Don’t believe the naysayers when it comes to QLD property prices
If you were to believe every populist prophet in the property market, the doom and gloom they purport about house prices already nose-diving by up to 20% or more would surely have you in a panic. And rightly so. But is it right? The simple answer is no. It all depends on where you source your information. Trusted sources like CoreLogic, the leading property data, information, analytics and services provider in Australia reports the facts. Property naysayers don’t. Instead, they tend to rely on highly manufactured clickbait to create attention-grabbing headlines themselves without much reliance on the facts.
So, what’s the current state of our property market? Using CoreLogic’s latest data for March 2020, the national meridian house price rose by 0.7% to $554,229. House prices rose by similar percentages across all capital cities except in Tasmania. In Brisbane, the figure was 0.6% which marks the third consecutive month the greater Brisbane market has risen. Meanwhile, ABS figures show the number of dwelling approvals to be built increased by 20% in February.
When it comes to the effects of COVID-19 restrictions on the property market, it’s still too early to be making any clear-cut predictions. What we do know is that restrictions have already had an effect on auctions since the Federal Government introduced a ban on ‘in room’ or physical auctions, with a number of vendors withdrawing their properties over the last two weeks. However, when you consider the latest auction figures for Brisbane, it tells a different story. Last weekend saw 154 newly introduced ‘virtual’ auctions take place, with a clearance rate of 27.9%. When compared to last year, auction numbers are up while the clearance rate is marginally higher – 129 auctions with 25.9% clearance (March 2019).
Further restrictions on open homes coupled with border closures, restricting interstate buyers as well as international investors, have certainly had an impact, with early indicators suggesting a fall in demand is only now just starting to weigh on the property market. Speak to your local real estate agent, and they’ll likely tell you sales are starting to decrease. To counter this, the real estate industry has proven itself highly agile, adapting to technology substitutes in place of physical property inspections at almost lightning speed. And buyers and sellers have been equally quick to embrace it. The evidence is in the numbers, with 1,075 private treaty real estate transactions in Brisbane last month.
While the property market is currently insulated thanks to wide range of monetary and fiscal policies that have been rolled out by both the Federal and State Governments in an attempt to soften the blow to our broader economy, the biggest concern is the impact of job losses. This is likely to create downward pressure on property values as income and borrowing capacity is limited and sentiment levels drop. That said, it’s not all doom and gloom as some might have you think. Will the property market tank with house prices land-sliding by 20% or more? Extremely unlikely. Will we see property prices drop by somewhere around 5% or less? That sounds more realistic but only time will tell.