Property Prices Remaining Resilient across QLD

Despite the slowdown in the economy on the back of COVID-19, the QLD property market as a whole has remained resilient.

The latest data from CoreLogic has shown that while there has been small house price falls across the country, QLD has been holding up incredibly well.

Over the month of June, house values in Brisbane fell by just -0.4%. Over the quarter, Brisbane house prices are just -0.2% lower.

For the year, house prices in Brisbane are actually higher by +1.9% making it one of the stronger housing markets in the country. The median dwelling value for Brisbane is currently sitting at $508,386 according to CoreLogic.

The situation for regional Queensland is also a relatively positive one. For the quarter, house prices are down just -0.1%, while over the course of 2020 they are up +2.1%.

The broader market is also holding up pretty well considering there has been pressure on certain segments of the population and particularly in some sectors of the economy. National house prices were down only -0.7% for the month and -0.8% for the quarter. However, on an annual basis, they are still 7.8% higher, which is something many people quickly forget.

While there are always plenty of headlines in times of crisis, with some suggesting we could see falls of 30-50%, the reality is this is highly unlikely and there are some fundamental reasons for this.

For the most part, Australia’s property market is heavily owner-occupier driven. 70% of all homes are owner-occupied homes, but what’s more interesting is that half of these have no debt. That means these homes are owned outright with no mortgage. Of the homes that do have mortgages, most homeowners are actually in a very strong financial position.

According to CoreLogic, there is $7.4 trillion with of property in Australia and only $1.83 trillion of debt against it. What this means is that there would be an average LVR of about 25% across the broader market. By most measures, this is incredibly low and one of the reasons, we are unlikely to see significant price falls.

These numbers suggest that the vast majority of homeowners are not in financial trouble and have no reason to sell. Even if demand is lower for a short period of time, property prices should remain relatively stable. While the situation is different all around the country, there are a number of reasons why QLD remains in an enviable situation compared to other major markets such as Sydney and Melbourne.

QLD continues to be well insulated from the effects of COVID-19, which will make it an appealing option in the months and years ahead. And from a fundamental perspective, Brisbane property prices are about 55% of Sydney’s while household incomes are only around 10% lower, which suggests there is still significant value to be had.

The last time property prices weakened, during the lead up to the 2019 federal election, QLD was once again a market that held up strongly, showing only small falls in comparison to Sydney and Melbourne.

While there remains uncertainty in the air, QLD continues to be well-positioned to ride out the storm and so far, property prices have remained resilient.

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