John McGrath – Queensland to lead the national market recovery
The property market in South East Queensland might be cooling, but like the local climate, it won’t be chilly for long.
It’s likely that this region will lead the national market recovery, with major drivers of the next cycle including infrastructure projects associated with the 2032 Olympics and steady population growth.
Latest figures from CoreLogic show Brisbane home values increased by 42% during the COVID-19 period. They are currently -6% down from their COVID peak.
Unlike its East Coast capital city counterparts, Brisbane values rose at the same pace as regional Queensland values (also 42%) because both markets were beneficiaries of a massive population shift from Sydney and Melbourne to the Sunshine State during the two years of COVID-19.
Millennial families were a big driver of this shift and it continues today. Being able to work from home has enabled thousands of families to cash in their homes in Sydney and Melbourne and relocate north where they have bought better and larger properties on a lower mortgage.
Regional Queensland values are cooling at a slower pace than Brisbane. They are currently -4.7% off their COVID peak, according to CoreLogic data.
Regional Queensland as a whole market is anchored by the Gold Coast and Sunshine Coast, two areas that attracted 16% of all capital city seachangers who relocated during COVID.
As discussed in our McGrath Report 2023, South East Queensland is a comparatively buoyant property market. There are several factors keeping a strong floor under prices, including continued interstate migration, limited housing supply, and Olympics infrastructure projects and jobs.
The state’s population is expected to grow by 298,000 by 2026. There is still a steady stream of interstate buyers lining up to purchase their piece of paradise, with federal budget figures estimating 41,000 people moved to Queensland during FY22.
This demand is expected to remain steady through to 2024 when migration rates will return to those of pre-COVID times.
Amongst the projects creating new jobs in Queensland is the $1.8 billion South East Queensland City Deal, funded by all three levels of government, which will begin a 20-year pipeline of infrastructure across the region.
The long-delayed $1.6 billion Brisbane to Sunshine Coast passenger rail line will revolutionise public transport from the capital city to the Sunshine Coast’s pristine beaches.
Improved travel times have also been promised to southern commuters, with $1.12 billion being invested to create faster rail services between the Gold Coast and Brisbane.
While house value growth has slowed across the south east, rents continue to rise swiftly.
House rents in the suburb of Ormiston, near Redland Bay on the outskirts of Brisbane, have increased by 25%, while on the Gold Coast at Paradise Point, rents have jumped 45.5% in the 12 months to June 2022.
Demand for high density rental properties is also increasing largely due to a lack of house rentals and increasing asking rents.
Overall, the slowdown in price growth in Queensland’s south east will give buyers their best chance to get into the market, while remaining confident that infrastructure spending and population growth will keep prices buoyant relative to other parts of the country for some time to come.
We’re moving through a market cooldown right now but looking ahead to the future, I think one dollar invested in Queensland real estate will be better than anywhere else in Australia.