Updated: Nov 25, 2019
#BRISBANE is on the cusp of a mini boom with house prices set to “accelerate” over the next three years — outperforming every other capital city, a leading industry player predicts.
In its Australian Housing Outlook 2019-2022, released today, QBE forecasts median house price growth in the Queensland capital to average 6.4 per cent per annum over the next three years, boosted by tourism, an improving economy and affordability.
That’s more than a 19 per cent increase in average growth by 2022, taking the median house price to $660,000.
QBE Dwelling Prices Outlook for Brisbane and Gold Coast. Source: QBE.
In its previous report a year ago, the insurer only predicted 11 per cent growth for Brisbane house prices by 2022, so the outlook has improved markedly.
QBE Lenders’ Mortgage Insurance CEO Phil White said there was an undersupply of freestanding houses in Brisbane, which was increasing demand for that type of product.
“There are a lot more units and very few freestanding houses being built and that change has been quite noticeable over the last few years,” Mr White said.
“The type of people that are moving to Brisbane are looking for lifestyle and they’re families. “They prefer housing, but we’re just not building the houses.
“We need to meet that demand. As a result, demand increases but supply is not increasing at the same rate. That will drive house prices up disproportionately high.”
The QBE report, based on new data provided by BIS Oxford Economics, states that tourism is boosting the economy in Queensland and a decade of modest house price growth has left the market “relatively affordable”.
“With the Queensland economy also forecast to strengthen, residential price growth is forecast to steadily accelerate through to 2021/22,” the report said.
But Mr White said there was a risk the data might be overstating projected growth in Brisbane.
“At the same time, while forecasts for the Brisbane house market point to solid growth, and the fundamentals do look very strong, there is a risk that consumer caution and oversupply of units could temper these projections,” he said.
Forecast Median House Price Growth 2019 – 2022, Australian Capital Cities. Source: BIS Oxford Economics.
The report said “the lower Australian dollar is boosting the local tourism and education sectors” in Brisbane, with a number of large building and infrastructure projects, such as Queens Wharf and Cross River Rail, underway.
“Brisbane continues to maintain a significant affordability advantage over other east coast capital cities, and as employment prospects improve, demand from home buyers who are priced out of these cities is expected to increase,” the report said.
AMP Capital head of investment strategy and chief economist Shane Oliver said Brisbane’s housing market was due for a “catch up after years of not going anywhere”.
“It’s fallen way behind Sydney and Melbourne,” Mr Oliver said.
“The reality is Brisbane has lagged, it is quite cheap compared to Sydney and Melbourne and it’s just a better value market.”
AMP Capital chief economist Shane Oliver says Queensland’s economy is starting to turn a corner.
Mr Oliver said he believed Queensland’s economy was slowly starting to turn a corner.
“I do think it will start to improve in the year ahead,” he said.
“I suspect as population growth continues to improve and mining investment picks up again, it should help the state.”
Real Estate Institute of Queensland CEO Antonia Mercorella said Brisbane’s undersupply of new, freestanding houses would drive up prices.
“With demand for houses on the rise — particularly amongst families — and a growing population, it is likely that prices will significantly increase,” Ms Mercorella said.
She said Brisbane’s lifestyle and affordability were attracting interstate migrants, which were increasing the population, pushing down supply and, in turn, driving up prices.
“Increasingly we’re seeing residents from the southern states flocking to Brisbane with the knowledge that their dollar will go much further when it comes to purchasing property,” she said.
“Not only will they get much more for their money, they’ll enjoy the benefits of a fantastic climate, relaxed lifestyle and improved liveability.”