There isn’t a day that goes by where we aren’t bombarded with various media reports about the property market. If it isn’t about interest rates, its the rising cost of renting, housing affordability or, the challenges that first home buyers face getting into the market.
While there are many factors that influence property prices in South East Queensland, we unpack the 4 key drivers of the current market. However, before we dive into these 4 factors, let’s take a look at what’s been happening.
In the 5 years since COVID, property prices in Queensland, and in most parts of Australia, have risen dramatically. As a general rule of thumb, property prices tend to double every 10 years in major urban areas yet since COVID, property prices have risen at approximately twice that rate.
In Brisbane for example, the median house price sits a little below $1 million with annual growth rates averaging around 8.4% pa over the last 10 years, 10.5% pa over the past 7 years and around 12% pa over the past 12 months (Source: SQM Research).
This comes after a period of over 10 years where property prices in Brisbane were mostly flat.
This leads to the inevitable question; has the recent growth led to an over-heated, bubble market or are property prices simply making up for lost time and returning to a more normalised level over the longer term?
The story in the Southeast has been very similar with property prices rising at a similar rate on both the Gold and Sunshine Coast’s.
Looking forward, we see 4 major factors that are driving the current market.
Supply Vs Demand
The Federal Government announced a new housing target of 1.2 million new dwellings over the next 5 years. This policy was announced for the period from mid-2024 to mid-2029. A recent report from industry lobby group, the Urban Development Institute of Australia has estimated that at the current construction rate, we will fall 393,000 short of that target, or 30% shy of the target. A separate research report by Mandala Partners, indicates that there will be a shortfall of 462,000 dwellings, which is significant either way you look at it.
This translates to an annual national target of 240,000 per year yet over the past 12 months, construction rates are running at around 170,000 new dwellings, making the 1.2 million target over the next 4 years of the policy period even steeper.
Dwelling approvals have fallen significantly over the past 10 years with approval rates in Brisbane peaking at 14 approvals per 1,000 residents in 2015 and now falling to around 7 new dwellings per 1,000 head of population in 2023.
Falling approval rates has exacerbated the supply problem when we add in population growth in Queensland from both inter-state and overseas migration.
Queensland experienced significant population growth in 2022-23 of 2.6% pa vs the longer term average of 1% and between 2018 and 2023, Queensland’s population grew by 452,790 people. The population of Queensland is 5,583 million people in 2024 Vs 10 years ago when it was 4.7 million people.
By 2046, the Queensland population is forecast to grow to 7.2 million people and in the Southeast (Brisbane, Gold and Sunshine Coast) the current population is 4.1 million (2024) and is expected to grow by as much as 50% to around 6 million by 2046.
This rapid population growth coupled with lower than forecast construction rates is a key factor driving property price growth across Australia and in particular in the Southeast of Queensland and for the regional centres along the Queensland coast.
Interest rates
During the pandemic, interest rates reached historic lows with the wholesale cash rate (set by the Reserve Bank) dipping to 0.10%. During the pandemic, households recorded record levels of household savings and with equity markets and property prices rapidly increasing, we saw a rapid rise in consumer, business and government spending which had the undesirable flow on effect of causing inflation to rise rapidly to a high of 7.8% pa (December 2022), well above the Reserve Banks target range of 2-3% pa.
This rise in inflation drew the inevitable response from the Reserve Bank, to increase interest rates and after 13 increases in a row, the wholesale cash rate rose from 0.10% to a high of 4.35% in November 2023.
Using monetary policy (interest rates) to slow an overheated economy is a very blunt and uneven instrument. Increasing interest rates increases business costs which places upward pressure on prices for goods and services while at the same time, offering higher returns on cash investments which is a stimulatory force. At the same time, mortgage costs for home owners and investors rises which is designed to slow household spending to reduce demand for goods and services, taking pressure off prices.
Monetary policy creates winners and losers in the economy so its not always the most subtle tool to combat inflation.
Traditionally, an increase in interest rates has a negative, downward effect on property prices however, in most of Australia and certainly in Queensland, property prices rose at a rapid rate through that period, from February 2022 to the first interest rate drop of 0.25% in February 2025.
Following a second drop of 0.25% on 20 May, expectations for interest rates over the remainder of 2025 point to further easing of between 0.50% and 0.75%. A possible 1% (total) drop in interest rates, which on an average mortgage of around $600,000, will increase borrowing capacity by over $100,000 resulting on upward pressure on property prices which are already rising by higher than long term average rates. For investors, a drop in interest rates not only increases their borrowing power, rental yields improve making investment in property even more attractive, placing further upward pressure on property prices.
First Home Buyer Policies
With the Federal Election behind us, the focus in the property market in the short-term has returned to 3 fundamental drivers; interest rates, supply and changes to first home buyer policies.
The good news for owners of property is that all three are on stimulatory settings for property prices meaning that property values are set to rise over the next 12+ months.
While that’s good news if you own property, of course its bad news for anyone looking to enter the property market and for renters as, with an increase in property values, rents will likely increase at a similar rate.
We have discussed interest rates and supply in this article so the focus here is on the changes to first homebuyer policies and their likely impact on property prices. The thing to remember, changes in policies that impact a part of the market, have a wider impact on the whole market so these changes in first home buyer policies will have a stimulatory impact on the market as a whole.
Property data and research house, SQM Research did some analysis of both parties policies for first home buyers prior to the election. Their analysis came to the conclusion that house prices in Australia will rise by around 8-15% over the 12 months following the policy changes which for the new Federal Government, is targeted at a 1 January date for their policies to come into effect.
Louis Christopher, MD of research at SQM said; “Arguably, Labor is going to be more inflationary for the existing home market than the Coalition’s, but I’m with many analysts who’ve criticised both policies because what the country needs more is strong reform in a housing market on the supply side. And this isn’t it. These are Band-Aids, which are going to fall off very quickly.”
Dan White, the head of Ray White Group, the country’s largest real estate agency, said; “The Labor policy is far more broad-based. It will impact prices more. The Coalition policies only apply to new stock. New stock is only a fraction of the overall market.” (AFR April 2024).
Looking at median property values in the Brisbane market, for example; a 15% increase on the median house price of $907,000 translates to a rise in values of $136,000 over the next 12 months while for apartments which have a median value of $698,000, thats a rise in values of $104,000 over 12 months. (CoreLogic HVI May 2025). Even at the lower estimate of 8%, thats a rise of $72,000 and $55,000 respectively over the 12 month period and that’s ignoring any additive effects of interest rate reductions and the shortage of housing stock.
2032 Olympics
When writing this piece we browsed a number of other articles from a variety of mainstream and not so prominent sources and there were the predictable “prices to double” headline grabbers along with the more excited “exponential growth” predictions. As good as all of us qualified, semi-qualified and unqualified experts like to think we are, few can really predict what property prices and rental yields will do between now and the Olympics. Guidance can be sought in the before and after effects of the Olympics in former host cities such as London, Paris and Sydney but are any of those cities an accurate reflection of where Brisbane and Queensland are today let alone what it will be like in 7 years time?
Bear in mind too that the opening proposition is that property prices ‘tend’ to double every 10 years and that property prices have doubled in the 5 years since COVID. Are we really in for another 100% increase in property values over the next 7 years or indeed, is this an under estimation of the growth in property values?
Will a particular suburb or regional town really benefit that much from a venue being in their location for the 3 odd weeks of the Olympics competition and what happens after, do prices suddenly crash and if they do, down to where?
From a property perspective, the most important thing to understand about the Olympics is that its not at all about the 3 odd weeks of the games itself as the Olympics don’t just start at the opening ceremony and end at the closing. The ‘property’ race for the Brisbane 2032 Olympics actually started some time ago. Let’s break the lead-in to the Olympics down into some meaningful stages:
Back in July 2021, Brisbane won the right to host the Olympic games in 2032 and while the then government was very slow to respond and commence work on venues until the current Governments announcements in March this year, a number of key infrastructure projects were either announced, commenced or accelerated. Two examples are the Cross River Rail Project in Brisbane and the extensive Bruce Highway upgrades. To some extent, the activation of resources to progress these projects has drawn from some of the supply of resources which might otherwise have been engaged in the delivery of new housing.
Recent analysis undertaken by Finder found that 1.5m Australians are interested in purchasing investment property in Queensland to capitalise on the increases in values and yields that are anticipated to occur.
Following the much needed announcement of venues in March 2025, work on building and delivering projects for the games is now formally underway; new stadium’s, transport, an athletes village, etc. Over the next 2-3 years a large number of infrastructure projects will kick off and given the ingredients to build a stadium (construction workers, concrete and steel) are largely the same as that required to build an apartment building, our already stretched housing market will see more resources diverted to Olympics projects. Over the last 12 months we fell around 70,000 dwellings short of our national construction target with a lower level of Olympic specific construction. This will change quite quickly over the next few years.
On top of that, a large portion of construction workers will be drawn from inter-state and overseas placing further pressure on housing supply in Queensland for both long and short-term accomodation. We have already seen higher demand for short-term let accommodation around major projects such as the cross river rail. This demand will only increase particularly as there are no new hotels that appear to be panned for major population and Olympic locations in Brisbane and on the Gold and Sunshine Coast.
The 2028 Olympics are being hosted in LA. The day the LA games close, the focus of teams and Olympic organises shifts en-masse to the next host city, Brisbane. However, this pre-planning activity has actually already begin as the IOC have just paid a visit to Brisbane in May. Over the next 7 years, and especially once the games close in LA, pre-planning activity will rapidly increase. Members of the IOC, individual Olympic committees from each country, administration staff, coaches and even athletes, the media and representatives for future Olympics will pay visits to Brisbane and key regional cities and towns to look at everything from training venues, accomodation, transport routes and the games venues. We are even aware of an organisation that had started purchasing property in 2024 around the venues for Sailing to provide accomodation for teams and athletes.
Visiting officials, teams and media will place greater demand on both rental accomodation and likely purchase of properties ahead of the Olympics pushing up both rental and property prices.
Most sports will look to host world and major championships in the host cities and towns in the 2 years prior to the Olympics, allowing teams, organisers, coaches and athletes the opportunity to test out local conditions, venues and infrastructure. They all need somewhere to stay while they are here, not to mention fans who will attend those events.
Paris (2024) saw 16 million people visit the city for the Olympic games. 5 billion watched the games on TV/streaming and 9.5 million purchased tickets to games events. While we may not see that many visitors to Brisbane in 2032 due to our distance from Europe and the US, attendance numbers will be very high, driving property values and rental prices to record levels.
Accomodation is likely to be so tight in 2032 that we may even see cruise ship companies sending their ships to Brisbane and the Gold Coast and potentially, up the coast of Queensland to offer additional accomodation.
Post games, host cities see longer term flow on benefits through increased tourism and migration due to the positive exposure that the host cities and towns have benefited from through the games. While demand for property will not be as high as the years leading into the games, demand levels will be higher than the pre-Olympic’s 5+ years ahead of the games.
The Wrap Up
There are many factors that influence property values in an economy so the 4 we have discussed here are far from that comprehensive list. Domestic factors such as economic activity, employment, wages, etc and to a lesser degree; external influences from the global economy.
The 4 drivers we have explored here are, in our view, likely to be the major influences on property values and rental prices in the Southeast over the next 1-5 years however, changes in our economy, government policy, society and globally can quickly change the property market. We only need to look to the GFC to see how a flaw in the US housing market had a rapid and catastrophic impact on the global market.
For now at least, we are of the view that Brisbane, the Southeast and indeed, many parts of Queensland will see higher than average growth in property values and rental prices over the short, medium and potentially, long term. Opinions of course, last as long as it takes to convert today’s newspaper into tomorrow’s fish and chip wrapper.
Last word: Trump and Tariffs
Some will no doubt question why we haven’t spent any time discussing the recent turmoil in global equity markets due to uncertainty with tariff’s, the US government and international policy and power.
As we have seen over the last few weeks, Trump has pulled back on most of the high tariffs he implemented only a few weeks ago and much of the global uncertainty has settled down although remaining jumpy due to shifting policies on everything from international trade to foreign policy. So far at least, this global turmoil hasn’t had a notable impact on the property market in Australia and unless there is a long-term, fundamental shift in the global geopolitical environment and/or a global recession, we are unlikely to see a flow on effect to property values and rental prices in Australia.
Angus Roxburgh
Buyers Agent
Director