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Could Brisbane Take Over As The Best Performing Capital City Housing Market In 5 Years?

Author: Tim Lawless
Source: CoreLogic

Brisbane is well placed to take over as the best performing capital city housing market over the next five years.  Dwelling values across Australia’s third largest capital city have risen at the annual rate of 1.2% of the past decade; that’s half the pace of inflation and dramatically lower than Sydney or Melbourne where annual gains have averaged 6.3% and 5.9% over the past ten years.

Brisbane’s housing market won’t outperform other cities simply because the market has previously underperformed, however the relative gap in pricing between Australia’s largest cities is likely to be one of the factors that attracts housing demand to the city.  At the end of November 2017 Sydney house values were 102% higher than Brisbane’s and Melbourne values were 57% higher.  Based on median household incomes, Sydney households are earning only 12.9% more than households in Brisbane’s and incomes across Melbourne are actually 0.7% lower than Brisbane’s.  

Clearly households aren’t as affected by affordability in Brisbane as significantly as they are in the larger capitals.  This is also visible from more formal affordability measures such as the dwelling price to income ratio and the proportion of household income required to service a mortgage. In Sydney, the dwelling price to income ratio is 9.1 compared with 7.5 in Melbourne and 5.9 in Brisbane.  Similarly, the proportion of gross annual household income required to service an 80% LVR mortgage is now 48.4% in Sydney compared with 39.9% in Melbourne and 31.7% in Brisbane.

Importantly, there are a variety of economic and demographic factors that are likely to support improving market conditions across Brisbane including economic and demographic trends as well as a worsening performance across the larger cities of Sydney and Melbourne which will provide a lower relative benchmark for Brisbane.

Population growth from both overseas and interstate is ramping up into Queensland, with the majority of this growth being experienced within the South East corner of the state.  Net overseas migration remains well below New South Wales and Victoria, however it’s the highest in a bit more than three years.  Net interstate migration is where Queensland is demonstrating its pulling power, attracting the highest number of residents from other states in eight and a half years.  Net migrants crossing the state border into Queensland is now the highest of any state, outpacing Victoria for the first time since June 2013.

 


Tim Lawless
Director of Research
CoreLogic

Published: 5 February 2018.