Brisbane property market update: October 2022

It might seem like you only bought your Secret Santa present a couple months ago, but surprise surprise we’re on the homestretch to the end of the year. Which brings us to a review and a forecast of one of our favourite property markets in Australia – the Brisbane property market.

Let’s look in the rearview mirror to see where both commercial and residential Brisbane real estate has been in 2022, where it currently stands, and then with our crystal ball in hand look into the future of Queensland’s capital city market.

Brisbane property market update: Where the market’s been

Brisbane achieved the strongest Australian property market in 2021. Nearly every part of Brisbane saw property values increase, a rare thing for any major city, and there wasn’t a significant decline recorded until July 2022 (its monthly property values dropped by 0.8 per cent).

Queensland topped the nation for property sales growth for FY22 according to the PEXA Property Insights Report. The sunshine state saw 220,962 property sale settlements, a 12 per cent increase on the previous financial year.

And Queensland’s commercial property sector remained stable in 2021 before increasing across every segment earlier in 2022. The commercial property market posted strong results with more than 11,000 settlements completed in FY22, worth over $24 billion. Total values and volume of sales have been exceptional. But where has that led us? Where are we today?

Where the market is today

Like the rest of the nation, the pace of growth has certainly slowed since the gangbuster year Brisbane’s property market had in 2021. Interest rate rises mean less buyers in the market are on the front foot, and both scarcity and affordability issues are keeping many property hunters off the trail for their next – or first – property.

Yet we’re seeing signs that confidence is returning as certain markets hold their values. Especially for those looking for properties within five to seven kilometres of Brisbane’s CBD where a good number of very relevant assets are for sale, particularly those within good school catchments.

Commercial property in Brisbane CBD, particularly office assets, are still seeing positive signs. In the CBD office space, gross effective office rents are currently averaging about $560sqm per annum for Premium grade stock, while A grade is averaging $425sqm per annum. That’s a 2.5 per cent increase in rents compared to the same time last year.

What about economic indicators?

Unemployment has dropped to 4 per cent (a 0.6-per cent reduction since March 2022). And the state’s Final Demand Growth (a figure that measures the total value of goods and services sold in a state) has increased by 0.6 per cent to 6.6 per cent.

Where the market’s going

Buyers are returning to Brisbane’s property market after a mid-year slump in transactions. It appears investment confidence will remain for some time, as investors continue to watch the rental market tighten and both international and interstate arrivals increase.

We think commercial property investors should be looking to inner city office for robust opportunities. A return to office for white collar workers, and an increase in city foot traffic as the population continues to explode, will only bode well for office building landlords. More on this to come soon.

As for Queensland’s economy, big things are expected as the state’s capital continues preparation for the 2032 Summer Olympic Games. If Sydney’s lead-up to the 2000 Olympics is anything to go by – the NSW capital seeing its biggest infrastructure and major public projects explosion in recent history – Brisbane will be a hive of development activity in the years to come.

Developments are already on the way, with new rail, subway and parks projects underway, and not to mention the $3.6-billion Queen’s Wharf integrated resort development. Brisbane’s waterfront is getting a $2.1-billion facelift too, a new international cruise terminal is in development and, well, there are frankly too many more projects in the pipeline to mention in a sub-800-word blog post.

Population growth slumped during lockdowns, but the long-predicted population explosion is undoubtedly back on the cards now borders have reopened. Compared to other states, Queensland has been robust, gaining a net 7,035 people from interstate arrivals over the March 2021 quarter, while NSW and Victoria respectively lost 4,463 and 4,864 people. Most of them probably headed to Queensland where the opportunities are plentiful, the property affordable and the future bright.

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