Why Brisbane’s property boom will continue

Brisbane was the fastest growing major capital city in 2021, recording dwelling value growth of 28.4% according to CoreLogic:

Industry experts are tipping Brisbane to lead price growth again in 2022, buoyed by strong internal migration and superior affordability compared with its southern counterparts:

Domain chief of research and economics Nicola Powell said, out of all the capital cities, Brisbane would be the one to watch in 2022, with the Gold Coast and the Sunshine Coast markets also firing at a velocity that was simply too fast to falter in the near future.

“What we’ve seen is much stronger rates of growth in Brisbane than Sydney and what we’ve got – particularly in South East Queensland – has been this shift in migration … and that adds to the fact that it offers lifestyle and job prospects as well as the Olympics (in 2032) and all the infrastructure projects that are being completed,” Dr Powell said.

“That’s going to continue to put demand on housing, particularly when you put it on the backdrop of the fact that house price growth has gone sideways for a number of years.

“Brisbane has under-performed compared to other capitals, so there’s more room for growth. And it hasn’t had a massive upswing, so there’s still strong growth to come”…

McGrath Paddington senior agent Alex Jordan said while there was no evidence Brisbane had reached its home price peak, the rapid rate of growth would slow.

“I don’t see the same magnitude of growth that Brisbane benefited from in 2021 … this was a historically unprecedented level of capital growth,” Mr Jordan said.

“But there’s still pent-up demand and I think we’ll see the highest level over the next few months…

“The 2000 Olympics put Australia on the map … and we’re already seeing investments into upgrades here, so I think Brisbane is well positioned to become a global city,” Mr Jordan said. “Leading up to the Olympics there’ll be strong demand”…

SQM Research’s Christopher’s Housing Boom and Bust Report 2022 named Brisbane as next year’s winner of the Australian real estate market – with the city expected to dominate dwelling value growth in 2022.

I made similar arguments throughout last year tipping that Brisbane would lead the nation’s capital city property growth.

The reasons are simple. First, Queensland and Brisbane have experienced the strongest population growth in the nation thanks to strong migration from Melbourne and Sydney:

Net internal migration by state

This strong internal migration is tipped to continue over the medium-term, according to the Centre for Population’s 2021 Population Statement (see here).

Second, despite its recent strong growth, Brisbane property is still very ‘cheap’ compared to both Sydney and Melbourne, as illustrated clearly in the next charts:

The median Brisbane house only costs around half as much as the typical Sydney house and less than 70% the cost of a Melbourne house.

The price-to-income ratio of homes in Queensland is also far less than NSW or Victoria:

With both Sydney and Melbourne having recently experienced long and painful lockdowns, and with such a wide affordability gap, it is easy to see a situation where many tens-of-thousands of southerners migrate north to South East Queensland in search of more affordable housing and better lifestyle.

Brisbane’s 2032 Olympics should also fuel property demand.

While I am not expecting Brisbane property prices to catch up with Sydney or Melbourne, they should at least close the gap over the next decade, meaning Brisbane property should outperform its southern big city counterparts.

Unconventional Economist

Comments are hidden for Membership Subscribers only.