The Brisbane property market has experienced both its largest and fastest decline on record, according to CoreLogic’s Daily Home Value Index (HVI), with a peak-to-trough fall of 10.9 per cent between 19 June 2022 and 28 January 2023.
Historically, CoreLogic reported that downturns in Australia’s third-largest capital city have lasted for an average of 14 months with price falls ranging from 2.9 per cent to 10.8 per cent.
“Brisbane now stands out as one of two capital city markets with record declines, the other being Hobart,” commented CoreLogic head of research Eliza Owen.
“Sydney continues to have the largest peak-to-trough falls of the capital city markets (currently at -13.8 per cent), while peak-to-trough falls remain mild in some cities such as Perth, where values are down just -1.0 per cent from a recent peak in August 2022.”
Ms Owen pointed out that the downturn seen in the Brisbane market to date has failed to make much of a dent in the city’s pandemic gains.
“The fall in the Brisbane daily HVI follows an upswing of 43.5 per cent between August 2020 and 19 June 2022, which was the fastest trajectory of rising values on record,” she said.
“This leaves home values across Brisbane 27.9 per cent higher than at the previous trough in August 2020.”
CoreLogic said that Brisbane’s property market is adjusting to a sharp increase in borrowing costs over the second half of last year, which it said have likely hit buyers hard alongside the substantial price rises seen in the city.
The median dwelling value in Brisbane was reported to have risen from $506,553 at the beginning of the pandemic in March 2020 to $707,658 as of the end of 2022.
“Despite the large decline from peak, Brisbane maintains the third highest gain in value of the capital cities since the start of the pandemic,” Ms Owen added.
“Only Adelaide and Darwin, which are 42.8 per cent and 29.6 per cent higher, respectively, than at the onset of the pandemic, have performed stronger. For this reason, there is marginal risk of negative equity for Brisbane home owners, with the exception of very recent buyers, who purchased around the peak in June 2022 with less than a 20 per cent deposit.”
But Ms Owen suggested that a number of factors could be placing a floor under the Brisbane market, as the pace of falls has been continuing to slow in recent months.
“The first factor is relative affordability. Although housing values remain higher than pre-COVID levels, Brisbane retains a lower price point than Sydney, with a $435,170 difference in median house values and a $280,749 difference in median unit values,” she said.
“The gap between Brisbane and Melbourne housing values is also significant, with a $119,697 gap between median house values and a $97,692 difference in median unit values. This could encourage ongoing housing demand from those willing to migrate to the state, or own an interstate investment.”
While the rate of decline in the city could be set to continue to slow, CoreLogic also predicted that Brisbane property price values will likely fall further over the course of 2023.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.