Brisbane housing sinks as mine areas boom

Brisbane has an oversupply of houses on the market. Photo / Thinkstock

Brisbane home prices plunged the most among Australian capital cities last year, as lagging demand weighed on an oversupplied market.

House and apartment prices in Brisbane fell 6.8 per cent last year, according to a RP Data-Rismark report released yesterday.

Across Australia's eight capital cities, prices slipped 3.6 per cent last year and declined 0.2 per cent 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.

A jump in construction spurred by a surge in prices before the collapse of Lehman Brothers Holdings 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 two-speed economy.

Queensland, home to more than A$50 billion ($64.58 billion) of planned resource projects, grew 3.5 per cent in the three months to September 30 from the previous quarter, compared with 2.1 per cent 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, wrote in a report.

"Only a soft housing market is holding back the economy."

Brisbane property prices jumped 7.9 per cent in 2006 and 24 per cent in 2007, according to RP Data. When demand faded in 2010, the resulting oversupply of homes pushed prices down 1 per cent, compared with a 4.7 per cent increase across all capital cities.

The continued weakness has been further exacerbated by a slowdown in population growth, which is now 30 per cent below the 10-year average, James said.

Queensland's population grew 1.7 per cent in the year ended June 30, after expanding 2 per cent 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 per cent in the 12 months to October to 86 days, RP Data figures last month showed. The time on the market for apartments jumped 33 per cent 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.

The median house price in Queensland's Sunshine Coast dropped 5.3 per cent in the year ended September 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 per cent, and in Cairns in Far North Queensland, the starting point for visitors to the Great Barrier Reef, prices have fallen 2.7 per cent.

In contrast, prices in Gladstone, the hub of the state's mining activity, surged 10.5 per cent. In MacKay, the gateway to the state's Bowen Basin, where BHP Billiton, Macarthur Coal and Aquila Resources all have mines, home prices have climbed 2.5 per cent.

"There's great amounts of money being spent in these places," said Brisbane-based Anton Kardash, chief executive 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."

- Bloomberg