At a time when a pandemic, rising inflation and interest rates and a global economic crisis are fluctuating supply and demand in the property market, predicting the outlook for Australian property markets is no easy task. We take a look at the trends in two markets that are given less attention than the “big 2” (Sydney and Melbourne): Brisbane and Adelaide.
Australia’s two largest cities, Sydney and Melbourne, have seen flat to falling house price values due to affordability constraints.
As minimal wage growth and delayed moving plans due to the pandemic have seen more Australians become more cautious with their house buying and selling habits, Australia’s most expensive property markets are facing increasingly slower property price growth. This isn’t (yet) a “crash” as some have long predicted, but a noticeable slowdown.
But for some of Australia’s smaller capital cities, property trends have a very different story to tell. And it is those that we look at in this blog.
The Brisbane market: Astonishing price rises
While Sydney and Melbourne property markets are slowing, Brisbane and Adelaide are on the rise, as their quarterly pace of growth continues to rise at an annualised pace of more than 20%.
Brisbane, in particular, remains Australia’s strongest capital city housing market, with housing values rising a further 1.7% in April, taking the three-month growth rate to 5.7% – the fastest quarterly growth rate in housing values among the capital cities.
In turn, every sub-region of Brisbane has seen housing values rise by more than 20% over the past 12 months.
The upward trend of the property market in Brisbane is so strong that even devastating floods haven’t stagnated its growth, as, while home sales have reduced by 15% compared with the same period a year ago, the number of sales over the past three months was still 21% above the 5-year average.
But while history shows the resilience of the Brisbane property market, the increasing amount of home buyers and investors wanting to buy in the city has meant that there aren’t enough new properties coming onto the market for sale.
Advertised inventory levels remain extremely tight across Brisbane, with listings standing at 40% below the previous five-year average.
But with all factors taken together, the long term outlook for Brisbane’s housing markets remains positive. Ongoing interstate migration, a large infrastructure budget, and a growing level of excitement following the announcement that Brisbane would host the 2032 Olympic games have made the city more popular to settle in than ever and is likely to be one of the best performing property markets over the next few years.
Adelaide: A steep growth trajectory
As for Adelaide, the monthly rise in prices was the second-highest gain of any capital city after Brisbane.
Adelaide topped the capital city growth tables in April with housing values rising by 1.9% in the month, adding approximately $115,000 to the value of the typical dwelling.
Part of the attractiveness of Adelaide is the relatively low price baseline. With a median house value of $740,000 lower relative to Sydney and $340,000 lower than Melbourne, many interstate buyers have been snapping up properties in the market, as a majority are willing to pay a premium price or overbid to secure their property of choice.
On the supply side, Adelaide too is seeing an ongoing shortage of advertised supply, not unlike Brisbane. Total advertised listings are more than 40% below the previous five-year average, while total sales were estimated to be 53% above the previous five-year average through the first quarter of the year.
As for the trend ahead? The livability, convenience, security and affordability of houses within smaller capitals such as Brisbane and Adelaide are likely to see continued strong growth in these two markets – far faster than what Sydney and Melbourne are likely to see.
We’ll continue to track these trends in coming articles and analyses through our website. Check back to our Knowledge Hub next month for more!