What the last 2 downturns taught us about property

Historic figures demonstrate how a so-called ‘downturn’ is rarely anything to be worried about. Take a look at Brisbane home values over the last 15 years.  

Everyone keeps saying it… “The property market is about to crash!”.

It’s driving us crazy because it reflects headlines and fear mongering, but absolutely not reality. 

To put threats of a bubble burst or crash into perspective, let’s take a trip down memory lane and check out what happened during the so-called ‘downturns’ of the last fifteen years. 

Brisbane property during the GFC

In June 2008, immediately prior to the Global Financial Crisis, Brisbane average house prices sat at $425,000. Then the Global Financial Crisis hit. If you remember those days, there were people all over the world who lost a great deal of money and were forced to sell their homes. However, Brisbane house prices settled at $420,000 in 2009; an insignificant $5k less than the year before. 

A year later, in 2010, values had zipped back up to around $460,000. Amidst global ‘panic’, Brisbane home values barely hiccupped. 

Sydney followed a similar trend, going from a $517,000 average in 2008 to $490,000 a year later, to $612,000 in 2010. 

2011 price dip

Brisbane experienced a price slowdown in 2011. At the time, newspaper reports described the fall as being greater than during the GFC. It was attributed to consumers being focused on saving rather than spending as part of the aftershock of the financial downturn. It also coincided with the first home buyer’s grant ending, massive flooding in Brisbane and a drop in overseas migration. 

The quote from data research analysts described the market as being “at rock bottom”, with average sitting at around $447,500.  

By the end of the December quarter in 2012, the figure was reportedly $446,300. In 2013, Brisbane homes were worth an average of 5% more. 

A year later, reports showed it had jumped to $490,000. In 2016, house prices lifted to $515,000, and then to $540,000 by December 2018. 

Any property owner who sat tight and didn’t panic would have reaped rewards. Savvy investors who bought in at this time would have also found patience is a virtue. 

The Royal Commission

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry commenced at the end of 2017. Its findings resulted in the lending industry coming under a lot of pressure. It became harder to access a home loan as banks became “allergic to risk”. 

The offshoot of this for Brisbane property prices was a flatline effect. Prices took a small tumble from $540,000 in 2018 to $535,000 in 2019 because buyers were struggling to access finance. As COVID took hold, there were fears the situation would get worse….

Pandemic prices

What happened was the direct opposite. 

Being able to purchase a home for under $550,000 is now a dream in many Brisbane suburbs. One report from mid 2022 showed median house price had risen by 25.83% over the previous corresponding year. In January 2023, PropTrak’s home price index put average Brisbane home values at $716,000. 

An influx of new residents to Brisbane were responsible for rising prices, as were the increasing costs of building or renovating a home. With the Olympics now coming into view, even a few jumps in interest rates are unlikely to see any significant reversal in home values. 

If history is anything to go by, there has never been a reason to panic about home prices in Brisbane. Those of us who have been in the industry for several years certainly never fret; for one thing we always remind sellers that if you make a transaction in the same market or are planning to relocate to a more cost-effective location somewhere else in Queensland, you’re likely to still have the funds you need to make your next move.

Brisbane has the most positive 10 years ahead of us with infrastructure, migration numbers and the Olympics.

Want to talk in more detail abour price performance in your suburb? Contact us today.

I hope you enjoy the read.

Matt Lancashire