What’s the Easiest Way to Buy a Home in Brisbane in 2023?
Published April 6, 2023
In my work as an agent, I get to meet a wide range of different people each week. By listening to what buyers are saying and the questions they're asking, I’m able to gauge their feelings about the market, understand what they’re looking to buy, and learn more about the frustrations in their search process. Over the last few years, buyers were unsure about what price they could buy a property for because it was so competitive. In many cases, it's still the same. It’s still competitive out there, just not as crazy as it was 12 months ago.
Now, after interest rates have gone up by over 3%, buyers no longer have the spending power they had 12 months ago. If you look at the price growth for the below 4 suburbs, you'll see that the median house price has grown by between 43% - 54% over the last 3 years.
The median price for the lowest priced suburb from above in 2022, Murarrie ($1m), is now higher than the median price was for Coorparoo & Camp Hill in 2020 ($950,000). Many have managed to keep up with price growth over the last few years. However, others have experienced diminished buying power due to interest rate rises, and are realising that some of these areas are out of reach, at least if they’re looking to buy a freehold house.
So, what’s behind this? Well, we heard from a bank economist recently that, 18 months ago, people were being stress tested at 4% during the preapproval process. That is, they may have been able to get a loan from the bank at 2% but the bank wanted to check they could still afford the loan if interest rates went to 4%. Now, mortgage rates are above 4% and buyers are getting stress tested at 9%. This significantly affects their affordability.
For example, a $1m loan at 2% has a repayment of $4,249 / month. At 4% that increases to $5,288 / month and this was the previous stress test amount over the last few years. Now, at 9%, you’re at $8,402/month. If $5,288 is the maximum that someone could afford on a monthly basis, then this means the stress test at 9% will suggest their maximum loan amount is approximately $625,000 according to online mortgage calculator, www.moneysmart.com.au, and here you see the problem.
If you're in this position, this is the time when you need to get really clear on exactly what you're looking for and understand your non-negotiables. For many, you may switch suburbs and keep looking for a similar house. In this case, you may start looking further out. Today, I want to look at how you could stay in a similar suburb by switching housing type to something with higher density and lower cost. In this way, you could still be close to friends and family and your ideal schools. The reason I want to look at this is because price growth has been nowhere near as strong for units as it was for houses, which means properties in good areas are still within budget, if you’re open to broadening your search.
The simplest case for this is moving from a detached house to a townhouse, especially if that townhouse has a decent backyard. Townhouses have become popular over the last few years because they’re the next best thing to owning a house. The issue we have is that our data source, Pricefinder, doesn't split townhouses from units in order to really analyse that data properly. To counter this, I've pulled the below data across a range of suburbs with plenty of unit sales and have measured the number of sales with at least 3 bedrooms. Below are some of the suburbs with at least 20% of 2022 sales being 3 bedroom+ units/townhouses. For the two highest growth suburbs, Camp Hill & Murarrie, there are definitely a large proportion of townhouses, although there are also a few commercial properties that skew the figures slightly for Murarrie. Still, prices are significantly lower than freehold homes in these areas and the units or townhouses may also be more modern than the houses.
As you can see, most of these suburbs achieved median unit price growth of over 10% over the 3 year period, although Kangaroo Point and New Farm were lower at 4%. In saying that, they also had far more sales at 354 & 305 respectively in 2022. The below table shows some of the suburbs with high numbers of unit sales, including those with less 3 bedroom sales. All of these suburbs finished 2022 with median unit prices under $700,000.
Finally, one other thing to consider is just how many properties are available on the market to purchase when you’re in the market to buy. As we know, price is based on both demand and supply. In 2021, demand increased significantly so more people decided to sell, which brought more properties to market (supply) at a higher price. In 2022, we actually saw less houses on the market than in 2020 across the below four suburbs, at between 72% - 79% of the number of listings sold in 2020. Prices continued to grow, partly because of the low stock levels.
For units, we saw sales higher than their 2020 numbers in both 2021 & 2022 for all the below suburbs. Across these 8 suburbs, there were over 3,400 unit sales in 2022, which means lots of options for buyers. In comparison, there were 515 sales in the above 4 suburbs for houses.
So, if you’re noticing that your search is more frustrating than you’d like it to be, either because houses seem expensive or because there is limited stock to choose from, hopefully the above data will show you that there are other options available, even if they weren’t initially what you were considering when you set out on your search.
If you’re looking to buy in Brisbane, the below video from December 2021 shows:
the high and low growth suburbs across Brisbane over the last decade;
the affordable areas to buy a house;
an overview of the unit and townhouse market; and
the skills you need to learn to speak with agents and close deals faster and more easily.
I've now switched to Ray White since this video so my email address has changed to chris.andersen@raywhite.com
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.