BIS Shrapnel’s Residential Property Prospects report predicts Brisbane median house prices will climb 17 per cent in three years
Brisbane is predicted to be Australia’s strongest property performer in the next three years, with economic forecaster BIS Shrapnel’s latest Residential Property Prospects report forecasting a 17% increase in property prices.
Report author Angie Zigomanis said that by June 2017, only the Brisbane and Sydney markets were expected to have experienced any growth in house prices in real terms over the previous three years, with all remaining capital cities expected to record real price declines.
Mr Zigomanis said the strongest conditions were forecast for New South Wales and Queensland as both markets had an undersupply of dwellings.
“The pieces are falling into place for the Brisbane residential market to continue to strengthen,” Mr Zigomanis said.
“However, the pace of price growth is likely to be moderate, with economic conditions still relatively subdued and net interstate migration inflows are at low levels.”
New housing construction had fallen below underlying demand in the Queensland market in recent years and a shortage of dwellings had emerged, with vacancy rates in Brisbane at 2.3 per cent in the March quarter.
While Brisbane’s median house price at June had risen 8 per cent for the year to an estimated $475,000, it was still 7 per cent below its June 2010 peak in real terms which, together with the low interest rate environment, had resulted in affordability being at early-2000s levels.
Mr Zigomanis said house prices on the Gold Coast and Sunshine Coast had generally moved in tandem with Brisbane but without the diversified economic drivers of the capital, these markets had underperformed in recent years.
Interstate migration into Queensland was at long-term lows and this would continue to have an impact on demand on both the Gold and Sunshine coasts, however an extended period of weak construction meant these markets were now moving into an undersupply and vacancy rates were tightening.
The Townsville market was forecast to remain relatively weak over 2014-15 before vacancy rates tightened as a result of low housing construction, driving stronger growth from the following year.
The pick up in Cairns was expected to occur sooner, with the upturns in both markets being sustained by low interest rates, he said.
The Townsville market was expected to catch up with Cairns by 2016 and cumulative price growth was forecast at 11 per cent over the three years to 2017 for both markets.