After increases in the first half of the year, Brisbane is now the second-most valuable capital city in Australia, with house prices higher than those in Melbourne. We take a look at various possible reasons for this.
The median house value in Brisbane is currently $966,382, around 6% above the Melbourne median of $912,000 (REIV). The median unit value in Brisbane is only a little lower than Melbourne, at $590,000 versus $629,000. Brisbane Home Value Index climbed 21% the year to June 2024, while Melbourne barely moved. Sydney house prices also rose 5.7%, to $1.4 million.
Going back in time, pre-pandemic Melbourne’s median dwelling value held a 37% premium over Brisbane’s. Things were fine and the coffee was top shelf. Now, Brisbane home values have increased at more than five times the pace of Melbourne values since the onset of COVID. Let’s find out why. The ‘slower paced’ capital city cousin is slow no more. (CoreLogic: September, 2024)
The Highlights of Brisbane vs Melbourne
It was obvious the financial predicament Victoria was facing when deciding to walk away from hosting the Commonwealth Games 2026 – at a cost of $589M – due to projected cost blow-out estimates.
In May, Victorian Government debt was posted at $156.2 billion (rising to $187.8 billion by 2027-28) and if not reduced, then it will become 25 per cent of the value of all the goods and services produced in the state in a year (called gross state product). Source: ABC.
So, the Victorian Government budget 2023-2024 introduced the 10-Year COVID Debt Repayment Plan, incorporating Land Tax on properties and a Payroll Tax increase on businesses. Meanwhile, with a budget surplus, Queensland Government is handing out $11.218 billion in concessions to residents, with a State election in October.
There is a marked difference in the way these states levy land tax. In Victoria, Land Tax of investment properties starts at $50,000 in land value. (See table).
Land Tax in Queensland – As an individual, you are liable for land tax only if the total taxable value of your freehold land (comprising land owned solely and any share in land owned jointly with others) at 30 June is $600,000 or more. Then it’s $500 plus 1 cent for each $1 more than $600,000, up to $999,000. (Upper brackets vary slightly). Keep in mind that tax exemptions on a Principal Place of Residence apply in both States.
Refer to: Queensland Revenue Office for the full table.
Victorian Land Tax
Land tax general rates (from tax year 2024)
| Total taxable value of land holdings | Land tax payable |
|---|---|
| < $50,000 | Nil |
| $50,000 to < $100,000 | $500 |
| $100,000 to < $300,000 | $975 |
| $300,000 to < $600,000 | $1,350 plus 0.3% of amount > $300,000 |
| $600,000 to < $1,000,000 | $2,250 plus 0.6% of amount > $600,000 |
| $1,000,000 to < $1,800,000 | $4,650 plus 0.9% of amount > $1,000,000 |
| $1,800,000 to < $3,000,000 | $11,850 plus 1.65% of amount > $1,800,000 |
| $3,000,000 and over | $31,650 plus 2.65% of amount > $3,000,000 |
Land tax general rates with absentee owner surcharge
| Total taxable value of land holdings | Land tax payable |
|---|---|
| < $50,000 | Nil |
| $50,000 to < $100,000 | $2,500 plus 4% of amount > $50,000 |
| $100,000 to < $300,000 | $4,975 plus 4% of amount > $100,000 |
| $300,000 to < $600,000 | $13,350 plus 4.3% of amount > $300,000 |
| $600,000 to < $1,000,000 | $26,250 plus 4.6% of amount > $600,000 |
| $1,000,000 to < $1,800,000 | $44,650 plus 4.9% of amount > $1,000,000 |
| $1,800,000 to < $3,000,000 | $83,850 plus 5.65% of amount > $1,800,000 |
| $3,000,000 and over | $151,650 plus 6.65% of amount > $3,000,000 |
Note: Investments from $600,000 to $1,000,000 in a Trust attract a Land Tax rate of $28,263 plus 4.975% of amount.
Refer to: Victoria State Revenue Office for all tables.
Why Brisbane?
Why are people more inclined to move to South East Queensland? The sunshine, the beaches, the differing state economic position are some reasons. Future transport/road projects will speed up the interconnections between Gold Coast, Logan and Brisbane and the Sunshine Coast, along with projects planned for the 2032 Olympic Games that will boost the economic environment.
In stark contrast, Melbourne infrastructure projects are encountering delays, including that of the Melbourne airport rail by at least four years. In addition, with a forecast of 3% in economic growth forecast for the sunny state, overall things are looking bright.
With Domain tipping that the Brisbane metro median house price will hit the $1 million mark by January 2025, a prediction made six months ago, it seems they could be right. Brisbane and the south-east market are on track to be Australia’s quiet achiever.
(Sources: Domain.com.au, Profile.ID.com.au, ABC News, May 2024, GrantThornton.com.au, Qld Budget Overview 2024-25)