If we’re in a cost-of-living crisis, why are house prices still rising in Brisbane?

Brisbane house prices rose 3.7 per cent to a median of $888,285 in the December 23’ quarter - the latest Domain House Price Report shows, and increased 9.7 per cent, or more than $78,000, last year – the steepest annual gain since September 2022.

To understand why prices are increasing when interest rates have been on the rise and the cost of living has also surged, we need to dive into the different factors driving up property prices.

Firstly, it’s no secret that housing stock levels are at an all-time low, with less properties on the market for purchase this also translates into listed properties selling at a faster rate, SQM Research data shows more than half of all listing sell in under 60 days.

Domain's chief of research and economics Dr Nicola Powell said the pace of price gains had been increasing as buyer demand continued to outstrip supply, particularly for more affordable homes.

So why is housing supply so low?

There are two main driving forces behind the low supply – the first is rapid population growth, according to the Australian Bureau of Statistics (ABS) Queensland’s population grew by 2.3% in the year to March 2023. One quarter of this growth was fuelled by interstate migration. This migration is largely due to lifestyle and more affordable property prices and living expenses in comparison to other major cities in Australia.

The second is a strained construction sector off the back of rising material costs and labour shortages. The latest stats from ABS show the total dwelling commencement fell (10.4%) in the quarter to September 2023.

What about the rise in interest rates? Why hasn’t this slowed down house price gains?

The local economic factors are playing a larger role in impacting house prices in Brisbane, this is not the case in other Australian capital cities. To summarise total listings levels are low, city-wide capital growth is running a bit over 1% per month, and migration trends from both overseas and interstate favour more housing demand. Furthermore, house prices in Brisbane are still more affordable compared to Sydney and Melbourne.

What does this all mean for residential property prices in Brisbane for 2024?

The property prices in many major capital cities are expected to continue to see some growth in 2024, however, economists are predicting “high speed growth” for Brisbane this year.

These forecast strong gains are backed by low supply and high demand and further compacted by the median house price being relatively affordable, however, the time to invest in Brisbane is now, as the window of affordability is closing.