U-turn: Brisbane home prices rise for second month in a row

Brisbane home prices have bounced back for the second month in a row in a sign the housing downturn has lost steam, with lower listings levels helping prop up values, defying interest rate hits.

Brisbane home prices have bounced back for the second month in a row in a sign the housing downturn has lost steam, with lower listings levels helping prop up values, defying interest rate hits.

The latest PropTrack Home Price Index, out Wednesday, saw Brisbane rise 0.12 per cent in February, backing up January’s knife-edge turnaround of 0.02 per cent.

PropTrack senior economist Eleanor Creagh said while “it’s too early to confidently call an end to the downturn”, it was diminishing.

PropTrack senior economist Eleanor Creagh said “it is possible that we’re seeing a bottoming

Brisbane saw home prices fall eight months in a row from May to December last year, as interest rate hikes were absorbed by the market, but the pace of the falls was already slowing last year, she said.

“We’ve now seen home prices are bouncing, so it is possible that we’re seeing a bottoming process and that the trough in the downturn is unfolding,” she said.

MORE: Block of Brisbane units snapped up $1m under replacement cost

Greater Brisbane: 600 new homes to be built on 42-hectare site

Brisbane prices won’t be falling significantly unless property listings surge in the next few months. Picture: NCA NewsWire / John Gass

Buyers looking for price falls over the coming months would be disappointed unless rate rises were accompanied by a higher level of property listings in Brisbane, she said.

“If the listings environment remains constrained and we continue to see lower stock levels that will likely counter the downward pressure from interest rate rises,” Ms Creagh said.

Brisbane’s median home price now sits at $716,000, just $75,000 less than Melbourne.

“Brisbane really outperformed throughout the last three years,” Ms Creagh said.

“Home prices in Brisbane are up 42 per cent compared to March 2020, whereas Melbourne is only up 13.9 per cent. Melbourne really underperformed throughout the Covid period.”

Ms Creagh said total property listings in Brisbane were down around 30 per cent in comparison to previous five-year averages.

Finance Brokers Association of Australia managing director Peter White.

PropTrack expects the Reserve Bank to increase its cash rate target a further 25 basis points on March 7, taking the cash rate to 3.6 per cent.

The figures come as Finance Brokers Association of Australia managing director Peter White warned a new 3 per cent loan serviceability buffer would make it harder for homeowners to refinance or negotiate better rates.

“More borrowers are becoming ‘mortgage prisoners’, locked into a situation where they can’t access a better deal because they don’t meet the inflated assessment rate. Others may be forced into selling their homes because the excessive buffer rate holds them prisoner to their current lender as rates rise,” he said.

The Australian Prudential Regulation Authority this week confirmed it expected banks to continue to use 3 per cent interest rate buffer put in place after October 2021 to counter incoming record low rates.

A 2.5 per cent buffer had been in place when rates were higher in early October 2021, with Canstar research finding that half a percentage point difference translated to $21,000 less borrowing power for someone with an average $94,000 income.

FOLLOW SOPHIE FOSTER ON TWITTER