On the surface, Brisbane’s property market is delivering mixed messages, but if you dig deeper the data begins to make sense.
Look at the Auction Clearance rate for example. It describes the percentage of properties that went to auction this week and sold under the hammer. Many consider it an up-to-date gauge of market performance.
Brisbane’s auction clearance rate for last week was 41% – that’s low compared to the 85% result this same time last year. This alone would indicate the market is softening. But let’s look at some more information before we draw conclusions.
Interest rates are continuing to rise with a 0.25% increase announced on Melbourne Cup day – not exactly the result home-owning punters might have wanted, but not entirely unexpected. However, while the RBA indicated there would be more increases to come, their shift toward 0.25% increments, rather than the 0.5% steps we’d previously seen, has delivered some confidence that we’re nearing interest rate stability – and confidence is crucial to market performance.
But there’s another important element of Brisbane’s market worth noting, and it’s that different sectors are moving at different speeds. I’ve been particularly impressed by the prestige sector of late. Just this week we’ve witnessed some outstanding sales at the upper price points, and they speak volumes about what’s happening.
Here’s the three that really caught my eye.
First up, 110 Massey St, Ascot sold $4.45 million which is a record figure for a stand-alone dwelling on 401 square metres. The property has five-bed, four-bath, four-car accommodation across three levels, along with a gym, cellar, mud room and swimming pool. The sculptured, architectural finish is stunning.
The second sale of note was the Shaun Lockyer designed 49 Union St, Clayfield for $6.87 million. This five-bed, three-bath, two-car home on 1169 square metres of land was a stunning example of contemporary Modernism.
Finally, there was the incredible result for Arcos Villa – the family home of Rob and Megan Gray in Paddington. They achieved a freestanding single residential price record for Paddington, bringing in an eye watering $8.2 million just one day after listing.
Rob and his brother Andrew established Graya constructions and have earned a reputation for building some of Brisbane’s most incredible homes… and Arcos Villa was a crown jewel for the team. It’s been reported the buyer had visited Arcos Villa previously to gain design inspiration for their own project… but when it suddenly came onto the market, they snapped it up rather than go through the challenges of building.
This sale speaks volumes about what’s happening at the prestige end.
At present, owners looking to build a home face substantial challenges. High-end designers and architects are simply unavailable for new projects. For example, Shaun Lockyer isn’t taking on any new clients until 2024.
Also, highly regarded builders are booked way in advance, and quality subcontractors are the same. The cost of construction materials continues to rise too. There’s so much uncertainty around the future direction of material prices that builders are enforcing cost-escalation clauses to protect their margins.
In short, if you’re looking to build a prestige home or complete an extensive renovation, expect it to take two to three years and cost you substantially more than you might expect.
As such, those with deep pockets are forgoing the build. Instead, they’re securing finished homes, and they’re willing to pay a premium for them. Mind you, even at these eye-watering prices, most would be buying well below replacement cost.
That’s why you should never look at Brisbane as a single market but rather a tapestry of different price points, property types and suburbs. It also shows why having a professional buyers’ agent – one who monitors movements in your sector of interest – is crucial to securing a home in these uncertain times.