How has the Brisbane Real Estate Market Performed in Comparison to Stock Markets over the Last Decade?

Published February 1st 2022

As can be seen from the below average annual growth figures, Coorparoo, Camp Hill, Morningside and Greater Brisbane have all had particularly strong growth over the last two years from September 2020 to September 2022, which covered off on the very strong Covid growth period.

“Average annual growth rate (AAGR) is the average annualized return of an investment, portfolio, asset, or cash flow over time. AAGR is calculated by taking the simple arithmetic mean of a series of returns.” Investopedia

Houses across all areas significantly outperformed share market returns over the past 2 years from Sept 2020 to Sept 2022 when compared against the ASX 200 (Australian stock market) & the S&P 500 (USA stock market) which each achieved less than 8% total return per annum including dividends and less than 4% without considering dividends. This means that units across all areas outperformed both stock indexes when dividends aren’t considered at 3.5% average annual return for units in Greater Brisbane VS 3.3% return for the local share market (ASX 200).

Many are focused on the recent downturn in the property market and the effect of inflation and interest rates on property prices. The below graphs show what’s been happening up until the end of December 2022 for houses.

As can be seen above, there has been a drop in the median house price for all three suburbs since March 2022, although prices are still above September 2021 levels for all suburbs and significantly above the start of the covid growth spurt in 2020.

Looking at the average annual growth rate across these suburbs, the lowest housing growth rate was for Camp Hill at 18.7% which is still more than double the local share market, including dividends (7.7%) and double the Greater Brisbane growth rate (9.3%). Morningside and Coorparoo significantly outperformed at 22.5% and 24.2% respectively, even after considering the recent drop in median price since Q1 2022.

The below graph shows the situation for units which includes both units and townhouses across the suburbs.

When looking at units, prices went up at a slower rate than houses but they’ve also seen less of a reduction since March 2022. In fact, prices have continued to grow in Camp Hill, which has been the highest growth suburb for units (14.6% average annual growth). The lowest growth suburb, Morningside, still grew faster than Greater Brisbane at 5.3% VS 3.5%, which was a strong result considering that the S&P 500 returned 3.4% over the same period.

So how does this compare to long term returns for houses, units and the two stock market indices?

The below table looks at returns over the last decade up until the end of 2021 which was one of the highest growth decades for the stock market in the low interest rate environment since the GFC in 2008.

Looking at the above, we can see that houses in Morningside, Camp Hill and Coorparoo all outperformed the local share market (ASX 200) before taking dividends into account (6.3%). The S&P 500 had a particularly strong run over the decade at 15.5% average annual growth, although this was still slower growth than we saw over the past two years for Morningside (22.5%), Coorparoo (24.2%) and Camp Hill (18.7%).

Looking at these numbers, houses in each of these suburbs grew at over double the rate between Sept 2020 - Sept 2022 that they grew over the decade between December 2011 - December 2021. As such, it’s clear that we’ve had a particularly strong market over the recent period, although we’re also seeing prices drop for the first time in over a decade.

So, where do we sit when we just consider the last 12 months? The below table paints the picture.

As you can see, we’ve still seen strong growth in house prices over the last year with only Camp Hill below the Greater Brisbane figure of 9.6% growth. Looking at units, prices went down in Morningside, although Coorparoo, Camp Hill and Greater Brisbane were all up by at least 6.6%.

When comparing these results to the stock market both at home and abroad, the property market did tremendously well with the ASX 200 and S&P 500 both down by 7.3% and 15.6% respectively once dividends had been factored in.

As can be seen, the property market has still contributed strongly to capital growth while we find ourselves in an immensely strong rental market which works even better for investors. If you want to zoom out and review how the Brisbane property market looks in comparison to other markets around the world, check out my other article that I wrote in June 2022.

If you’re looking to buy or sell in this market and you’d like some further assistance, please feel free to reach out at chris.andersen@raywhite.com or 0424 682 636.

* One thing to consider when comparing against the S&P 500 is that I haven’t factored in any currency fluctuations, which is something you’d need to discuss with your financial advisor and would affect your returns.