Brisbane Property Market Update 

Brisbane Leads, But at a Slower Pace 

Since our last update the big news is that persistent trends in the Brisbane property market continue – namely Brisbane remains in positive price growth, albeit at a slower rate (+1.2% for the Quarter and +10.4% in the 12 months), outperforming both Melbourne which is now firmly in decline (-2% in the three months ending 31 January, -3.3% in the last 12 months) and Sydney which has entered negative growth (-1.4% for the Quarter, +1.2% in the last 12 months).  

Brisbane vs. Melbourne: A Five-Year Perspective 

Brisbane has considerably out-performed Melbourne over the last five years. Since 2020 Brisbane property prices have increased >70% whereas Melbourne’s have increased a lousy 7%. In the near-term, this trend doesn’t appear to be changing. Advertised stock levels (i.e. the number of properties listed for sale), which are a good lead indicator for short-term property price movements, remain above their long-term trend in Melbourne and below trend in Brisbane. 

With the state election now completed in Queensland, we have some local certainty which gives both vendors and buyers further confidence (the same can not be said for Victoria).  

Long-Term Investment Perspective 

When investing in property, decisions are made over decades and near-term pricing impacts have little impact to your outcome as an investor. Furthermore, as we’ve previously written the eastern seaboard capitals have a long history of reverting back to the long-term price differential between markets. In other words, the out-performance of Brisbane relative to Melbourne and vice versa has happened consistently three times in both markets over the last 40 years (see graph below).  

Is Brisbane Becoming Expensive? 

So where are we at right now? The price differential between the two markets is as high as it’s been for 15 years. So, by a historical standpoint, Brisbane appears to be relatively expensive. That certainly does not mean that in the near term the outperformance of Brisbane relative to Melbourne is about to change. As shown below there have been periods of outperformance that have lasted closer to a decade including in Melbourne between 2009-2018. Further, Brisbane remains the capital of choice for interstate migration which adds demand on local housing stock.   

The Importance of Diversification 

What the data really demonstrates is the importance of diversification in investment decision making. It is very difficult to predict the short-medium term performance of any market at any point in time, so having properties diversified across markets helps spread investment risk (and can separately help minimise rental risk and state-based taxes). Whilst a small proportion of our clients do have properties spread across markets, it is quite difficult in practice. Not only from a financial standpoint (less than 25% of investors own more than one property), but it’s also practically challenging in terms of purchasing and managing properties across several markets, even if you engage professionals such as LongView.

This is yet another reason why an increasing number of our clients are complimenting their direct investment properties with our LongView Investment Fund, which provides investors an avenue to invested in a diversified pool of high-quality properties, without the purchasing and management challenges. As at the end of January, the fund has invested alongside 60 homeowners across the eastern seaboard capitals in properties collectively worth close to $100m.  

Brisbane's Rental Market Remains Tight

The Brisbane market experienced modest rental growth with the vacancy rate remaining historically low at 1.2%, so further price growth could occur. What we are experiencing is that high-price point properties >$1,000 per week are becoming harder to lease, with potential tenants becoming fussier with what they are looking for.  

In both Sydney and Melbourne, the six-month trend in rental growth has turned negative, with rents down 0.4% and 0.6% respectively, with larger falls across the unit sector  

The surprising part is that this is occurring against a background of continued population growth in all capitals (albeit at a lower rate) and lower volumes of rental stock as investors have left the market, notably in Melbourne. So, with more demand (population) and less supply (property investors) one would expect that rents should be going up. Whilst this is true on the supply side, demand is a bit more complicated than just population growth. It’s hard to locate hard data on this the likely cause, which we are experiencing daily with our team. Our view is that it is mainly attributable to household consolidation – i.e. people living with housemates and/or back with mum and dad. There has also been a modest uptake in home-ownership rates which may be having some modest impact on rental demand. 

For now, it appears the rental market is reverting to its long-term growth rate (~2% p.a.) and that the era of rapid rental price growth is now over.