This Week in Real Estate – 14th May 2022

Brisbane Records Strong Price Growth

The Brisbane property market continues to chalk up solid price growth, with new figures revealing an increase in dwelling values for April.

The latest CoreLogic Hedonic Home Value Index shows Brisbane house values increased by 1.7% while units increased by 1.4% during the month.

Brisbane has recorded month-on-month price growth every month since August 2020, with its strongest month of growth recorded in November 2021.

In annual terms, Brisbane prices have grown 32% for houses (the highest in the nation) and 16% for apartments. The median value for a house in Brisbane is now a record high $880,332, which is $23,601 higher than it was in March.

Analysts say the April figures are good considering most of those properties would have sold in March when Brisbane was recovering from significant flooding.

While Brisbane overall is doing well, CoreLogic says the top end of the market has lost more momentum in terms of price growth than the middle and bottom segments.

Delays Drive Demand For Existing Homes

The construction crisis has led to an increase in demand for newly built or renovated high end homes on the Gold Coast.

Local agents say soaring costs and materials shortages have turned many toward existing properties to avoid costly delays.

Recent sales include a near-new mansion at Carrara which broke the suburb record by more than $1million when it sold for $13 million.

A record was also set in Benowa with a new lakehouse selling ahead of auction for $6.335 million.

A custom display home in Broadbeach Waters known as the Corner House sold under the hammer for $2.65 million.

Eddie Wardale, of Kollosche, says buyers are willing to pay a premium for quality new builds.

He says buyers are put off by how long they may need to wait if they choose to build.

“The timeframe to build a home that would normally take 9 to 12 months is being extended out to up to 18 months,” he says.

Buyers Unfazed By Rate Rises

Most buyers aren’t deterred by the recent interest rate rise, with many having factored that into their calculations, according to Owen Wilson, chief executive of REA Group which publishes realestate.com.au.

Wilson says the rate rise was off a very low base and even if more predicted rises occur it will only put the market back to where it was before the pandemic.

“The market has already factored it in, anyone buying at the moment is doing so with a full expectation of these rate rises and we’re still seeing really healthy levels of listings and transactions,” he says.

He says banks have been using 5% as their serviceability interest rate, so anyone who has taken out a loan in recent years has been assessed at having the capacity to meet repayments at a much higher rate.

He believes demand may slow over the year but says that, in light of recent strong activity, this is a healthy outcome.

Most Borrowers Ahead On Repayments

Bank economists say homeowners shouldn’t fear rate rises, as many can comfortably absorb increases.

ANZ chief executive Shayne Elliott says the cash rate could be 2% by the end of the year, which, although higher than the recent low of 0.1%, is still low by historic standards.

ANZ has $285 billion worth of home loans on its books and Elliot says over 70% of its customers are well ahead on their repayments.

He says when rates went down most customers didn’t reduce the amount they were repaying, so they have built up a buffer.

That means that once the bank lifts its interest rates in response to the RBA move, 70% of its customers won’t have to find more money as they are already paying above what is needed to service the mortgage.

Elliott says many of their customers are now two years or more ahead on their repayments and only 0.7% are behind on their repayments.

94% Of Sellers Make A Profit

Regional property owners are (slightly) more likely than capital city owners to sell for more than they originally paid, according to the latest Pain and Gain report.

Regional Australia owners achieved a higher price on 94% of sales, compared with 93.7% for capital city owners.

Nationally 93.8% of resales were for a higher price, up from 92.4% in the previous quarter for a total nominal profit of $38 billion.

The report says the national median nominal gain was $319,000 with total resale profits of $38 billion over the December 2021 Quarter. For those who sold for less, the median loss was $34,000.