Boom Time Forecast for Brisbane's Housing Market in 2020

Record low interest rates could boost Brisbane home prices by up to seven per cent in one year, a new report reveals.

SQM Research’s Housing Boom and Bust Report for 2020, released today, forecasts an increase in home prices in the Queensland capital of between three and seven per cent — a recovery from the sluggish growth recorded in the first half of 2019.

The base case scenario forecast assumes no changes in interest rates and no intervention by the Australian Prudential Regulation Authority (APRA), in which case SQM predicts Brisbane home prices would increase between three and six per cent.

In the best case scenario for Brisbane, prices are forecast to rise between four and seven per cent if interest rates are cut to 0.5 per cent by April 2020.

SQM Research managing director Louis Christopher said Brisbane’s improving economic outlook and recovery in mining investment was set to benefit the housing market.

“An increase in mining investment is coming through as we speak and that’s going to be a nice job creator for the city,” Mr Christopher said.

“Brisbane is definitely offering better value for money for those who decide to move from Sydney to Melbourne.

“The problem in the past has been people will come from the south but struggle to get jobs, but the economy’s picking up and I think there will be more white collar jobs on offer in Brisbane over 2020 and 2021, which may well encourage more buyers from down south.”

Mr Christopher said he also anticipated a recovery in Brisbane’s rental market in 2020, with rents forecast to increase between three and five per cent. “Brisbane is increasingly facing a shortage of rental accommodation after years of being in surplus,” he said. “Vacancy rates are consistently falling and it has turned into a landlord’s market.”

It comes as the NAB changes its expected timing for the next interest rate cut.

The bank now expects the Reserve Bank of Australia to slash the official cash rate to 0.5 per cent in February 2020 — and potentially announce a package of unconventional policy should there be a need to provide further stimulus to the economy going forward.