Darwon's Theory | A Case of Keep Calm and Carry On

The latest property market figures are in, and the numbers tell a clear story: Brisbane continues to punch above its weight. CoreLogic reports that local prices increased 0.8 per cent over the past month and are now 14.6 per cent higher than 12 months ago. Across Australian capital cities, prices rose 0.5 per cent last month to sit 7.1 per cent higher year-on-year. So, while the broader Australian property market is rising, Brisbane remains a standout.

Naturally, the question on everyone’s mind is: will this growth continue? To help unpack that, it’s worth diving into two important property market indicators. Today, we’re talking about asking prices and investor sentiment.

Let’s start with asking prices, which, according to the director of SQM Research, serve as a crucial leading indicator for future house price growth. The average asking price for houses across Brisbane is now $1,179,105 (up 19.2 per cent from last year). For units, the average asking price is $628,326 (a 21.2 per cent jump year-on-year). So, why are asking prices such a powerful signal? I think Michael Yardney explains it best.

For a start, they typically reflect current market sentiment. When sellers (and the agents representing them) are confident, they set higher asking prices, anticipating strong demand. On the other hand, if they feel uncertain or expect a downturn, they may lower asking prices to attract buyers - relying on competition to bolster the final price. In this way, asking prices serve as a real-time indicator of how sellers view the market, often providing insight ahead of actual sales prices.

Asking prices are also a reflection of the broader economic landscape. Interest rates, employment rates and overall economic conditions can quickly be reflected in asking prices, offering a glimpse of how external factors are shaping the market. And, by now, we probably all know the RBA has decided to hold the cash rate steady once more.

Investor sentiment is another essential factor shaping our local property market. Markets like Brisbane, which offer long-term potential, continue to attract investors. At the same time, investor confidence has softened in southern capitals, where investment properties are being offloaded (especially in Melbourne, where a max exodus has been triggered by recent changes to residential tenancy legislation as well as higher land taxes). Investors don’t have the same hesitations with Brisbane and this demand helps sustain price growth.

For sellers, the combination of rising asking prices and strong investor sentiment paints a promising picture. Brisbane's property market is proving resilient, supported by strong demand and favourable conditions. I can hardly believe I’m saying it, but Christmas will be here before you know it - and the heat typically comes out of the market for a short while. This could be the perfect time to list your property, as buyers continue to compete for limited supply.

Cheers,

S.D.