Brisbane housing market to overtake Sydney and Melbourne

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Brisbane’s residential market is likely to overtake Sydney and Melbourne this year even though its values may decline faster than the rest, according to a report by The Australian Financial Review.

In 2018, house prices in the capital of Queensland rose by 0.4%, while unit prices decreased by 0.7%. These accounted for overall growth of 0.2%.  This year, Brisbane is predicted to perform better than the two largest capitals in Australia. However, it is also likely to enter negative territory during the period, according to ANZ.

"Brisbane will continue to outperform Sydney and Melbourne, but we'll see some price declines," ANZ economist Jack Chambers said.

ANZ projected values to slide 1% in both detached houses and apartments for the year to December 2019, putting an end to years of moderate overall growth.

Property values in the city climbed 4.1% in 2014 and 4.9% in 2015. During 2016 and 2017, though, the growth slowed to 1.6% and 1.8%, respectively, according to CoreLogic.

Brisbane's inner-city unit market has been significantly impeding the growth rates, with prices remaining 5% lower than they were 10 years ago.

Apartment prices, which are declining at a much faster pace than in Sydney and Melbourne, have pushed some deep-pocketed investors to purchase deeply discounted stock.

However, the sector is expected to continue its recovery into 2019, thanks to the moderation of new supply. New apartment completions in Brisbane this year are pegged at 5,700, just over half of the 10,700 recorded in 2017, according to BIS Oxford Economics

CoreLogic is also claiming another year of slight gains for Brisbane due to interstate migration. "Net migration rates into Brisbane should drive growth into 2019. It's more important [than international migration] as interstate migration is more likely to include buyers," said CoreLogic Head of Research Tim Lawless.

The latest Australian Bureau of Statistics data on net interstate migration revealed that over the decade to June 2017, Queensland attracted 11,000 additional residents on average each year.

Brisbane will also bear the brunt of the credit squeeze. However, the squeeze will have less impact on the city because the gap between earnings and dwelling prices in Brisbane is less than Sydney’s and Melbourne’s.

"Sydney and Melbourne are more affected by credit tightening than Brisbane. Price-to-income ratios are higher," Chambers said.

Finally, Brisbane’s residential gross property yields at 4.5% in December were higher than Sydney's 3.3% and Melbourne's 3.5%.

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