands at $977,575​​​.

Source: CoreLogic

While growth has slowed compared to earlier months, the market remains resilient, with tight supply and sustained demand underpinning house prices. Brisbane’s growth trajectory contrasts with the declines recorded in Sydney, Melbourne and Hobart, further cementing its appeal as a market of choice for both investors and owner-occupiers​​.

Brisbane unit values

Units in Brisbane outperformed houses again in December, with a 0.8 per cent increase in values, maintaining the same price growth momentum experienced in November. Over the quarter, unit values rose by 2 per cent, while the annual increase reached a substantial 16.6 per cent. The median unit price now stands at $680,893, reflecting consistent demand for more affordable and higher-yielding properties compared to houses.

Source: CoreLogic

However, PropTrack data presents a slightly different perspective, indicating a marginal decline of -0.1 per cent in Brisbane’s unit values during December. This discrepancy between CoreLogic and PropTrack highlights the need for caution when interpreting market data, as variations in methodology or sample sizes can lead to differing results.

Brisbane’s rental market

The rental market in Brisbane remains tight, with vacancy rates holding steady at 1 per cent. Gross rental yields for houses and units remain at 3.4 per cent and 4.5 per cent, respectively, highlighting the appeal of Brisbane for investors seeking stable returns​​.

Rent growth has moderated, with annual increases of 3.2 per cent for houses and 3.3 per cent for units, compared to 3.6 per cent for both market segments at the end of November. Despite this slowdown, Brisbane’s rental market remains under significant pressure due to limited supply and strong demand. Affordability continues to be a concern, with rents consuming an increasing share of household incomes​​.

Source: CoreLogic

Summary

Looking ahead, Brisbane’s property market is expected to maintain its upward trajectory in 2025, albeit at a more moderated pace. The city’s strong fundamentals – limited supply, high demand and ongoing migration –are likely to support continued price growth. However, several factors could influence market dynamics.

First, the federal election scheduled for 2025 is expected to slow housing activity, consistent with historical patterns during election years. Policy announcements and potential incentives for home buyers may shape buyer and seller behaviour, adding uncertainty to the market​​.

Second, the construction sector faces significant challenges, including high costs and labour shortages. These issues have already resulted in delays and cancellations of projects, with SEQ dwelling commencements falling well short of targets. High construction costs are expected to persist, favouring high-value niche projects over broader developments​​.

Finally, the trajectory of interest rates will play a crucial role. If the Reserve Bank of Australia implements rate cuts as anticipated, borrowing capacity could improve, potentially reigniting buyer demand. However, in the absence of significant changes to interest rates or supply, price growth is likely to remain subdued​​​.

In summary, Brisbane’s property market continues to perform strongly, supported by ongoing strong demand, tight supply and favourable economic conditions. While the pace of growth has slowed, the city remains a standout performer compared to other capital cities, highlighting its resilience and long-term potential.

Heading into 2025, competition for quality properties, particularly those under $1.5 million, is expected to intensify as the market reopens in January and February. Over the longer term, Brisbane is well-positioned for steady growth, driven by its strong fundamentals and ongoing appeal to home buyers and investors alike.