The experts are not always right. Remember COVID and housing prices? Who could have predicted that windfall?

This is not an expert bashing article though but rather a look at the Brisbane housing price market to see if you should buy or sell real estate now.

Are you looking to invest into the Brisbane housing market but you’re not sure who to trust with accurate information on the market?

You know prices have risen over the past couple of years and the rumours are rife that prices are falling. But by how much? How does this drop compare to previous price drops. Is now the right time to dive in or should you hold off?

Let’s look at the history of Brisbane house prices to see if there are any clues for the current climate. We’ll also check in with some of Australia’s most respected real estate research companies, as well as one of Brisbane’s most respected real estate agents, Peter Hutton, Principal and CEO, Hutton & Hutton, and tap into his 30 + years of industry knowledge.

Before I start let me put a caveat out there. Experts aren’t always right. Even with a mountain of data, even the banks and industry experts get it wrong occasionally.

Comments from real estate agents should be construed as hype centred diatribe around lifting the market in order for them to remain in business. Agents like Peter Hutton are very customer centric, which is the reason they are still in business; 30 + years the start.

What is a housing crash?

First, let’s look at what a housing market crash is. A ‘crash’ is defined as: “a sudden and severe decline in prices”.

A report from the RBA defines a 20% or more decline in nominal house prices from peak to trough as a ‘severe’ price correction.

So, with this in mind, has there been a severe price correction in Brisbane’s housing market?

Brisbane house prices did fall significantly during the late 1980s and early 1990s. However, this was around the same time as a once-in-a-lifetime recession which saw interest rates hit 17% and unemployment rise to 11%. So, the market was under pressure from a multitude of factors, not just housing.

Peter Hutton doesn’t like to use the word crash but rather a slowdown.

“The Brisbane real estate market today is very different than the 1980’s and 90’s.

The market is more mature. Brisbane is not an insular backwater. Expo ’88 and The Commonwealth Games put the city on the global map. Brisbane is now part of the global housing market.

China, India, UK, Phillippines and the US make up the top 5 countries that people migrate from to take up permanent residency in Australia. And there’s now slowing down for ‘the lucky country’.

Over the past 30 years, Queensland has seen positive migration growth from its southern states of New South Wales and Victoria with Brisbane and the Gold Coast being the biggest winners.

Migration is key in stabilising any downturn in the Brisbane market”

What affect did COVID have on the market? 

Everybody, including the experts expected the housing market to free fall.

But it didn’t.

Stories of home owners achieving $100,000 or even $250,000 above their auction reserve price were common. Homes listed today were sold tomorrow for list price or above.

Why did this happen? Why didn’t the market crash?

According to Peter Hutton

  • Australians fell in love with their homes again and got the renovation bug, thereby improving the value of their homes.
  • People were forced to work from home, particularly in the southern states. Renovations included home extensions, or repurposing the 3rd or 4th bedroom into a purposeful home office.
  • Victorians suffering under their government’s severe lockdown policy that lasted months at a time, dialled Brisbane agents frantically seeking a Queensland abode to protect themselves in the future, should this disease run rampant again and keep them jailed in their homes. Many Brisbane properties, which lagged behind its Sydney or Melbourne counterparts, were snapped up sight unseen over the phone.
  • Brisbane real estate agents opened up their seller’s homes to not only the local market but global markets by promoting virtual or video walk throughs of properties.

The Brisbane market is still mostly in an upward trend although August data may challenge that.

How will inflation affect Brisbane house prices?

Inflation rose to 6.1% in June 2022. Even the experts didn’t predict that.

What was the RBA’s reaction?

They needed to put the brakes on, so they began an aggressive programme of increasing interest rates. Three consecutive months of rises of 50 base points each time sent a strong message to the market. RBA Governor, Phillip Lowe advises more pain is coming.

Variable housing mortgage rates rose to 3.5%, up from 2.86% between April and June 2022.

How will this slowdown compare to the GFC?

Median houses prices across Australia declined by 1.3% as mentioned in a recent article in Your Mortgage magazine.

The article went on to deliver the thoughts of Corelogic’s Tim Lawler and I quote:

“CoreLogic research director Tim Lawless said the expected further increases in the cash rate will likely accelerate the declines in the coming months.

“The rate of growth in housing values was slowing well before interest rates started to rise, however, it’s abundantly clear markets have weakened quite sharply since the first rate rise on May 5,” he said.

Mr Lawless said the current rate of decline is now comparable with the onset of the global financial crisis (GFC) in 2008 and the sharp downswing in the early 1980s.

“Due to record high levels of debt, indebted households are more sensitive to higher interest rates, as well as the additional downside impact from very high inflation on balance sheets and sentiment,” he said.

What’s the future of Brisbane house prices?

Let’s do a little crystal ball gazing with the property experts.

According to NAB’s Chief Economist Alan Oster, it’s expected Australian capital cities house prices to fall by 3.7% on average in 2022, increasing to 14% in 2023.

The ANZ Bank are even gloomier expecting prices to fall up to 20% in 2023.

The Sydney Morning Herald in April 2022 quoted the Commonwealth Bank being more optimistic with falls to be around 8%

While the above paints a picture of doom and gloom let’s consider where these prices will fall from.

From 2019 to 2021, Yopa UK Research advised Brisbane prices had increased 18.2% during COVID.

NAB has weighed in saying Brisbane house prices will rise another 9%.

To summarize the experts, falls of around 4% in 2022 compared to rises of 18.2% still puts Brisbane home owners in the black.


Still confused?

If the experts can’t get it right, who can you believe and what should you do?

Perhaps we should finish with the last word from a gentleman who has transacted thousands of Brisbane home sales in both good and bad markets.

“Commercial real estate investing is all about studying the numbers. The figures determine whether you buy or sell.

Residential real estate is more emotional. Location, purpose (whether it be your primary residence or holiday home) and family member considerations form part of the buying or selling decision.

There is always a market for real estate. Well priced real estate, that’s well marketed will always sell well.

Nobody including the experts can predict the highs and lows of the Brisbane housing market. Buying or selling is personal and you should make your decisions accordingly.

Take solace in knowing time has proven to correct all Brisbane home price decisions you make.