Although there is still room for further decline in the Australian property market in 2019, there are significant differences across regions, according to forecasts. Brisbane, for example, has performed significantly better than Sydney and Melbourne.
Data show that Brisbane house prices in 2018 overall growth of 0.2%. Among them, single-family house prices slightly increased 0.4%, while apartment prices fell 0.7%.
Australian New Zealand Bank (ANZ) economist Jack Chambers predicted that house prices in Brisbane could fall slightly in 2019. But even so, prices in the region are likely to outperform Sydney and Melbourne in the same period.
A Summary of House Price in Brisbane
Given the poor performance of the overall housing market over the past year, ANZ forecasts that by the end of December 2019, the prices of single-family homes and apartments in Brisbane may have fallen by about 1 percent, ending a moderate upward trend over the years.
Prices in Brisbane rose 4.1 percent in 2014 and 4.9 percent in 2015, according to Corelogic. Housing prices in Brisbane slowed significantly in 2016 and 2017, to 1.6 percent and 1.8 percent, respectively, due to the oversupply of apartments.
Specifically, the Brisbane urban apartment market is a major drag on local house price growth. At present, apartment prices in many inner urban areas are still about 5% lower than they were 10 years ago. But as apartment prices continued to fall, the downward adjustment cycle in Sydney and Melbourne extended, and many well-off investors began looking for other value depressions. Brisbane property market performance was thus boosted, better than Sydney and Melbourne.
The number of high-rise apartments delivered in Melbourne (≥ 4 floors) will increase from 13500 last year to 17000 this year, according to BIS Oxford Economics, an Australian consultancy. The number of apartments delivered in Sydney this year has not risen, but has also remained at an all-time high of 26300. The price of apartments in the two major cities faces further downward pressure as the number of completed projects increases, as well as the bank`s second assessment.
Brisbane, by contrast, completed 5700 new apartments in 2019, half the peak of 10700 in 2017.
Unlike ANZ, Corelogic, an Australian property research firm, predicts a sustained rise in inflows, mainly domestic ones. Prices in Brisbane will rise moderately in 2019. Tim Lawless, director of research at Core Logic, said: "the population that continues to flow into Brisbane will support the rise in local property prices."
According to its analysis, domestic interstate population movements are more likely to push up house prices in Brisbane than overseas migrants. The reason is simple: domestic interstate inflows are likely to bring more home buyers to the local property market.
Queensland added an average of 11000 residents a year in the decade to June 2017, up from 7200 in Victoria over the same period, according to the latest figures from the Australian Bureau of Statistics. New South Wales, by contrast, showed a net outflow, with an average annual outflow of 13600.
In addition, Brisbane is much less affected by the new credit rules in terms of the extent to which credit tightening affects different regions, compared with Sydney and Melbourne, because the gap between house prices and income is relatively small.
In addition, in terms of overall housing yields, the Brisbane housing investment rate remained at 4.5 percent in 2018, up from 3.3 percent in Sydney and 3.5 percent in Melbourne.
"if government`s property tax (negative withholding / capital gains tax) changes after the next federal election, rental market conditions and yields will be an important consideration for investors` housing investments," Lawless said.
