Brisbane home prices plunged the most among Australian capital cities in 2011, as lagging demand weighed on an oversupplied market.
House and apartment prices in Brisbane fell 6.8 percent last year, according to a RP Data-Rismark report released today. Across Australia’s eight capital cities, prices slipped 3.6 percent last year and declined 0.2 percent in December.
“The oversupply issue, the weaker pace of activity outside the mining areas, and weaker population growth all combined to see a very weak housing market last year,” said Spiros Papadopoulos, Melbourne-based senior economist at National Australia Bank Ltd.
A jump in construction spurred by a surge in prices before the collapse of Lehman Brothers Holdings Inc. has left Brisbane with a glut of homes. In Queensland, mining areas with soaring prices and rents contrast with struggling tourist destinations, illustrating the state’s so-called two-speed economy.
Queensland, home to more than A$50 billion ($53 billion) of planned resource projects, grew 3.5 percent in the three months to Sept. 30 from the previous quarter, compared with 2.1 percent nationally, according to latest statistics bureau figures.
“Queensland has been the big improver over the last three months,” Craig James, Sydney-based chief equities economist at Commonwealth Securities Ltd., wrote in a report dated Jan. 23. “Only a soft housing market is holding back the economy.”
Brisbane property prices jumped 7.9 percent in 2006 and 24 percent in 2007, according to RP Data. When demand faded in 2010, the resulting oversupply of homes pushed prices down 1 percent, compared with a 4.7 percent increase across all capital cities.
The continued weakness has been further exacerbated by a slowdown in population growth, which is now 30 percent below the 10-year average, James said in a telephone interview.
Queensland’s population grew 1.7 percent in the year ended June 30, after expanding 2 percent over the previous 12 months, according to the Australian statistics bureau.
The amount of time it took for houses in Brisbane to sell rose 24 percent in the 12 months to October to 86 days, RP Data figures this month showed. The time on the market for apartments jumped 33 percent to 91 days.
The state also had more development land in receivership than anywhere else in the country, according to a report by real estate broker Colliers International. The company handled 106 distressed property sales in Queensland last year, more than half of the total across the country, and similar numbers are expected to be put up for sale this year, it said.
Tourism vs. Resources
The median house price in Queensland’s Sunshine Coast, home to “Crocodile Hunter” Steve Irwin’s Australia Zoo, dropped 5.3 percent in the year ended Sept. 30 from a year earlier, according to the Real Estate Institute of Queensland. Prices in the Gold Coast, known for its surfing beaches and casinos, have declined 3.9 percent, and in Cairns in Far North Queensland, the starting point for visitors to the Great Barrier Reef, prices have fallen 2.7 percent.
In contrast, prices in Gladstone, the hub of the state’s mining activity, surged 10.5 percent. In MacKay, the gateway to the state’s Bowen Basin, where BHP Billiton Ltd., Macarthur Coal Ltd. and Aquila Resources Ltd. all have mines, home prices have climbed 2.5 percent.
“There’s great amounts of money being spent in these places,” said Brisbane-based Anton Kardash, chief executive officer of the Real Estate Institute of Queensland. “We’re quietly expecting 2012 to show us some measured growth as that money starts to filter through.”