Brisbane Rental demand has transitioned towards detached and lower density housing markets since the pandemic, reflecting the disruption to rental demand from overseas migration, but also the stress of changed working conditions, caused by Covid restrictions.

Westpac is forecasting 20 per cent gains in the housing market over the next two years. In a report released Monday, the banking institution’s chief economist Bill Evans said he was expecting dwelling prices to rise 10 per cent nationally in 2021, and said the pace would continue into 2022, off the back of strong economic growth. “The upturn is being supported by record low interest rates; the confident expectation among borrowers that these rates will remain low for years to come; ample credit supply; and an improving economic backdrop, as the roll-out of vaccines promises to bring the pandemic to an end and drives a sustained lift in confidence,” Evans said. “The bottom line is that Australia’s housing upturn now has strong momentum that looks to be lifting further and will remain well supported by monetary conditions and an improving economic backdrop.” Dwelling approvals surged 22 per cent in the final quarter of 2020, and new lending for dwellings lifted by 16 per cent in the December quarter, which Evans says demonstrates a robust and confident housing market. “Most tellingly, buyer demand has run well ahead of ‘on market’ supply, with sales outstripping new listings by 34 per cent over the last six months and ‘stock on market’ down to just 2.5 months of sales—[where] the long run average is 3.8,” he said. “A lift in new listings will no doubt be forthcoming but for now this is clearly a seller’s market.” House prices forecast: Westpac Average 2018 2019 2020 2021 2022 Sydney 5.1 -8.9 5.3 2.7 10 10 Melbourne 3.7 -7 5.3 -1.3 8 10 Brisbane 1.7 0.2 0.3 3.6 10 10 Perth -1 -4.7 -6.8 1.9 12 8 Adelaide 1.9 1.3 -0.2 5.9 10 8 Hobart 3.9 8.7 3.9 6.1 8 6 Australia 3.5 -6.4 3.1 1.8 10 10 ^ (as % change). Source: Westpac bulletin Unsurprisingly it was the smaller capital cities and regional towns that were most likely to capitalise on these forecast dwelling price increases. There was still concerns about lingering areas of weakness, specifically the Sydney and Melbourne high rise markets, but according to the Westpac Housing Pulse report they look to be a minor drag on the broader market surge. Evans said it was the regions that had been largely unaffected by virus disruptions and benefitted from related shifts in internal migration flows that would see the biggest boost in property prices. Evans said they were also predicting good news for the labour market. “Australia is expected to see growth well above trend this year and next. The unemployment rate is forecast to decline steadily to 6 per cent by end of 2021, and 5.3 per cent by end of 2022. “We now expect the upswing to generate stronger, double-digit, price growth near term while our expectation, back in September last year, remains that a policy response can be expected later in 2022 which will settle markets into 2023.” A high number of developers are planning to roll-out of new offices projects over the next six months as a rebound in confidence ignites financing and speculative projects, according to NAB’s quarterly commercial sentiment survey. To date, Australia has faired much better than most other countries on both the health and economic fronts, with many activities now returning close to their pre-pandemic normal. The recovery from the pandemic-driven recession is now filtering through into commercial property market sentiment, with NAB’s survey, a measure of sentiment based on expectations for capital values and rents, lifting for a consecutive quarter. “While [our] index lifted for the second straight quarter, it is still very negative and well below the long-term survey average,” NAB chief economist Alan Oster said. “However, expectations are improving for a stronger near-term recovery in economic activity and a lower peak in unemployment, which is seeing overall confidence levels in commercial property markets improve.” Sentiment continues to diverge across sectors amid ongoing travel restrictions, with office and retail sentiment lifting and CBD hotels continuing to lag, sitting as the weakest asset class. Industrial sentiment however rose sharply over the quarter, supported by ever growing demand in online retail and continued requirements for available warehouse and logistics space. Office markets Sydney aerial shot ▲ Vacancy rates in the country's two biggest office markets, Sydney and Melbourne, have already risen significantly over the last six months. On the development front, over half of property developers surveyed said they planned to commence works on new office projects in the short-term, up from 39 per cent in the previous survey. “The survey highlights a shift in emphasis among property developers planning to start new works from residential to commercial building,” Oster said. “A below average of developers said they were targeting residential developments, down from the previous quarter, but more are planning to start new works in the industrial, office and retail sectors.” Shoring-up optimism has been the post-vaccine outlook for revenue and profitability. Despite this, longer-term changes to workplace are still playing out as employers and staff seek a new balance in flexible work arrangements. Of the 370 property professionals surveyed by NAB the average expect over three in four (77 per cent) of white collar workers will return to CBD offices post-Covid. Some forecast a reduction of as much as 10-15 per cent in annual net absorption as work-from-home rates increase and firms search for 80 per cent of their existing CBD office foot print post-Covid, offset by greater workplace space ratios. NAB said it expects the national vacancy rate, which remains unchanged at 9 per cent, to climb to 9.4 per cent in the next 12 months as businesses attempt to reduce their property footprints, before easing to 8.9 per cent in two years’ time. “The outlook for capital growth for the next two years is for contraction in office, retail and CBD hotels, but at a slower rate than forecast in the third quarter,” Oster said. “Industrial property expectations were however upgraded, and raised in all states, insulated by unchanged vacancy rates of 5.8 per cent.” Property professionals also pointed to a big improvement in the ease of acquiring debt and equity to run their businesses across the fourth quarter. They also expect debt and equity funding conditions to continue improving over the next six months, bringing them back to levels not seen since mid-2015. Across the quarter, the average pre-commitment to meet external debt funding requirements for new developments in Australia fell to 63.3 per cent for residential property, but increased to 60.6 per cent for commercial. Brisbane’s housing market: policy updates The Home Builder scheme will continue until the end of March in a bid to prevent a major decline in construction activity. Read more: HomeBuilder Gains Eleventh Hour Extension Queensland faces a “hard road” over the next four years as the state recovers from the coronavirus pandemic, Treasurer Cameron Dick says. Read more: Queensland Budget Announcement The central bank, which introduced a package of measures at its latest meeting, cut the cash rate target to 0.1 per cent—the lowest in Australia’s history, in its bid to support a recovery. Read more: RBA Cuts Interest Rate in Bid to Build Economy Brisbane housing market forecasts ANZ economists forecast Brisbane house prices will rise by 9.5 per cent next year, as low interest rates and government stimulus flow through the economy while Commonwealth Bank updated its forecasts, projecting a strong rebound in prices across the second half of 2021. CBA now expects Brisbane house prices to increase by 16.6 per cent to December 2022 compared to 13.7 per cent in Sydney and 12.4 per cent in Melbourne. Westpac has also updated its property forecasts, with Brisbane real estate prices tipped to surge 20 per cent between 2022 and 2023. Brisbane Housing Market Insights: February 2021 https://theurbandeveloper.com/articles/brisbane-housing-market-update via @TheUrbDev