Brisbane home prices hit new high ahead of interest rate meeting

Aug 2023Karen Millers

Home prices in Brisbane have clawed back all of last year’s falls to hit a fresh high as demand for housing continues to outweigh supply, a new report reveals.

After rising for seven straight months, the city’s home prices climbed another 0.4 per cent in July to be up almost 2 per cent higher than this time last year — and nearly 48 per cent stronger than in March 2020, according to the latest PropTrack home price index.

It is a slightly different story in regional Queensland, where home prices fell 0.1 per cent in July, but are still 3.6 per cent above July 2022 levels.

PropTrack senior economist Eleanor Creagh said a lack of new listings, solid auction clearance rates, and strong demand for housing was driving the recovery, with Brisbane hitting its peak faster than expected.

“The pace of price growth in prior months was revised up a little bit and continued into this month with Brisbane being one of the strongest performing regions with regards to monthly price growth in July,” Ms Creagh said.

“I think one of the biggest drivers over the next few months will be the flow of listings that come to market. We know auction activity has remained pretty solid…and after seven months of price growth, you’d have to think that’s going to continue to encourage vendor confidence and encourage people who have held back from listing to list.”

Ms Creagh also believes interest rates are nearing their peak, ahead of Tuesday’s Reserve Bank board meeting where most economists expect the cash rate to remain on hold.

“Subsiding momentum in inflation and consumer spending has eased the pressure off the RBA to continue lifting interest rates this week,” she said. “This allows more time to assess the economic outlook as it tries to engineer a soft landing whilst returning inflation to target.”

Property Pursuit Advisors founder Meighan Wells said the Brisbane local government area was still “severely undersupplied” in certain locations for specific property types.

“In my 20-plus years in the industry, I’ve not seen supply so low,” Ms Wells said. “How have we got to this point? Years of short-term knee-jerk poor policy and amazing weather. Yes, I jest but, in all seriousness, people have been flocking to Queensland over the past two and a half years and no one is leaving.”

Property Investment Professionals of Australia (PIPA) chair Nicola McDougall said a significant increase in overseas migrants was also contributing to price growth.

Ms McDougall said as well as healthy market conditions, it appeared the rising interest rate cycle may have come to an end.

“The Reserve Bank of Australia took its foot off the throttle in early July and held the cash rate steady at 4.1 per cent, which provided some confidence to property buyers around the nation,” Ms McDougall said.

“The June quarter inflation reading also came in well under market expectations at six per cent with it highly possible we are at, or near, the peak of the cash rate.”

Financial comparison site, Finder, surveyed 43 economists and experts in its latest RBA Cash Rate Survey and found the majority (67 per cent) believe the RBA will hold the cash rate at 4.1 per cent in August.

Of those forecasting a hike, more than 80 per cent are anticipating a rate rise of 25 basis points.

Finder money expert Richard Whitten said lower than expected CPI inflation figures for the June quarter meant many homeowners could likely breathe a sigh of relief.

“This will be welcome news to the rising number of homeowners who are already struggling to pay their mortgage,” Mr Whitten said.

“If the RBA does hike the cash rate in August, it will be death by a thousand cuts for many.”

Originally Published: Elizabeth Tilley | Herald Sun | 1 August 2023

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