Queensland's housing market, particularly Brisbane, has recorded substantial price and rent increases, leading to growing affordability challenges for residents. Property values in Brisbane have shown significant annual growth, outperforming major southern capitals in recent months. The rental market also experienced steep rises and low vacancy rates.
In response, the Queensland government has launched initiatives, including a land activation program and a "use it or house it" policy, to increase housing supply, though these plans have drawn debate regarding the inclusion of social and affordable housing mandates.
Queensland Property Market Overview
Property data indicates a trend of increasing housing market expenses across Queensland. This growth occurs as price growth in Sydney and Melbourne has moderated.
Brisbane Price Growth
Brisbane's property values increased by 1.6 percent in December, an average of approximately $16,000 per property for houses and units. Annually, Brisbane's growth rate reached 14.5 percent, an approximate increase of $131,000. In February, average house prices reached $1,046,000, representing a 0.7% monthly increase and a 15.9% year-on-year rise.
National Comparison
Brisbane's housing market has shown stronger growth compared to Sydney and Melbourne, which experienced a 0.1 percent decline in values in December, marking their first month-on-month fall in a year. Brisbane is positioned as the second-highest performing city nationally for property price growth, following Perth.
Regional Growth
Regional areas of Queensland have also experienced significant increases. Homes in the Granite Belt reached an average value of $592,873, a 20.4 percent increase over 12 months. Toowoomba, the Granite Belt, and the eastern Darling Downs region observed housing value increases between 18 and 20 percent over the same period. Other regions with strong growth include Charters Towers (up 16 percent), Ipswich (19.7% annual), Logan (19% annual), and Toowoomba (18.2% annual). These regional increases are linked to affordability, economic diversity, and access to local amenities.
Brisbane Housing Market Dynamics
Brisbane's median home value was reported at $1,036,323 in December and $1,054,555 in January. The city is now categorized among less affordable markets and has become more expensive than Sydney for first-home buyers.
Unit Market Performance
The unit sector in Brisbane is experiencing rapid growth, with prices increasing faster than house prices, up 20.3% over the past year. The average unit in Brisbane is valued at $831,000. This trend is attributed to increased buyer interest in apartments at lower price points compared to houses, increased investment in south-east Queensland, and a lack of new developments in the medium-to-high density sector.
Rental Market Trends and Challenges
Brisbane recorded the steepest quarterly rent increase among Australian capital cities in the December quarter.
Rent Increases
Median house rents increased to $670 per week, and unit rents rose to $650 per week in the December quarter. The 3.1 percent rise for Brisbane renters surpassed increases in other capital cities, including Hobart (1.7 percent), Sydney (1.3 percent), and Canberra (1.4 percent). Over the past 12 months, Brisbane experienced a 6.2 percent increase in rents, exceeding the national average of 5.2 percent.
Vacancy Rates
Brisbane's overall rental vacancy rate is 2.1 percent, with the apartment market at 1.4 percent (close to record lows) and houses at 2.4 percent. Another report indicated a December vacancy rate of 0.9 percent. A healthy vacancy rate is generally considered to be closer to 3.5 percent.
Tenant Impact
Rent increases are a frequent issue reported by tenants, with both new and existing tenancies facing consecutive increases that exceed the Consumer Price Index. This situation presents difficulties for renters, who have limited alternatives. Substantial rent increases over the past five years have contributed to an increase in group and multi-generational households.
Contributing Factors to Market Conditions
Several factors are cited as contributing to the current housing and rental market trends:
- Population Growth: Brisbane is identified as one of Australia's fastest-growing regions, experiencing substantial interstate migration, particularly from Sydney and Melbourne, driven by lifestyle appeal and job opportunities. There has also been an increase in international arrivals.
- Housing Supply Shortage: The housing supply in Queensland has not kept pace with its growing population, creating increased demand. An ongoing undersupply of housing and limited new construction are noted factors.
- Government Schemes: The federal government's 5 percent deposit scheme is cited as supporting market entry for first-time buyers by allowing purchases with a reduced deposit and without Lenders Mortgage Insurance.
- Interest Rates: Potential interest rate adjustments are cited as a factor that could moderate the market. Recent interest rate hikes and expectations of further adjustments are also noted.
- 2032 Olympic and Paralympic Games: The Games are anticipated to further impact Brisbane's housing situation. Significant government investment in South-East Queensland is expected to generate jobs, potentially attracting more residents and increasing housing demand. These major infrastructure projects could also divert construction workers from residential building, potentially affecting housing supply and escalating costs.
Government Initiatives for Housing Supply
The Queensland government has announced several initiatives aimed at increasing housing supply across the state.
Land Activation Program (LAP)
A new land activation program involves selling vacant state-owned land to the private sector for housing development. Economic Development Queensland (EDQ) will manage the program, allowing private developers to identify under-utilized government land and collaborate with the state to deliver housing projects. The program is part of the Crisafulli government’s broader strategy to deliver one million new homes by 2044, including 53,000 social and affordable homes.
"Use It or House It" Policy
In conjunction with the LAP, the state government plans to implement a "use it or house it" policy. This policy will mandate that surplus state-owned land no longer required for government use be released and developed for housing.
Banyo Site
The first site to be released under the LAP is a six-hectare former Energex site in Banyo, northern Brisbane, which has the potential to deliver approximately 400 new homes. This site is situated 13km from Brisbane’s CBD and is accessible to a train station, shops, and other public amenities. The transfer of this land from Energy Queensland to EDQ at residual value has been completed. Concerns about contamination from industrial purposes were raised by the opposition; however, the Deputy Premier stated that all necessary environmental assessments had been completed and the land is safe for development.
Affordable Housing Debate
The land activation program does not include a mandate for developments to incorporate social and affordable homes. Deputy Premier Jarrod Bleijie stated that mandates have historically led to fewer homes being built and that partnering with the market is essential for supply.
He argued that increased housing availability would naturally lead to reduced prices, stating, "availability equals affordability."
However, the Queensland Council of Social Services (QCOSS) described the lack of social housing mandates as "extremely distressing" given the record-high social housing register, urging for direct government investment in social and affordable housing. The Shadow housing minister also criticized the plan, asserting it prioritizes developers over Queensland residents' housing needs.
Social Housing Sales
The Queensland government has resumed the sale of social housing properties. Deputy Premier Jarrod Bleijie stated that between 2015 and 2020, an average of 280 social homes were sold annually by the Housing Department under the previous Labor government. He asserted that the current government is building four times as many social and affordable homes as Labor, with 5,900 contracted or constructed since they came to power. Proceeds from any sales are stated to be reinvested into the department’s social and community housing capital program.
Corruption Risks
Proposed electoral law changes by the LNP, which would permit property developers to make state-level donations, have drawn warnings from Queensland's corruption watchdog regarding increased corruption risks, particularly in the lead-up to the 2032 Olympic and Paralympic Games.
Student Housing Challenges and Solutions
Students in Brisbane are navigating a challenging private rental market due to high demand and low vacancy rates.
Private Rental Difficulties
Students frequently face difficulties finding share houses, with some needing parental guarantors or signing leases without prior viewings.
Purpose-Built Student Accommodation (PBSA)
Many students are opting for PBSA, which, while potentially more expensive than private rentals, often includes bills, food, and amenities, with rent paid only during the university year. Demand for PBSA is surging, with providers noting low rental vacancy rates and rebounding university enrollment.
Supply and Policy
Over 3,500 new PBSA beds are planned for Brisbane, with construction commencing soon for 500 of these at one major provider. Industry bodies advocate for legislative changes to define PBSA as a distinct rental category, allowing for tailored regulations to attract investors. The Queensland government is considering feedback from the sector while ensuring tenant protections.
Future Market Outlook
Forecasts suggest that the property market will not maintain the same level of price growth as observed recently. Momentum is indicated to be slowing due to factors such as higher interest rates, reduced confidence, and increasing affordability and serviceability constraints.
KPMG's residential property outlook forecasts house prices in Brisbane to rise by 10.9 percent this year and 8.9 percent in 2027, with unit prices expected to increase by 7.8 percent this year and 4.9 percent next year.
However, a significant decline in values is not anticipated, primarily due to low market supply and continued population growth, particularly interstate migration into south-east Queensland, which sustains demand.