South East Queensland (SEQ) is now leading Australia’s house price downturn.
According to Cotality’s daily dwelling values index, home values in Brisbane (including the Gold Coast) have declined by 1.5% over the past month, the sharpest decline among the major capital city areas:
Brisbane’s auction clearance rate is also the weakest among the three largest capital cities, tracking below 40% for 17 consecutive weeks:
Meanwhile, for-sale listings are piling up in Brisbane, up 57% from 12 months ago, according to Cotality.
Source: Cotality
Thus, the headline data suggests that Brisbane home values will continue to fall sharply in the period ahead, especially if the Reserve Bank delivers further interest rate increases.
The outlook for Gold Coast property is even worse, with the Australian’s Mackenzie Scott reporting that the Gold Coast home values are falling “at a rate of knots”, with median house asking prices falling 8.6% since March and unit prices plunging 16.4% since February, according to SQM Research.
“It’s falling at a rate of knots”, SQM Research managing director Louis Christopher said. “The higher they climb, the harder they fall. That is the concern that we’ve had for the Gold Coast; it became massively overvalued”.
“It is uniform; there’s not a single area that’s outperforming, and that includes the lower end of the market”.
This sharp correction is driven by interest rate uncertainty, federal budget property tax changes, and an influx of supply following a pandemic-era construction boom.
“Strong population growth against what was constrained supply has pushed up unit prices big time”, Christopher said. “Now, with the rise in interest rates, the property taxation changes and greater supply have caused a correction in the market”.
“The outlook is going to be determined by investors going forward … they will be demanding higher yields”.
Louis Christopher posted the following chart on X (Twitter) showing the large rise in apartment approvals in the Gold Coast since the pandemic:
The Gold Coast has always been a speculative boom-and-bust market.
Given the magnitude of the boom and the level of overvaluation, the bust will be severe.
