Population growth in Queensland outpaced all other states in 2021.

Population growth in Queensland outpaced all other states in 2021, growing by 73,700 people. This 1.4% increase was largely driven by the pandemic-induced net interstate migration from New South Wales and Victoria. While lockdowns are no longer in place, a recent Property Council of Australia survey found a further 220,000 people are seeking to leave New South Wales and Victoria in the next five years in favour of the sunny state.

Queensland’s State Final Demand (SFD) rose 1% in June Quarter 2022, which is 4% higher for the year and 9.1% higher than the pre-pandemic levels of March 2020. The largest contributor to this SFD growth is household consumption, accelerated by travel related activities (i.e. recreation, culture, cafes, restaurants, and transport services).

The state’s labour market continues to strengthen with the unemployment rate dropping to 3.2% in July 2022 – the lowest on record. Queensland also had the equal highest wage growth of any state, increasing 2.9% for the year to June quarter 2022.

Queensland’s residential market

Queensland experienced significant price growth across all dwelling types over the 12 months to August 2022 – this is largely attributed to low levels of supply. Brisbane’s 17.5% median price growth for all dwellings marked the second highest annual growth of all capital cities (behind Adelaide) and closed the price gap between itself and Melbourne.

Following a four-year trend of relatively flat median prices, Greater Brisbane’s median vacant land price grew a significant 24% to $310,000 in the 12 months to Q2 2022. Vacant land settlements have declined since Q3 2022 due to a lack of supply in registered land and delays in title registrations.

Greater Brisbane house prices also experienced more than 20% growth in the 12 months to Q2 2022 – to an impressive $780,000. However, price growth appears to be flattening, with a slight decline of 0.6% recorded for the quarter.

New home building

According to the Housing Institute of Australia (HIA), new home sales fell 13.1% in July 2022 as a result of higher interest rates, however sales remained above pre-pandemic levels. It is however, the first clear indication that the sharp rise in the cash rate coupled with increased living costs have impacted activity.

Nevertheless, average new home sizes have steadily increased since the pandemic to 262.7sqm, echoing the responses received from RPM Buyer Surveys. It is clear that households in the aftermath of the pandemic have made the choice that internal space outweighs land size and even location at times.

While construction rates per sqm have grown since March quarter 2021 to $1,446/sqm in Brisbane, this figure remains below the national capital city average of $1,524/sqm. It is the belief of builders that there is at least a further 10% growth in construction costs over 2022/23. This will put continued pressure on cash flows for many builder.

This article was originally published in our South East Queensland September Market Update. For the full report, click here.