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While Brisbane house market remains affordable compared to Sydney and Melbourne, it is projected that its median house price will see one of the strongest growths once the oversupply in the unit is absorbed, according to The QBE Australian Housing Outlook 2018-2021.
Over the four years to June 2016, median house price growth in Brisbane averaged 5% per annum, while through 2016-2017 and 2017-2018, price growth increased to only 1% year. It was noted that higher supply had driven values lower in the city.
The unit sector, meanwhile, led the oversupply in Brisbane market, with the detached housing market close to balance or in slight undersupply. Digging deeper, it was found that this trend had been lead by a surge in apartment completions, especially in Inner Brisbane.
Findings showed that annual unit completions over the previous two years have been 95% higher than the annual average over the 10-year period to June 2016.
Due to the oversupply in the unit market, it is projected to that Brisbane unit prices will track lower.
Completions, on the other hand, will ease through 2018-2019 before dropping more rapidly as current projects under construction are progressively completed. Once this happens, the Brisbane median house price is expected to register a cumulative hike of nearly 11% over the next three years, translating to $615,000 by June 2021.
For investors leasing their properties, apartments were seen to have a significantly higher incidence of rental occupancy than houses. In terms of location, Inner Brisbane seemed to be performing slightly behind Greater Brisbane, with a .05% higher vacancy rate.
“Falling rents are likely to be delaying owner occupier activity in this market and keeping tenants in the rental market for longer. Furthermore, net overseas migration inflows, which support demand for inner city rental apartments, has started to slow,” the report stated.