Brisbane Property Prices

RP Data reports that Brisbane property prices are increasing, but looking back five years, the annual change in capital values is still negative.  That means, on average, a person who purchased five years ago has made a capital loss in Brisbane.

REIQ reports that apartment demand is increasing

Sales of units and townhouses across Queensland have strengthened further over the last year, according to the latest Real Estate Institute of Queensland (REIQ) data report.  Over the March quarter, the preliminary numbers of unit sales in Queensland increased by 2 per cent compared to the same period last year.

But it is sales in our major tourism centres of Cairns and the Gold and Sunshine coasts that are the real story with sales sky-rocketing over the past year in these areas.

“The popularity of units and townhouses in our major tourist precincts has returned,” REIQ CEO Anton Kardash said.  “These areas have experienced the highs and lows of the GFC, and the strength of the Aussie dollar, more than most over the past four years so it is heartening to see them stepping back into the light.  Many of these areas have also become more affordable, even those with unique seaside locations, so this is no doubt spurring buyers into action before the tide has turned to the positive completely.” 

In Brisbane, the median unit price was steady at $390,000 over the March quarter. Solid performers over the period were Upper Mount Gravatt and Kelvin Grove which posted price growth of 9.6 per cent and 8.8 per cent respectively. 

[Click on chart to enlarge]

REIQ Reports that apartment activity grew at end of 2012

Queensland units and townhouses have followed the positive lead of the house market, according to the latest Real Estate Institute of Queensland (REIQ) data.

The REIQ’s December Queensland Market Monitor (QMM), released today, showed the numbers of unit and townhouse sales across the State continued the property market’s upward trend compared to the year before.  The numbers of unit and townhouse sales increased 8.9 per cent in the December quarter 2012 compared to the same period in 2011.

REIQ CEO Anton Kardash said the driving force behind the improving sales volumes was the southeast corner.  “Compared to the December quarter in 2011, the numbers of sales in Brisbane and the Gold and Sunshine coasts continues to trend upwards, which of course partly reflects the concentration of, and demand for, these types of properties in South East Queensland,” he said.

“Also this quarter, there has been an increase in the numbers of affordable unit sales across the State, especially for properties priced between $250,000 and $350,000, as buyers take advantage of some attractively-priced properties.  And Brisbane has posted its second quarter where the annual median price change has been in the positive, which is another sign that prices are heading in the right direction once more.”

According to the QMM, the numbers of sales in Brisbane was up 16 per cent compared to the December quarter in 2011; sales on the Gold Coast were up 8 per cent; and on the Sunshine Coast, the sales numbers increased an impressive 23 per cent over the same periods.

“The median price of units and townhouses on the Sunshine Coast also increased 1.1 per cent to $328,500 over the quarter with Noosa Heads and Noosaville also both recording price growth,” Mr Kardash said.

The Brisbane median unit price decreased 4 per cent to $389,000 over the quarter but posted an increase of 0.3 per cent over the year ending December. Over the period there was also a marked rise in the numbers of sales between $250,000 and $350,000 which reduced the overall median price.

“Inner Brisbane suburbs continue to do well with median prices in New Farm and South Brisbane all posting solid price growth,” Mr Kardash said. 

Capital city dwelling values rebound in January, largely driven by gains across the Brisbane, Sydney, and Perth markets

From an RP Data press release:

Home values across Australia’s capital cities were up 1.2% in January, taking the annual movement in dwelling values back into the black with a 1.8% increase over the past twelve months.  Dwelling values across Australia’s combined capital cities recorded a 1.2 per cent improvement over the month of January, negating the -1.2 per cent drop in values recorded over the final quarter of 2012.

Since bottoming out in May 2012, dwelling values across the combined capital cities have recovered 3.1 per cent.

The year on year results have now moved firmly into positive territory, with capital city dwelling values 1.8 per cent higher over twelve months ending January 31st.

Every capital city, apart from Melbourne (-0.4 per cent), has recorded an increase in dwelling values over the past twelve months. The gains in January were mostly focussed within the Brisbane, Sydney and Perth markets where values were up 2.0 per cent, 1.8 per cent and 1.7 per cent respectively.

According to RP Data’s research director, Tim Lawless, housing market conditions have started the year on a strong footing. “These strong January results are likely to have seen some upwards seasonal bias, however the housing market has been on a clear recovery trend since June last year. Capital gains aren't likely to remain this high over the coming months, however we are likely to see the recovery trend continue through 2013.  Despite the improving market conditions in January, dwelling values across the combined capital cities remain 4.6% below their 2010 peak. The latest housing market data adds weight to the argument that interest rates may be at the bottom of the cycle. The Reserve Bank will be watching the performance of the housing market closely, and the positive trend in housing values will dampen calls for further interest rate cuts,” Mr Lawless said.

Brisbane apartment prices (to 31 January 2013):
January 2013 - up 4.4%
Quarter - up 3.8%
Year on Year - up 3.2%
Median price based on settled sales of Brisbane apartments over the quarter - $350,500.

Median Price Reports Not Always What They Seem

Often, newspapers report on the growth or decline in property values, or identify certain areas as hotspots, or have articles such as "What is your home worth?"  This articles are often based on changes in median price over a period of time.  However, care must be taken when looking a median price reports.  First, the data set may be small.  For example, it is not uncommon for the median price for a suburb to be calculated on less than 20 sales.  Second, there may be a change in the mix of what is sold.   For example, if in one year, many 1 bedroom apartments are sold, and in the next year, many 2 bedroom apartments are sold, then the median price will show growth, when in fact, the values of 2 bedroom apartments may have declined.  Another example is if a large new apartment building completes.  This happened a few years ago in West End -- the newspapers reported dramatic price growth in West End; the change in median price was in fact due to the completion of more than 150 apartments in 2 developments, not due to property values increasing.

It is easy to identify "hotspots" on this basis -- just look to where a number of new apartments buildings or subdivisions are nearing completion.  But this is really misleading.  

The Courier Mail, that often publishes such reports, identifies the risk of looking a median prices:

"A change in median price, more often than not, reflects what has been sold during the two time periods rather than actual price growth.  The only real way to test price growth is to look at resales - the same dwelling resold over time."  Courier Mail Real Estate Section, page 2, 5 January 2013, by Matusik.

Realty Times makes the same point in this article.

As Matusik states "You can't always believe what you read."  [I guess he is referring to the Courier Mail here?]

RP Data-Rismark December Hedonic Daily Home Value Index Results

Capital city home values fall over consecutive years, down -3.8% in 2011 and -0.4% in 2012.  With capital city dwelling values falling by -0.3% over the month of December, home values recorded an aggregate decline of -0.4% over the 2012 calendar year.
Highlights over the quarter:

• Best performing capital city: Darwin +2.5 per cent
• Weakest performing capital city: Hobart, -3.7 per cent
• Highest rental yields: Darwin houses with gross rental yield of 6.1 per cent and Darwin Units at 5.9 per cent
• Lowest rental yields: Melbourne houses with gross rental yields of 3.6 per cent and Melbourne units at 4.4 per cent
• Most expensive city: Sydney with a median dwelling price of $580,246
• Most affordable city: Hobart with a median dwelling price of $317,500

According to RP Data Senior Research Analyst, Cameron Kusher, we have now seen two successive years of annual value declines, however the annual rate of declines has improved substantially compared to last year.

“Home values in Brisbane, Perth and Hobart remain below where they were five years ago, whereas the other mainland cities have all recorded significantly lower rates of growth in home values over the past five years than they did over the preceding five year period."

Brisbane apartment prices (to 31 December 2012):
December 2012 - down 2.8%
Quarter - down 0.9%
Year to Date - down 3.5%
Year on Year - down 3.5%
Median price based on settled sales of Brisbane apartments over the quarter - $363,000.

Brisbane Rents

Here is the median Brisbane rent for 2 bedroom apartments, as sourced from the RTA based upon information provided to the RTA when rental bonds are lodged or updated.  This does not distinguish between furnished and unfurnished apartments, and does not include lease renewals where the bond amount does not change.  This is for the September 2012 quarter.

Post Code 4000 (Brisbane City): $585 per week
Post Code 4005 (New Farm): $530 per week
Post Code 4007 (Hamilton): $420 per week
Post Code 4101 (South Bank/ South Brisbane): $510 per week
Post Code 4066 (Toowong): $395 per week
Post Code 4067 (St Lucia): $420 per week
Post Code 4068 (Indooroopilly/Taringa): $385 per week

There is a lot of good rental information on the RTA website at: Median Rents Quick Finder

Do not use WhatRentMyHome.  This "service" is operated by a real estate agency, and the information it provides is inaccurate and out-of-date, and is misleading.

REIQ says demand is increasing

Demand for units and townhouses is increasing across Queensland as buyers flock to this more affordable type of property, according to the Real Estate Institute of Queensland (REIQ).  

The REIQ September median unit and townhouse price report, released yesterday, found the numbers of sales increased substantially over the period.  Across the State, sales of units and townhouses grew by 40 per cent in the September quarter, compared to the previous quarter. The numbers of sales were also up 14 per cent compared to the same period last year. 

 REIQ CEO Anton Kardash said the data also showed sales increasing for units and townhouses priced under $350,000.  "More than 800 preliminary sales were recorded for properties priced under $250,000, which is a very affordable price for many buyers. This was an increase of nearly 40 per cent on the same period last year.  The greatest numbers of sales was in the $250,000 to $350,000 price bracket, which recorded about 1,250 preliminary sales over the quarter - also an increase on last year.  Units and townhouses continue to be a reasonably priced, and also preferable, option for many buyers who want the convenience of living closer to the city while also keeping a lid on their borrowings." 

There was a noticeable shift in demand for lower-priced units and townhouses in Cairns and the Gold Coast over the quarter with both regions recording significant jumps in the numbers of sales of properties for under $250,000. 

In Brisbane, the median unit and townhouse price increased 0.6 per cent to $405,000 over the September quarter and also recorded a small positive price result over the year ending September. "Brisbane’s median unit price edged up 0.3 per cent over the year which is a welcome result and one we haven’t witnessed for a year or two now.  This is hopefully the start of the pricing turnaround that we have been anticipating given our property market has been improving throughout the year," said Mr Kardash.

Double click image to make bigger

Brisbane Apartment Median Sale Price Down Slightly

The RP Data-Rismark Home Value index results for October recorded the first month-on-month decline since May 2012, with the eight capital city aggregate index falling by -1.0 per cent over the month. The fall was broad-based, with falls being experienced across each of the capital cities apart from Perth and Darwin. Both Sydney and Brisbane markets recorded a -0.9 per cent fall in values over the month, while Melbourne values experienced a larger -1.1 per cent fall.

On an annual basis, only Sydney (+0.6%), Perth (+3.5%) and Darwin (+8.6%) have shown a rise.

“Whether the October decline is a blip on the path to a recovering market, or a sign of further weakness is yet to be seen. Other indicators are suggesting the market has gathered some strength, with auction clearance rates holding firm around the 60% mark across the two major auction markets and owner occupier housing finance numbers showing steady improvements since February 2012, albeit from a very low base."

While unit markets showed a more resilient performance across the combined eight cities aggregate index, with values down -0.6 per cent in October, compared with a -1.0 per cent decline across the detached housing market, the cities of Melbourne and Adelaide both recorded a larger -3.2 per cent fall in unit values over the month. In particular, Melbourne unit values have shown a greater decline in values than any other mainland capital city over the past twelve months, recording a 6.0 per cent drop.

Brisbane apartment prices (to 31 October 2012):
October 2012 - down 0.3%
Quarter - up 1%
Year to Date - down 2.9%
Year on Year - down 4.4%
Median price based on settled sales of Brisbane apartments over the quarter - $363,000.

Prices Up? But sales volumes are down

""Real estate is a confidence thing and confidence gets zapped by uncertainty and all the information we've been getting from overseas and at home has certainly zapped confidence."  Mr Kardash also noted the median house price provided a limited snapshot of the property field, because the figure could often be skewed by an inordinate number of sales at either the low or top end of the market in a given time period.  Like Mr Matusik, he said the 4.7 per cent drop in the median house price in the 12 months to June this year reflected the majority of activity which occurred at the lower end of the market.

Mr Kardash said the Brisbane market was on the "cusp of improvement", although he noted the middle price range remained relatively stagnate.

"Just recently the market's seen a little bit of a pick-up in the very top end ... but for us, we'd be looking at all three price ranges to be showing an improvement before you could call that the industry was on the way up," he said.

Brisbane Times

Capital growth flat in August after rising in June & July: RP Data

The above headline does not really apply to the Brisbane apartment market.  Read on....

After recovering by one per cent in June and 0.6 per cent in July following the RBA’s back-to-back rate cuts, dwelling values across Australia’s combined capital cities were unchanged in August. At the end of August, dwelling values across Australia’s combined capital cities were down just -0.6 per cent in the first eight months of the year compared to a -2.2 per cent year-to-date loss in May. The year-on-year numbers have also shown a substantial improvement. Dwelling values were down -2.4 per cent at the end of August compared to -5.3 per cent in May.

“Improved affordability since June has helped dwelling values rise across every capital city over the three months ending August 2012, apart from Adelaide. The big question is, ‘can this growth be sustained?’ On the one hand, winter is seasonally slow, so these results have been encouraging. On the other hand, we know that there is likely to be an increase in new supply over Spring, which may introduce some headwinds for a recovering market. How the market plays out over the Spring season will be an important litmus test for its resilience,” Mr Lawless from RP Data said.

A spokesman from Rismark added, “Late last year we forecast that housing conditions in 2012 would deliver a material improvement over the -3.8 per cent loss suffered in 2011. Despite the fact that the RBA did not cut rates again until May, and we had the banks hike rates by about 25 basis points in the intervening period, the national market has clearly stabilised.”

The Brisbane apartment market showed some improvement over the past 3 months, but still not enough to recover from price deflation in late 2011 and early 2012.

Brisbane Apartments: Capital Growth to 31 August 2012

Month:  Up 2.1%
Quarter:  Up 2.1%
Year to Date: Down 1.9%
Year on Year:  Down 2.3%
Median Price Based on Settled Sales over Quarter: $350,000.

Brisbane apartments are doing better year on year and in the last quarter than Brisbane houses.

Source:  RP Data

No significant improvement: RP Data

Summary of RP Data report:

Capital city home values increased by 0.6% in July after increasing by 1.0% in June

·         Capital city dwelling values increased by 0.6% over the month of July 2012.  Dwelling values are down -0.6% over the first seven months of 2012 and down -2.4% over the twelve months to July 2012.  Home values remain -5.9% below their historic highs across the combined capitals with falls from the peak ranging from -11.5% in Brisbane to -2.9% in Sydney.
·         Looking at value movements across broad price segments in the market to June 2012, the premium housing market is recording the largest falls (down -3.4% over the year) while the broad ‘middle market’ has been the most resilient with values falling by -2.0% and the most affordable suburbs have recorded value falls of -2.9%.

Sales activity showed a slight improvement in May however, there has been no significant improvement to date despite recent interest rate cuts

·         Estimated sales volumes are currently -14% below the five year average nationally and -13% lower across the combined capital cities

·         Compared to volumes in May 2011, sales volumes are currently -4% lower nationally and across the capital cities.

Rents continue to improve in certain areas and across specific product types while yields continue to trend upwards

·         Capital city house and rents have increased by 3.0% over the 12 months to July 2012

·         Gross rental yields for houses have improved from 4.0% last July to 4.2% currently and for units they have increased to 4.9% from 4.6% last year.

Vendor discount levels and time on market are trending lower but remain at elevated levels

·         Based on private treaty sales, it took an average of 60 days to sell a house in the capital cities in June 2012 compared to 68 days at the same time last year. 

·         Vendors are now providing an average discount of -7.2% from their initial listings price, at the same time last year the average vendor discount across the capital cities was recorded at -7.6%

The number of homes for sale has been easing however, on an historical basis they remain at quite high levels

·         RP Data is tracking around 296,000 unique houses and units that are available for sale across Australia; that’s about 9% higher than at the same time last year.

·         New listings are actually -14% lower than at the same time last year.

·         More than half of the total listings are located in the non capital city markets despite the fact that only 35% of sales take place in these locations.

Economic data flows remain mixed

·         Headline inflation is at 1.2% and core inflation is at 2.0% and trending lower.

·         The Australian economy grew by 4.3% over the first quarter of 2012.

·         The unemployment rate increased from 5.1% in May to 5.2% in June.

·         Consumer confidence for July 2012 showed that optimism was outweighed by pessimism however, the Index increased by 3.7% over the month.

·         First home buyers accounted for 17.8% of all owner occupier finance commitments over the month.

·         Overall housing finance (ex-refi’s) are up 2.8% over the year while refinance commitments are up 7.5% over the year.

·         Private sector housing credit continues to grow at record low levels of just 5.1% over the 12 months to June 2012.

·         Dwelling approvals were up 10.2% in June 2012 compared to volumes a year earlier.

Brisbane Apartments are Worst Performing Market: RP Data Statistics

Dwelling values across capital cities recorded a second month of capital gains in July with dwelling values up by 0.6% over the month following a 1.0% rise in June.  The RP Data-Rismark Home Value indices posted a second successive rise in capital city dwelling values over the month of July. Across the combined capital cities, dwelling values rose by 0.6 per cent over the month with the rises being relatively consistently over the first three weeks of July followed by a -0.2 per cent fall over the final week of the month.  Over the three months to the end of July, capital city dwellings have posted an increase of 0.2 per cent.
See RP Data July Release

Brisbane apartment prices:
July 2012 - down 2%
Quarter - up 0.3%
Year to Date - down 3.9%
Year on Year - down 5%
Median price based on settled sales of Brisbane apartments over the quarter - $366,000.
The Brisbane apartment market is the worst performing capital city apartment market in Australia this year.

Below is a chart for dwellings, which includes both houses and apartments:

Residex Property Statistics June 2012

Residex has published its June 2012 statistics chart here.  According to Residex, Brisbane apartment median valued decreased by 2.92% in the last financial year, and decreased just over 3% in the prior financial year.  Melbourne was down over 4%.  The number of sales of apartments in Brisbane increased slightly  in this period.

Is Median House Price Data Useful?

There are many newspaper reports that discuss rising or falling house & apartment prices by reference to the median sales price for a particular period.  For example, see this recent report from REIQ.  The median price is the middle price of all the properties sold in the defined period.  (For example, if there were 5 sales in the period, for $1, $10, $1000, $1001 and $6409, then the median is $1,000.)

If you select a different length of time to measure the median, you get a different result of course.  For example, according to REIQ, the median sales price for Brisbane apartments (all of Brisbane local government area) for January 2012 to March 2012 was $387,750.  The median for April 2011 to March 2012 was $395,000.

The median is not the average price.  (The average for the example above is $1484.)  See also here and here.

The statistics only look at the properties that were sold in the period.  If the median changes, it does not necessarily mean that the value of any particular property has changed.  For example, if in one quarter, there are many two bedroom apartments that are sold, and in the next quarter, there are mostly one bedroom apartments that are sold, then the median price is likely to decrease.  If a new off-the-plan development settles in the period, then the median is likely to increase for that period and decrease for the next period.

So how reliable are the recent REIQ statistics?  I had a look at a number of the more larger, upmarket and top end apartment buildings, and there are no or few reported sales for the relevant period (January 2012 to March 2012).  For example:

• Admiralty Towers Two - no recorded sales
• The Grosvenor - no recorded sales
• Quay West - only one sale, a 1 bedroom.
• Admiralty Quays - only one sale, a 1 bedroom
• Riparian - 1 reported sale, a 2 bedroom
• Metro 21 - 2 reported sales (1 bedroom & 2 bedroom)
• Admiralty Towers One - no sales on direct riverfront side of building
• Fresh Taringa - no sales since October 2010
• Riva Indooroopilly - no sales in more than 12 months
• For the above, there were no 3 bedroom sales at all.

It seems that the larger and more expensive apartments are not being sold.  Thus, the median price will be less than periods where there are more of these apartments that are being sold.  That the larger or more expensive apartments are not being sold could be for a number of reasons:  (A)  They may be listed for sale, but not selling because the owner does not want to or need to decrease price. (B) These buildings have more owner-occupiers, who do not sell as often.  (C) If rented, the rents are good, and so selling for a lower price makes less sense than renting out the apartment.  (D) An owner who needs to sell may decide to rent the apartment for a short period, until prices rise.  (E)  There may be no buyers at the high end of the market.

So it is hard to determine if the apartment values have fallen for the kinds of apartments that are not often sold, and if so, by how much.  Also, the median price decease for Brisbane may be because of a change in mix of the apartments that are being sold.

RP Data Report

From a recent RP Data Report:

Brisbane values and volumes

• Over the past 12 months, property values in Brisbane have fallen by -6.6 percent for houses and units declined by -5.4 percent, underperforming the ten year average annual growth rates of 8.0 percent for houses and 7.0 percent for units.
• Although the combined capital cities began to record a strong rate of growth post GFC, Brisbane’s property market underperformed and has recorded limited growth in home values over the past five years.
• Brisbane’s property market also experienced distinct cycles over the past decade, with annual property value growth recording an historic high in November 2003, then consolidating over 2004 to 2006, followed by a strong recovery prior to the GFC however, Brisbane has been underperforming since 2008.
• Over the last five years, sales volumes have been recorded an average of 3,915 transactions per month.
• The current sales volumes are estimated to be -24 percent lower than the five year average.
• Brisbane’s median house price is recorded at $430,000 and the median unit price sits at $360,000 in April 2012. 

Key Statistics

• Compared to the combined capital city average, Brisbane’s property values have been underperforming since the beginning of 2009.
• Over the past five and ten years, Brisbane has experienced a much stronger housing market performance than it has over the past 12 months.
• Vendor discounting rates are currently recorded at an average of -9.5 percent for houses and -7.5 percent for units. At the same time last year, discount rates were recorded at -8.9 percent for houses and -7.8 percent for units.
• In March 2012, Brisbane houses were on the market for an average of 86 days and 58 days for units. In March 2011, houses took an average of 88 days to sell and units 66 days, highlighting a slight improvement in conditions for sellers.
• Vendors who sold their dwellings over the past year had owned their houses for 8.7 years on average and units for 6.9 years. 
• In June 2011, Brisbane’s estimated population was roughly 2.1 million persons, growing by 1.7 percent over the year.
• Brisbane dwelling are each home to an average of 2.7 persons. 

Decreasing Market

According to Residex, the median sales price of Brisbane apartments dropped 3.48% in the year ending October 2011 and dropped 1.74% in the last quarter.

See Residex blog.

REIQ Brisbane Apartment Report

Queensland’s unit and townhouse market shrugged off this year’s natural disasters and the current economic conservatism to record mostly positive results over the June quarter, according to the Real Estate Institute of Queensland (REIQ).

The REIQ June quarter median unit and townhouse report found the preliminary number of sales rebounded robustly across most of the State with median prices also holding firm.

REIQ managing director Dan Molloy said unit and townhouse sales were up about eight per cent compared to the March quarter courtesy of increased first home buyer and investor demand particularly.

For the Brisbane downtown area, the medium price for the June 2011 quarter was $448,000. This was up 0.1% on the previous quarter. The medium price for the 12 months to June 2011 was $475,000, up 6% on the 12 months to June 2010 (which was $448,000.)

Median Prices Can Be Misleading

From Chris Joye at Rismark:

“In the first quarter of 2009, some median index providers reported misleading results, claiming that house prices were falling when in fact they were rising rapidly. The medians were being dragged down by a surge in first time buyers purchasing cheap homes in the first three months of 2009. The RP Data-Rismark Hedonic Indices, in contrast, reported strong growth of circa 3 per cent in the first quarter in 2009.

“Since the first quarter, the RP Data-Rismark Hedonic Index has shown stable growth. In comparison, the median price indices are being artificially boosted by the fading of first time buyers and the return of upgraders buying more expensive homes, which drag the medians upwards. At the current time, the true rates of capital gains across Australia are likely to be substantially less than those reported by median price suppliers.”

From Chris Joye