Selling to the RE/MAX: Brisbane Property Market Continues to Crush COVID
What do you get when you mix an in-demand upper market, leafy residential suburb characterised by architectural craftsmanship and one of Australia’s top sales agents backed by two of RE/MAX’s strongest Brisbane offices combined into a single force for the first time? A shrewd insight into Brisbane’s current market conditions as we continue navigating COVID-19 almost six months later.
Debuting their first property under RE/MAX Ignite and RE/MAX Profile Real Estate powerhouse combo (not to mention top-100 RE/MAX worldwide dynamic duo Adam and Roxanne Workman), it’s nothing less than an enviable location anyone would be happy to call home – a highly-prized residence set in Ashgrove’s blue chip Avenues.
So, let’s find out more about this granular snapshot of Brisbane’s property market: Beautifully restored and presented in ‘as new condition,’ this magnificent 1940s residence offers the ultimate in timeless luxury, technology and effortless living. The home has been freshly renovated to perfection. Spanning over 400sqm with 5 bedrooms/3 bathrooms and multiple living zones including a home cinema, the property exudes quality and sophistication from every angle. Interiors reveal a striking open plan living and dining area, with floor-to-ceiling glass doors opening to a party-sized entertainers’ deck, followed by a private garden and stylish swimming pool. Connoisseurs will delight in the gourmet stone kitchen equipped with quality Gaggenau appliances, soft-close cabinetry and an expansive island breakfast bar. Offering every first class amenity imaginable, the property is only minutes to schools, parkland and lifestyle amenities.
What’s significant about this property is two-fold. Firstly, its sale is being handled by one of Australia’s Top 20 RE/MAX agents – Ryan Smith. Better known for benchmarking sales in the marketplace, backed by Smith’s ability to achieve a maximum result this property’s price point is equally significant. Comfortably positioned in the low-to-mid $2M range, it represents a surprisingly popular price pool that’s currently trending. An unlikely outcome of the current COVID climate, while property markets around the country have seen incremental price increases until most recently, two offshoots have steadily emerged: Buyers in the market looking to upgrade (and looking at higher price points) and sellers looking to offload higher end properties via price cutting (reducing days on market). So, it’s no surprise to that our snapshot property in Ashgrove has achieved 50,000+ views and multiple offers just shy of two weeks on market. In fact, we wouldn’t be surprised if Smith’s already closed with another first-rate result.
BELOW: A glimpse of the gorgeous home being sold at 29 Yoku Road, Ashgrove.
The $2 million price tag comes as no surprise, with Brisbane’s inner-city district of Teneriffe cracking the $2 million median house price last year before dipping back to a current median value of $1,860,000). What this tells us is that while property values may marginally rewind in the next few months, it isn’t a reflection of their “intrinsic value” but more so market lockdowns as a second wave contagion currently threatens the nation. In the meantime, suppressed transaction activity means there’s a potential build-up of latent demand coming our way and that the property market generally will rebound in the latter half of the year.
“It’s pleasing to see that the Brisbane property market continues to show underlying strength,” says Antonia Mercorella, CEO of the Real Estate Institute of Queensland. “Understandably, the COVID-19 pandemic is still creating uncertainty particularly under the threat of a second contagion, but as we continue to navigate through to the other side, Brisbane is likely to be [one] of the best-performing property markets over the next few years – particularly in light of its stability through trading restrictions and lockdowns as real estate continued to transact on the back of the federal government’s economic reforms.”
In taking a closer look at the latest performance results for Brisbane, according to the CoreLogic Home Value Index the capital city saw the first marginal monthly reduction for the year (-0.4% over June 2020). However, over the quarter, Brisbane remains on the affirmative, with growth of +0.8% backed by +4.3% YTD for a median dwelling price of $503,000. If you look at distinct dwelling types, houses were marginally down -0.4% with a median of $557,265, with units slightly weaker at -0.8% with a median of $387,420. A minor drop in price growth was to be expected given the wider impacts consumer sentiment and unemployment.
According to CoreLogic, the impact so far has been “…milder than initially anticipated” on the property sector, with a drift in values lower rather than a crash. They believe this is due to low stock levels, government fiscal stimulus, record-low interest rates and a willingness of lenders to defer payments in the short term. However, with the government extending JobKeeper and JobSeeker supplement until 2021 at least, there are still key risks related to their eventual removal as well as loan repayment holidays.
Meanwhile, all eyes are currently on the Consumer Price Index (CPI), with the latest figures showing the biggest bout of consumer price deflation in 72 years currently gripping our economy – dropping -1.9% over the three months to the end of June, leaving the annual rate of inflation over the full financial year at -0.3%. The two largest housing components of the CPI basket are rents and new dwelling purchases by owner-occupiers, which together account for around one-sixth. Price inflation in these two components is influenced by conditions in local housing and construction markets and can vary considerably from city to city (as currently evidenced in Sydney and Melbourne versus Brisbane). Inflation in rents and new dwellings have each averaged a little over 3% in year-ended terms since 2002.
Over the past year, these two components have been much weaker than average and have contributed notably less to CPI inflation; rent inflation was 0.4% and new dwelling cost inflation was 1.2%. These latest quarterly results show rents for residential dwellings recording the first quarterly fall since 1972. However, economists anticipated CPI to fall in the June quarter, given both state and federal government policies to make childcare and preschool free temporarily as well as a sharp fall in global oil price more recently, Actually, if exclude these three components, CPI would have risen 0.1% in the June quarter. Wonder where rent levels would have landed if that were the case? The Reserve Bank isn’t likely to change monetary policy in light of the latest inflation results. That’s because on the Reserve Bank’s preferred measure of inflation, which excludes volatile items, prices were broadly unchanged in the June quarter, to finish the financial year 1.2% higher. But what will be interesting is the effect a decline in CPI will have on real wages. Could we potentially see one of the biggest increases in recent times? Watch this space.