During 2021, almost every location around Australia saw property values increase which is very unusual. Many properties rose by more than 20% and around 98% of location across Australia recorded price growth, with most having double-digit gains.
We now have two months of sales data for 2022 which is still showing strong growth in sale prices for properties in Brisbane.
According to Dr Andrew Wilson of My Housing Market, “While demand for housing will remain strong, it’s likely that we will experience lower and more fragmented price growth this year. Overall house prices are likely to increase in the order of 4-5% in Melbourne and Sydney, but Brisbane is likely to outperform with stronger growth”.
Dr Wilson explains: “The smaller capitals – particularly Brisbane and Adelaide continue to provide buyers with affordability advantages as strong demand continues to push up prices at similar extraordinary levels to those recorded by Melbourne and Sydney last year.
Housing market demand will continue to be supported by the imminent reintroduction of mass migration and rising confidence in a post-covid recovering economy and reinforced by a clear underlying shortage of housing.
Investor activity will also continue to support housing markets, with surging rents enhancing yields and supporting total returns. The level of prices growth however will be determined by interest rates and incomes growth going forward which are likely to remain steady for the foreseeable future.”
We need to consider what effect the recent flooding has had on housing prices. After the 2011 floods, property prices in flood affected properties dropped by 25-40% and it took a long time for many of these properties to recover their value.
Perhaps some Sydney and Melbourne buyers who saw Brisbane as a fantastic investment opportunity may be having second thoughts. I was only asked this morning by a buyer how much of the Redlands flooded?
One final consideration from left field is wages. If you think about it, wages around Australia are much the same, they have hardly increased, yet property values have soared by over 20% last year and the general cost of living is clearly increasing with the effect of Covid. Affordability is becoming a serious consideration when trying to predict where the market is heading.
Whilst we are still seeing large numbers of buyers for every single property, and many buyers are still missing out on properties, there is no doubt that the number of buyers per property is decreasing and who know, this flooding event might just be the impetus for change.
Remember, if you need any help or advice, we are just a phone call away.
All the best, Simon.
Sources: Micheal Yardney and Michael Spillane