The Australian property market has been grabbing eyeballs since the advent of the COVID-19 pandemic for its resilient performance in the virus-induced economic slump. Defying historic recessionary trends, the nation’s property market has covered a record-breaking journey, specifically in terms of price upswing.
In the recently released statement on the monetary policy decision, the Reserve Bank of Australia (RBA) also highlighted that property markets have continued to strengthen in the country.
On the cusp of this multi-decade property upturn, the idyllic holiday destination Queensland has emerged as a radiant star of the housing boom.
As per industry figures, Queensland’s sun-drenched city Sunshine Coast is experiencing the sharpest rate of annual property price growth across Australia. Besides, the latest numbers from CoreLogic reveal that the property prices in Queensland capital, Brisbane, recorded an annual surge of over 10.5 percent in May 2021.
A similar uptrend in Queensland property prices was evident in the electronic conveyancing platform PEXA’s report, which showed that property transactions have soared to record levels across the Australian Eastern Seaboard over the last twelve months.
The report further exhibited that Queensland led the property transactions’ increase, with property settlements jumping by 37 percent in the financial year ending 30 June. Interestingly, the Sunshine State posted the strongest growth in the overall value of transactions, recording a 44 percent increase to AU$106 billion.
Why are Property Prices Soaring in Queensland?
The property prices are hitting record highs in Queensland as the housing supply struggles to match the ever-growing demand.
Changing lifestyle preferences in the COVID-19 era appear to be driving interstate buyers’ interest in the state’s housing market. The flexible and remote working arrangements, coupled with burgeoning demand for lifestyle-oriented properties and holiday homes, seem to be accelerating a movement towards more peaceful regions like Queensland.
Meanwhile, the COVID-19 pandemic has proved that workforce productivity can be very well maintained with employees dispersed across cities and the nation, altering the dynamics of the property market.
At the same time, increasing population growth, affordable housing and favourable climate appear to be spurring demand for properties in this popular state.
Along with these drivers, the prevailing record-low mortgage rates seem to have given investors and buyers the perfect ingredients to tap the Queensland housing market. Given the environment of low-interest rates and rising housing prices, the RBA will be monitoring trends in housing borrowing carefully.
With minimal international migration at the moment, interstate migration also seems to be considerably supporting the property market. As the regional market is appearing quite affordable than other large capitals to home buyers, the demographic tailwinds have been turning the interstate migration positive.
Given the ongoing tailwinds, it will be interesting to see whether the property prices in Queensland will post an uptick of about 15 to 20 percent through 2021, as projected by some industry experts.
The Challenges Demand Attention
Although more confidence is returning to Queensland’s property market, the supply side story suggests the difficulties sellers are encountering in keeping with growing demand. With an expectation of securing more capital gains over the coming years, homeowners are showing less interest in selling their properties despite huge offers put forward by buyers.
At the same time, the competition from interstate buyers in paying higher prices for desired properties is making it more challenging to control price levels.
To keep up with the insatiable demand, it has become more important than ever to build new houses and narrow the demand-supply gap.
Besides, fears loom that the first home buyers may be squeezed out of the Queensland property market due to stiff competition at auctions.
With more investors and owner-occupiers registering to bid on properties, affordability has emerged as a significant concern for some first home buyers despite dedicated support from the government.
In addition to these challenges, fresh lockdown restrictions in some parts of Australia can possibly make selling conditions more challenging in the days ahead while cooling off the red-hot property market across the nation.
However, this trend is expected to remain short-lived given a recent fall in virus case numbers. A tightened grip on the Delta variant and continued progress in the COVID-19 vaccination program will play an instrumental role here.
Despite some challenges, the Queensland property market is more likely to experience robust housing activity in the months ahead. A continued influx of new residents seeking lifestyle changes is anticipated to retain strength in the state’s housing market, keeping property prices elevated for quite some time.
Kunal Sawhney, CEO , Kalkine Group is an entrepreneur with revolutionary ideas; financial professional with wealth of knowledge in Equities, aiming to transform the delivery of equity research through tech-driven digital platforms
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