Most prophets of doom tend to share one thing in common: their predictions never come to pass. In fact, Queensland’s real estate market continues to defy even the most conservative predictions of property price falls as a result of the COVID-19 pandemic.
“The fact is, Queensland’s residential property market continues to show remarkably stable results, with the first full quarterly COVID-19 property price report giving Queenslanders a comprehensive look at how the pandemic has affected our State’s housing market,” said Antonia Mercorella – CEO of the Real Estate Institute of Queensland (REIQ). “Restrictions on auctions and open homes coupled with border closures, restricting interstate buyers as well as international investors, have certainly proved challenging for our market. To counter this, the real estate industry proved itself highly agile, adapting to technology substitutes in place of live auctions and physical property inspections at almost lightning speed. And buyers and sellers were equally quick to embrace it. The evidence is in the numbers, with over 8,600 property transactions across Brisbane and more than 7,100 across regional Queensland in the three months of April to June.”
So, what’s the state of Queensland’s property market? Powered by CoreLogic’s latest data for the April-June 2020 quarter, a spectacular standout is that across 13 major regions, only two reported marginal price retractions – these included Cairns (0.5% and 1.3% drop in median house and unit prices respectively) and Mackay (2.2% drop in median unit price). However, Mackay, coupled with Gladstone, recorded the highest annual median house price hikes for the State (5.9%). But it still wasn’t a match for Noosa, which remains Queensland’s most expensive jewel in the crown with a median house price of $836,724 and median unit price of $715,000.
And while it’s fairly unusual for any location to have all asset classes firing at the same time, that certainly wasn’t the case in Toowoomba. The region’s house, unit and land markets were all in the top three performers for major locations over the period. Toowoomba remains extremely affordable which has strengthened its appeal with both owner-occupiers and first home buyers in particular, who have been quick to move on both new builds and vacant land thanks to the HomeBuilder grant.
Meanwhile, the median house price in our State’s capital increased 0.7%, with Brisbane house prices remaining stable with 2.8% annual growth which is a satisfying outcome considering the city recorded negative growth across all three months for the quarter. However, this was chiefly due to a softening in the unit market which saw zero growth while a median drop of -3.1% was recorded in areas including Brisbane’s CBD and Fortitude Valley. This decrease in transaction activity and rentals shows the property market isn’t immune to the COVID-19 economic fallout – CBD job cutbacks and office shutdowns along with hospitality and retail outlet closures have all played a significant part. The overall impact on property values will depend on how long it will ultimately take to contain the virus, how deep this recession will reach and how fast Queensland’s economy will rebound.
“Brisbane’s affordability, low income-to-debt ratio, change in investor behaviour, rise in rental vacancies and historically low interest rates, which the Reserve Bank recently highlighted will likely remain for at least the next three years, along with the range of government grants currently available has seen first home buyers come out in force, allowing our capital city property market to continue to transact,” added Ms. Mercorella. “What’s helping drive price stability in the market is that while there’s increased demand driven by housing specific incentives such as the First Home Owner’s and HomeBuilder grants, advertised supply levels remain tight.”
COVID-19 has also accelerated interstate migration into Queensland, with predictions that a massive influx of Sydney-siders and Melbournites will make the move to the Sunshine State once border restrictions are eased. “Prior to the outbreak of the pandemic, Queensland was the number one destination for interstate relocations – particularly from major metropolitan areas such as Sydney and Melbourne. As this pandemic continues to affect us all, it’s introduced many of us to the possibility of a ‘new normal’ way of working – that is, remotely from home. And spending more time at home is seeing more people considering their options,” further explained Ms. Mercorella. “As a result, interstate demand continues to strengthen in Queensland with the main drawcards being affordability, livability and the lifestyle on offer. And while border restrictions haven’t stopped interstate buyers from snapping up properties sight unseen over the last few months, we anticipate this demand to surge in the coming year ahead as we navigate through to the other side of this pandemic. Perhaps this is one prediction that will ultimately prove right!”
While the property market is currently insulated thanks to wide range of monetary and fiscal policies that have been rolled out by both the Federal and State Governments in an attempt to soften the blow to the broader economy, the biggest concern is the impact of job losses. This is likely to create some downward pressure on property values as income and borrowing capacity is limited and sentiment levels drop. However, with the Federal Government preparing to unveil tax cuts and spending measures in the October 6 budget which will include lending reforms intended to improve access to credit, perhaps it’s not all doom and gloom as some pundits might have you think.