Contributed by Bryon Freeborn, Raine and Horne Wynnum
The market continues to gallop along…sign boards go up and sold stickers quickly follow. The hot topic on most buyer’s and seller’s minds has been, “does this market continue, does it slow down, and when will the brakes come on?”.
Queensland is a powerhouse when it comes to net interstate migration, with more than 7,035 people migrating in the March 2021 quarter, whilst NSW and VIC are minus 4,463 and 4,864 respectively (source: ABS statistics). There seems to be little evidence that this is about to slow or change – in fact it seems more likely to continue and increase if anything.
According to realestate.com.au, the second most searched key word in Queensland is “bayfront”, which is good news for the Wynnum/Manly area (the number one search being “pool”).
So, even if the brakes do come on, just like taking the throttle off a boat, Brisbane is likely to enjoy the momentum of the wake for longer than most other parts of the country. Then there’s the longer-term North Star which is the Brisbane 2032 Olympics, where our backyard of Moreton Bay will play a key role in hosting sailing events.
Debt cycles also play a key role in the market, and while times are good, people spend, and borrow to spend. Once debt level and repayments increase, most people find they need to reduce spending to cope better with repayments, triggering a reverse in spending. Goods and services then experience a fall in demand.
US inflation is currently up at 6.2% – a 30-year high. The price of money is likely to go up, which is in part where Australia buys its money, which may very well trigger a rise in interest rates.
We also have a federal election coming up in early 2022, which can – and did last time – act as a pause button on the market.
There is already media talk that has prompted conversations with buyers about the prospect that they will sit on the fence and wait for the slowdown, which may or may not come.
The last similar situation we saw was when buyers were holding off in early 2020, with the thinking that the September cliff of job keeper/mortgage holidays coming to an end would slow demand, yet this only seemed to help increase the market growth come September. Since the cliff didn’t materialise (in fact the opposite occurred) interstate buyers were on the increase and those buyers who held off became pent up buyers who entered the market at the same time.
As with any element of economics, it usually boils down to the basic fundamentals of supply and demand. The head-winds that may be forthcoming next year may not be enough to dampen continuing buyer demand, and perhaps at worst this will create a slight correction in the growth of the Brisbane market, and result in more choice in terms of houses for sale.
What we do know is that 2022 will arrive, people will need a roof over their heads, and the bayfront isn’t going anywhere!