The impact of COVID-19 on the property market
While new data is showing property prices in Brisbane have taken softer than feared hit since the onset of the COVID-19 pandemic, the anecdotal evidence from the field is showing a resilient market with increased buyer enquiry and an uptick in sales numbers. While the experts have identified a surprising resilience of inner-ring capital city markets, we have been experiencing strong markets across all suburbs, especially the outer West areas such as Logan West and Ipswich.
The impact of COVID-19
Early 2020, prior to COVID-19, there was promising growth for the South-East region. Specifically, the Brisbane property market was recording its strongest start to the year in five years. Although this growth has been hindered by the consequences of COVID-19, house prices in the Brisbane local government area dropped only 2.1 per cent over the three months to June, shaving $15,000 off the median price, which now sits at $685,000, according to Domain’s latest House Price Report, released mid-July. Prices in Greater Brisbane, which encompasses the local government areas of Redland, Ipswich, Moreton Bay and Logan, did slightly better – the median house price fell by only 1.4 per cent to $582,847.
Despite initial fears, the pandemic has not yet translated to a substantial increase in the number of forced sales across Brisbane. 2019’s federal election and banking royal commission created significantly more market uncertainty than COVID-19 has generated thus far. Professor Shaun Bond from the University of Queensland’s School of Business pointed out that many of the predictions made during lockdown were largely based on worst-case scenarios.
Sydney and Melbourne’s property market, where auctions represent around 25 per cent of sales activity, were impacted quickly and severely by COVID-19. With onsite auctions and public open homes suspended with just 24 hours’ notice, the industry hurried to adopt a 100 per cent online model of business.
Furthermore, Nerida Conisbee, realestate.com.au’s chief economist explained that “first-home buyers are the biggest players in the Queensland housing market at the moment, while investors are the buyer group that have dropped off the most”. Low interest rates, the government’s 5 per cent deposit scheme and reduced competition from investors put first-home buyers in a strong position. Again, the anecdotal evidence from the field supports the first home buyer activity comments. However, we are also still seeing strong investor activity , especially in the lower priced, higher return areas.
The forecast for the rest of 2020
The difficulty comes with predicting what will occur in the South-East property market for the remainder of 2020. The South East has many different markets that are dependent on price point, type of property and geographical location. But, liveability, affordability, scale and future economic prospects all suggest that Brisbane and the South-East is a market where you can confidently buy. While some locations in Brisbane and surrounding have strong growth potential, the right property in the right location will make for great long-term investment.
Underpinning Brisbane’s economy are projects including Queen’s Wharf, Cross River Rail, the second airport runway and the Adani Coal Mine. With minimal further downturn expected for the Brisbane and South-East property market, now is a great time to ride the next property wave.