Brisbane has recorded the largest and fastest property price decline on record, just seven months after home values reached their peak.
After recording an impressive 43% lift in values and encountering a population surge during the pandemic, CoreLogic’s Daily Home Value Index (HVI) has found Brisbane’s home values declined 10.9% between the peak in June 2022 and January 28, the largest percentage fall on record.
“Brisbane now stands out as one of two capital city markets with record declines, the other being Hobart,” CoreLogic head of research Eliza Owen (pictured above) said.
“Sydney continues to have the largest peak-to-trough falls of the capital city markets (currently at -13.8%), while peak-to-trough falls remain mild in some cities (such as Perth where values are down just -1.0% from a recent peak in August 2022).”
Owen said Brisbane’s new benchmark followed hot on the heels of the national index’s record decline of 8.6% on January 7.
She said the record fall in Brisbane home values had not made much of a dent in the gains made during the upswing.
“This leaves home values across Brisbane 27.9% higher than at the previous trough in August 2020,” she said.
How Brisbane home values decline unfolded
Although the 10.9% decline in Brisbane home values had occurred in just over seven months, CoreLogic found on average, peak-to-trough declines in the local market have lasted 14 months, with the extent of declines ranging from -2.9% to -10.8%.
Owen said the second largest downturn in Brisbane home values historically took place between April 2010 and January 2012 and took 21 months to reach a similar decline with the current downturn.
“The second largest period coincided with a national housing market downturn that was fairly broad based and partly coincided with the RBA lifting the cash rate 175 basis points between October 2009 and November 2010,” she said.
“Cash rate rises occurred as Australia’s economy proved relatively resilient through the GFC and the RBA moved to gradually repeal monetary stimulus it had put in place through 2008-09. Through this period, Brisbane saw the largest declines of the capital city markets.”
CoreLogic says Brisbane’s housing market is still adjusting to a sharp increase in borrowing costs over the second half of 2022, with buyers likely hit hard off the back of extraordinary price rises. The median dwelling value in Brisbane increased from $506,553 at the onset of COVID-19 in March 2020 to $707,658 at the end of 2022.
“Despite the large decline from peak, Brisbane maintains the third highest gain in value of the capital cities since the start of the pandemic,” she said.
“Only Adelaide and Darwin, (42.8% and 29.6% higher respectively than at the onset of the pandemic), have performed stronger. For this reason, there is marginal risk of negative equity for Brisbane homeowners, with the exception of very recent buyers who purchased around the peak in June 2022 with less than a 20% deposit. While Brisbane property values are likely to fall further in 2023, it is possible the rate of decline will continue to slow over the coming months.”
Local property adviser PK Gupta of Consulting by PK has identified Brisbane's best and worst suburbs to invest in and why he believes buyers should act now to secure an asset.
“Brisbane definitely has more upside than either Sydney or Melbourne when it comes to investment opportunity,” Gupta said.
“At the beginning of 2021, you could throw a dart at a map of Brisbane while blindfolded and you would have hit a growth location. But things have changed and now it’s not should I buy in Brisbane, but where and what should I buy.”
Queensland economy ranked the best
On January 24, Commonwealth Bank revealed Queensland has the strongest economic performance of all Australian states.
CommSec chief economist Craig James said the diversification of Queensland’s economy had traditionally prevented the state from taking top spot in the economic rankings.
“Strength in some sections of the economy had been offset by weaknesses in others, but Queensland is currently supported by solid mining, energy and tourism sectors as well as solid internal migration,” James said.
“Queensland has a strong report card ranking first on relative population growth and relative unemployment and is second ranked on three of the other eight economic indicators.”
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