Property prices in Brisbane are now the most expensive in Australia after Sydney. Locals are seeing their options shrink and investors are becoming more targeted.
Angelique Simonet and her husband Shane Boseley count their lucky stars they entered the Brisbane housing market when they did.
They bought their family home in The Gap, in Brisbane's northwest, for $585,000 in September 2019.
"It was the only one under $600,000 in the suburb," Ms Simonet said. "Six months later, they were all above $700,000. Prices just blew up.
"If we'd waited one more year, we would never have had enough money."
The median value of houses in The Gap has risen by 16.6% in the 12 months to November to $1,282,500, with units up 12.3% to $933,750.
Ms Simonet's home is now valued at $1.1 million, which she says makes them feel "lucky".
But the price hike is also problematic, she says.
"I worry for our kids; they'll never be able to buy anything.
Brisbane home prices have sky-rocketed. Picture: Getty
"Plus, our community has changed; many friends have had to leave the area to buy a house. If we sold ours, we couldn't afford to buy a new one here either.
"We'd also have to move further out."
Fear of panic
Hannah Attwood, 46, is renting for the first time in 20 years after separating from her husband and selling their four-bedroom house with a pool in Ipswich.
Renting in the western suburb of Bardon with her three teenage children, she worries about re-entering a heated market.
Renting in Brisbane is expensive. Picture: Getty
"Yes, renting is really expensive, but to have everything invested in a mortgage that I can barely afford… for me, is not realistic," she said.
She's determined not to give into panic, like she's seen so many others do in the city.
"People talk about going to auctions where buyers are paying way over the asking price in cash. I've heard so many people say, 'if I don't get in now, I'll never get in'.
"And I've seen a lot of friends make really rash purchases because of that fear."
Startling growth
Home prices in Brisbane rose 12.6% in the year to November, reaching a median value of $868,000. This increase is behind only Perth (18.7%) and Adelaide (14.6%). National annual price growth was 5.5%.
In terms of median value, only Sydney ($1.112 million) is more expensive, with the Queensland capital now more costly than Canberra ($843,000), Melbourne ($792,000), Adelaide ($795,000) and Perth ($778,000).
"Prices in Brisbane went up close to 80% over the past five years, and it continues to be one of the strongest performing markets," said senior PropTrack economist Eleanor Creagh.
"Adelaide and Perth are ahead, but conditions in Brisbane remain relatively strong."
Brisbane has seen extreme price growth in the past five years. Picture: Getty
Like Perth and Adelaide, the Brisbane rental market has had vacancy rates below 1% for over three years. The rates have eased slightly, with Brisbane at 1.2%, Perth at 1.1% and Adelaide at 1%.
And similarly, a lack of housing stock is partly to blame.
The Queensland government has responded with its 2024 'Homes for Queenslanders' plan, which aims to fast-track 900,000 new homes, including over 2,000 social dwellings annually until 2046.
Fringe benefits
Ms Creagh noted that prices have risen the most in Brisbane's more affordable areas as buyers are pushed down the cost curve.
"It's the affordable end of the market that's recording stronger growth," she said.
Ipswich, in the city's southwest, and Logan, in its south, have been top performers in the past year.
Ipswich's population is expected to double from 254,000 to 533,000 by 2046, the fastest projected growth in southeast Queensland.
Demographer Simon Kuestenmacher predicts increasing demand for family-sized houses on Brisbane's urban fringe, driven by millennials moving out of one- and two-bedroom apartments in the city.
Houses in Brisbane are some of the most expensive in the country. Picture: Getty
"The baby boomers in Brisbane aren't downsizing; they're hogging the three- and four-bedroom homes in the suburbs. These won't be available to the younger generation until the mid-30s, a decade away," he said.
"So millennials will look to the urban fringe for family-sized homes. That's why Ipswich and Logan will go gangbusters."
Ipswich median house prices rose 39.1% and units 24.2% in the year to September, while Logan Central saw 28.4% growth for houses and 30.7% for units. Both areas saw softer growth in the November quarter – but growth none the less.
Agent June Frank from Walkers Real Estate in Ipswich sees this trend in action.
"People in their 30s, with or planning to have children, are moving to Ipswich. With $1.3 million, you get a tiny post-war wreck in Brisbane or four or five bedrooms with a pool and great community in Ipswich – and grammar schools at a third of the cost," she said.
"We look at the market and think, 'Wow, that's just unbelievable', and then it'll spike again."
Public transport has become cheaper in Brisbane. Picture: Getty.
Queensland's first home owner grant threshold moved to $700,000 on 1 July, fueling demand for properties under that price, she added.
And accessing the CBD from the outer suburbs just got cheaper. There are now 50-cent flat fares on all Translink services across Queensland plus local buses, trains, ferries and trams.
Investors, especially from southern states, are also snapping up homes around Ipswich due to their affordability, and represent around 20% of the buyer pool, said Ms Frank.
Fuelled by migration
The tropical Queensland capital will continue to attract buyers from southern states, experts predict.
Since Covid hit in 2020, Queensland’s population has grown by 6.6%, compared with 4.7% for Australia as a whole, according to the ABS.
"Brisbane was a significant beneficiary of the population flows north that we saw throughout the pandemic, ahead of Perth and Adelaide," said Ms Creagh.
"Queensland has always been the retirement destination of choice," added Mr Kuestenmacher. "Remember that old joke, 'he died so young. He hadn't even moved to Queensland yet'. That will continue to ring true."
Agent Tom Lyne from Ray White New Farm said inner-north riverside suburbs like New Farm and Teneriffe are main beneficiaries of interstate movers.
"We get a huge amount of interstate inquiries. New Farm and Teneriffe are the best-known cosmopolitan locations in Brisbane."
The median value of houses in New Farm has risen by 2.9% to $2.65 million in the year to November; Teneriffe houses by 9.8% to $4.1 million.
However, high property prices and interest rate rises have reduced yields, deterring investors and causing existing ones to pull out. This has further reduced rental stock in a pattern reflected across the city.
Brisbane's population has boomed. Picture: Getty
Mr Kuestenmacher believes overseas migrants, potentially numbering 250,000 each year, will continue to boost demand in the inner suburbs of our capitals.
"In the next decade, the main game is growth in the city centre and the urban fringe," he said.
Brisbane will also benefit from the 'Olympic effect', he added.
"It's all about reputation both in Australia and overseas, making people want to move there."
Growth starting to slow
Signs suggest growth may be slowing in Brisbane. Home prices rose by 0.3% in November, down from 0.4% in August and 0.5% in June.
Ms Creagh believes affordability constraints will cool the market.
"The relative affordability advantage has deteriorated significantly after Brisbane's strong growth in recent years. We're starting to see an easing in those population flows," she said.
But it will be interesting to see how Brisbane reacts to anticipated lower interest rates next year, she added.
"I'd expect to see a more muted response to lower rates compared to previous cycles, given the current affordability issues."
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