Brisbane and QLD
June 2015 Market Update Region by Region
Overview
Taking time to assess ‘where you’re at’ is a valuable use of your minutes. By pausing and evaluating what’s happened in the past, you’re often more prepared to tackle the hurdles ahead. This month we’ve used the excuse of June’s mid-year position to reflect upon the first half of 2015 in property markets. Each of our offices has handed in their scorecard on how real estate is performing in their area, and the results are compelling.
Brisbane
Here we sit with June upon us and it seems Brisbane is in the midst of another fair-to-middling performance.
2015 started with plenty of promise and certainly there are any number of buyers’ agents and other observers out there claiming the Sunshine State capital is the best prospect for the Australian property investor. Unfortunately, out on-the-ground experts say there’s been a bit of a lull in urgency amongst buyers in those usually firing inner-city northern markets. New Farm and Paddington, for example were two suburbs that were achieving good premiums up until a couple of months ago, but demand has waned a little. Whether it’s a matter of vendors overpricing their property or other factors at work, bidders don’t appear to be hyped-up at auctions and paying the big dollars they once were. Many are adopting a wait-and-see stance with a number of homes hanging around on the market. Despite this general outlook, renovated and brand new abodes with all the bells and whistles in desirable locations sell well and with a bit extra on the contract price.
Conversely, some southern inner-city suburbs are doing fine. Demand for dwellings in in West End and Highgate Hill continues to be strong for both entry level and properties nearing the $2 million mark.
Of course the Brisbane State High catchment continues to help sellers attract a premium.
The gigantic red-flag for Brisbane is inner city units, and their soft pricing is likely to continue for at least the next couple of years. Towards the end of the year and throughout next year, we’ll see a number of large off-the-plan developments settle simultaneously and the ability to absorb the supply looks shaky. Look out for increasing vacancy rates, particularly in second hand stock, as renters start moving into newer developments once they’re constructed. If you must buy a new unit, look for something that has appeal for owner-occupiers to help mitigate the risk.
In our middle-ring northern suburbs, we were seeing a ripple of capital growth, but this too has a slowed a little according to our team. The price point to look for here is entry level, particularly in desirable suburbs. This is the property likely to continue enjoying good results. Mid-ring in the south is experiencing increasing levels of interest, although secondary products sit on the market for extended periods. There’s good rental demand for established units in areas such as Coorparoo and Greenslopes, and proximity to infrastructure and public transport are important factors.
Outer lying suburbs in the northern corridor are doing quite well with a lot of interest evident in the house-and-land packages in new infill estates. Land purchases are in high demand pushing prices up and, subsequently, sales rates remain quite high.
In the south, outer suburbs are relatively static. Sales are occurring but there’s no evidence of an increase in values.
There are still a number of townhouse developments being built with the predominant purchaser being interstate investors and that means a risk of oversupply and a decline in rental returns.
Interest rate cuts haven’t done much to stimulate our market. The biggest impact has been to push existing borrowers towards refinancing in order to improve their cash flows. First home buyers continue to be underrepresented in the market however investors still remain active in our inner ring.
Toowoomba
As we approach the second half of 2015, the Toowoomba residential property market continues to experience an upswing.
Due to reduced mining activity in surrounding locales as mining projects shift to operational phases, we may see the incline experienced in these areas in the first half of 2015 begin to ease at some point in the second half of 2015.
At present, the greater 4350 postcode demonstrates a vacancy rate of 3% which has increased from the sub 2% recorded in the early stages of 2014 and there has been a reduction in unit and small lot development activity from the investor market.
Despite this, low interest rates and the robust nature of the Toowoomba market have enabled momentum to remain stable in other sectors and land values continue to rise as demand outweighs supply.
As for sales, while there is a firming consumer sentiment as asking prices across all property types continue to rise, it is the sub $450,000 price bracket that is likely to remain the most popular due to its affordability and proven broad market appeal.
Across the board, the Toowoomba residential market has performed in line with expectations and thanks to low interest rates, this period of upswing looks likely to continue into the second half of 2015.
Gold Coast
The Gold Coast was one of the hardest hit regions of Australia following the GFC, with mortgagee in possession sale rates running above 6%. With the world financial situation, banks tightening their lending and LVR parameters, the Australian dollar soaring in value, the commodity boom and tourism being particularly hard hit, the perfect storm was unleashed.
However, that all seems to be well behind us now as the property market has recovered and turned upwards. Prices are well off the bottom across all residential property categories. Land values on the Gold Coast are reported to have increased by 10.7% over the past year according to the Queensland Valuer General’s 2015 annual report dated 5 March 2015.
Very positive economic changes have been driving the property market on the Gold Coast including:
• Increasing population. Current Gold Coast population is now at 535,000 (source: Gold Coast City Council web site) with projections of a population of circa 680,000 by 2021 (source: Queensland Office of Economy and Statistical Research Population Prediction Report dated 2011).
• Tourism is back stimulated by the lower Australian dollar and strengthened by new international flights direct to China and other parts of Asia.
• Increase in building development and infrastructure projects.
• Increase in number of new homes being built and apparent increase in number of substantial renovations of dwellings.
• Increased international investors including the very influential and growing Chinese investment market and cashed up Auckland based Kiwis.
• Increased interstate buyers with many cashed up investors from the very buoyant Melbourne and Sydney markets.
• Predictions of improving employment in the tourism sector and also boosted by the impending 2018 Commonwealth Games.
The increase in volume of transactions is particularly evident since the September 2013 federal election.
According to our data, purchasers still favour the sub $500,000 price bracket which accounts for 71.5% of transactions, compared to 23.5% for $500,000 to $1 million and 5% over $1 million.
While the prestige residential market proportionately accounts for a small part of the market in terms of number of transactions, the prices are on the rise on the back of overseas investors, locals and interstate buyers taking a shine to mostly waterfront houses and a limited number of luxury high rise units.
CENTRAL GOLD COAST
Growth has been solid throughout 2015 in the central areas of the Gold Coast as a result of increased demand across all property types within the area.
The main reasons for this increased demand include the reduction of interest rates, improvements in rental returns and increased overseas investments in new developments.
Broadbeach Waters, Mermaid Beach and Mermaid Waters have seen strong growth (25% to 35% increase in land values). An example of this is 145 Allambi Avenue, Broadbeach Waters which sold for $760,000 in August 2013 and was recently resold for $1,015,000 with no improvements to the property.
The unit market in Broadbeach and Surfers Paradise has seen improvement in the lower price points in smaller developments. Most of these sales were to local and interstate investors as the rental returns were covering mortgage and body corporate costs. The larger high rise developments are still seeing limited growth due to the high body corporate rates restricting the overall investment appeal. We should see increased growth in holiday units as building managers are reporting a decrease in vacancy rates as more tourists come to the Gold Coast.
Robina, typically a popular location for young families, has also seen strong growth as it is within close proximity of amenities such as schools, shopping centres and transport. In recent months demand for rental properties has increased and vacancy rates have dropped as more construction jobs are available on the Gold Coast due to new developments. For example the average townhouse rental rate has increased $20 to $30 per week across all developments.
The majority of new developments across the central areas are showing high sale rates with developments like Sunland’s Concourse Villas/Marina Residences and Robina Land Corp’s City Village and Riverlilly selling out within a few months. The majority of buyers have been overseas investors, although we are seeing an increase in owner occupiers looking to downsize from the family home and first home buyers.
NORTHERN COASTAL (SOUTHPORT TO HOPE ISLAND)
This year the Northern Coastal area has performed very well to date. Sales agents continue to report a general lack of sales stock with improved buyer activity putting upward pressure on values. Notable changes have been a significant reduction of time to sell with many listed properties selling within just a few days. Some properties are selling sight unseen by interstate investors, something not seen since the 2007 boom period and we are also seeing multiple offers and properties selling prior to auction. The strongest performing property categories have been:
1. Vacant residential allotments;
2. $800,000 to $1,500,000 market range; and
3. Lightly improved sites with development potential. In one Hope Island residential estate, 500 square metre allotments that were selling for circa $250,000 are now selling for circa $290,000. Vacant allotments have jumped circa $100,000 in some of the more in demand canal estates.
The traditionally more popular suburbs, generally those close to the Broadwater and Canal Estates, have been the best performers with increases estimated to be as much as 15% to 20%. The $400,000 to $600,000 range for the more typical family suburban style home has performed well. Two and three bedroom duplex units have also been in good demand. The unit market between circa $180,000 to $450,000 range appears to have improved, however, not as well as other sub market categories as stock levels remain high in some buildings. The unit market above $500,000 in the Broadwater precincts has lifted strongly with some complexes showing recovery of as much as $100,000 per unit. We note that property managers are reporting that they are now increasing rentals on properties as vacancy rates fall and demand increases. In some cases we have had reports of as many as 50 rental applications for a single property. Some of this demand has been within the more popular school zones.
We further note that the mainly established Northern Coastal property market will continue to strengthen due to the scarcity of land and influences of higher density town planning. The short term outlook is very positive.
M1 NORTH-WEST TO MOUNT TAMBORINE
Throughout the first half of 2015 the property market in the north-western Gold Coast, also known as the growth corridor continued to strengthen with agents generally reporting a shortage of stock and strong buyer activity.
Modern dwellings close to infrastructure such as schools and shopping centres appear to be the best performing. Notable estates include Highland Reserve, Riverstone Crossing and Coomera Springs. These estates all comprise predominantly modern dwellings of above average quality with good surrounding infrastructure. Prices in these estates range from $450,000 to $600,000 with an average increase in value over the past 24 months of approximately 10% to 15%.
Vacant land also appears to have strengthened throughout Upper Coomera and Maudsland with land becoming scarce. The more popular estates include Riverstone Crossing, Stone Creek, Coomera Retreat and Highland Reserve.
A notable sale is 16 Murray Circuit, Upper Coomera. This is a vacant 604 square metre allotment which sold mortgagee in possession on 27 August 2012 (arguably the bottom of the market) and is currently under contract for $202,000. This is a reflection of the increasing demand for vacant allotments.
Mount Tamborine appears to have stabilized with an increase in the volume of sales, however there has been no notable increase in values. These types of regional areas generally appear to have a bit of lag in market segment conditions compared to the local markets.
House and land packages remain the most concerning segment. Inferior quality estates in Upper Coomera and Pimpama continue to see large
volumes of interstate investors paying a premium for new product. We are also seeing very small lot sizes in these areas (as small as 250 square metres). This product is relatively untested with little to no re-sales to gauge how this style of product will be viewed by the local market.
UPPER NORTHERN CORRIDOR
The first six months of 2015 was generally considered a positive period for the upper northern corridor. Investors have continued to increase their appetites for house and land packages within recently established residential estates. To fulfil this appetite, developers have decreased lot sizes as evidenced in the new stages of The Meadows at Pimpama and Yarrabilba at Yarrabilba, with some lot sizes below 250 square metres. On the other side of the spectrum residential estates such as Gainsborough Greens at Pimpama and Ormeau Ridge at Ormeau Hills have retained lot sizes or only marginally reduced sizes due to these estate attracting a higher percentage of owner occupiers.
Recent sales include:
• 6 Leland Street, Yarrabilba: 250 square metre allotment that sold for $110,500 in January 2015.
• 38 Leland Street, Yarrabilba: 250 square metre allotment that sold for $110,500 in January 2015.
• 13 Matas Drive, Pimpama: 300 square metre allotment that sold for $188,500 in January 2015.
Although there have been no settled sales within Pimpama of allotments below 250 square metres it is present within the new stages.
Values of rural residential properties in the upper northern corridor have remained stable within the first six months of 2015. A number of real estate agents in the area have complained about lack of stock on the market or set to go to the market.
Owners of rural residential properties in the area are optimistic about changes to upcoming or recently implemented planning schemes; there is
optimism that some areas within the historically rural residential only areas could see a reduction in the required lot size per dwelling, therefore increasing the potential to subdivide or construct an additional dwelling on the lot.
Rental amounts in the area remain steady as infrastructure is being approved, on the drawing board or is currently under construction. An example of this is in the Yarrabilba Estate, with the planned kindergarten currently under construction and the recent sale of the school site and shopping centre site. The development of amenities such as these should increase rental amounts in the direct vicinity.
If the first six months are anything to go by, the upper northern corridor will continue to grow in terms of number of dwellings, however there is potential that a trend to decrease allotment sizes will continue and in turn increase the developer’s gain.
Established residential suburbs in the upper northern corridor including Eagleby, Edens Lands and Mount Warren Park have continued to attract owner occupiers. Real estate agents in these areas are noticing reduced time on the market if the property is reasonably priced. Beenleigh is considered the central business district of the upper northern corridor and has historically remained a sleeping giant for the area. The Beenleigh Town Centre has continued to attract foreign and interstate investment with high purchase prices being noted and purchases of multiple neighbouring properties.
SOUTHERN GOLD COAST AND TWEED COAST
In 2015 there has been a continued improvement in the residential property market across most but not all sectors.
Vacant land has perhaps been strongest with the majority of estates having been sold out or close to selling out. There is reportedly no developer stock available at Casuarina and very strong resales.
There has been a recent resale of a 500 square metre allotment in The Pocket for $520,000 which was originally purchased off the plan for approximately $395,000. There has been an improvement in prices for vacant land at Terranora as demand is now stronger than supply. The Hidden Valley estate at Tallebudgera is almost sold out. Sales have been strong at The Observatory and Varsity Heights Estates at Reedy Creek and also strong at Palm Beach Heights at Elanora.
From Miami to Pottsville the housing sector has continued to improve throughout 2015, being strongest in the under $750,000 price bracket. In most localities, demand is outstripping supply. In many cases sales evidence is not directly supporting new sales, particularly on the Tweed Coast.
There has also been strong sales activity in the over $750,000 price bracket in waterfront localities such as Currumbin Waters, Palm Beach and Burleigh Waters.
Duplex units have been selling well across the board along with townhouse or villa units in small complexes. There is currently a new duplex unit under contract at Palm Beach for $800,000, with very limited sales evidence to support this sale price.
Sales activity and market demand for low rise units in the under $400,000 price bracket is average. There has recently been some strong sales activity for low rise units along The Esplanade at Burleigh Heads.
There have also been some gains in well located high- rise units. There is a 2-bedroom, 2-bathroom unit in the rear Ambience building at Burleigh Heads under contract for $730,000, which previously sold in June 2011 for $625,000.
Caution remains for low rise and high rise units in larger, older buildings in secondary locations where high body corporate fees may apply. Local agents are reporting limited levels of demand for these properties.
There are a number of positive factors currently influencing the property market on the Southern Gold Coast and Tweed Coast including historically low interest rates, population growth and improvement in the local economy.
SCENIC RIM
The Scenic Rim and Lower Logan localities have started 2015 at a slow and steady pace. While the adjoining areas appear to be gaining momentum, this market hasn’t shown significant price changes so far. Agents are reporting a decrease in stock levels and good enquiry, however the underlying current is that purchasers have the upper hand and vendors firmly believe it is a buyer’s market.
There is more activity in the northern suburb of Jimboomba with enquiry levels and sales rates decreasing through Beaudesert and Canungra as you move geographically further away from Brisbane. Enquiries and rate of sale have increased and while most of the area has shown little value increase, recent sales in Cedar Vale have improved by up to 10% from this time last year. This may be attributed to the new release at Jimboomba Woods which comprises similar 4,000 square metre lots to Cedar Vale however further away from the Mount Lindesay Highway.
Purchasers are comparing established three year old homes against a new product and are willing to compromise on dwelling age to be closer to the Highway to commute to Brisbane.
Canungra Rise was released to the market this year. A multi stage and multi product estate within walking distance of the Canungra main street, it is anticipated that purchasers will be the end user local market.
Standard residential lots in the estate are priced from $195,000 to $210,000 and the sales agent is reporting eight sales to date. Construction is due to commence later this year. This is the first new larger subdivision released in Canungra since before 2000.
Sales rates in Beaudesert have been low over recent months. There have been a couple of properties resold that were initially purchased by interstate investors. These 4-bedroom, 2-bathroom, double lock-up garage homes were purchased off the plan in October 2011 for $396,000 and were resold three years later for $345,000. Older houses on more centrally located lots continue to remain static although stock levels below $300,000 are decreasing.
While this area continues on a level path, sentiment from purchasers, vendors and agents varies in each area and is dependent largely on the perceived value. There are still a number of vendors selling under duress and this will continue to hold off any substantial value increases.
Sunshine Coast
Throughout the first half of 2015, the Sunshine Coast property market has continued to improve. Demand has improved and sale volumes remain strong due to the continued momentum from the Sunshine Coast University Hospital helping confidence.
The housing market has been strong in the lower value bands. The sub $600,000 on the coastal areas and sub $350,000 in the hinterland towns remain the strongest sectors of the market. Stock levels or the lack of stock is becoming a concern. The higher priced properties have started to benefit as well. The prestige market has become less patchy with significantly improved activity and some price increases.
The land market remains strong with developers pre-selling stages well in advance while also increasing prices. The reduction in lot sizes continues to help with market appeal and affordability. The construction of multi tenanted houses (3-bedroom house with a 1- or 2-bedroom flat) and duplexes continue to be popular with investors however the market depth remains unknown with limited re-sales, especially for the multi tenanted houses.
The unit market remains patchy. We have seen an increase in sales volumes, however this is very much area and property specific with units in well located complexes suited to owner occupier or permanent rentals remaining the best performers.. Units in larger complexes with high body corporate or operating costs remain hard to sell. There are a number of new complexes proposed and being marketed which are all good signs.
Activity in the rural residential market has improved also. Personal preferences, presentation and motivation of purchasers can impact heavily on
the ultimate sale price and can result in wider parameters than more traditional residential properties.
It is still typical to purchase properties below replacement cost in some cases but the pendulum is swinging.
Hervey Bay
Demand for residential property in Hervey Bay appears to be steady, with renewed interest in construction activity of late. House and land packages continue to be popular with a range of buyers including some superannuation fund investors for property mainly priced below $350,000. There have been increased sales for higher priced stock between $500,000 and $750,000 which is encouraging. Most of these properties are on sites over 2,000 square metres providing executive modern homes with extensive ancillary improvements. Units located in premier locations situated close to the beach and CBD are reasonably sought after, particularly for onground, 2- bedroom, 1- or 2-bathroom units. Overall, market sentiment seems to be generally optimistic, with confidence gradually gaining momentum.
Gladstone
Market values for established residential dwellings in the city of Gladstone have generally stabilised over the course of 2015. Market activity has also stabilised over the last few months after a flurry of activity at the end of 2014 as property values stabilised to more realistic values.
Vacancy rates have also remained relatively stable since the beginning of 2015 with rates hovering between 4.5% and 5.5% which is still above average for Gladstone and reflective of the oversupply in some market sectors.
The market for inner city apartments and suburban townhouses is still pretty tough in Gladstone and conditions are unlikely to improve in the short to medium term. Sales volumes are very low and the sales that are occurring are showing very significant decreases of between 40% and 50% from sale prices achieved during the peak of the market.
Values for vacant land are continuing to come under pressure. It is much more cost effective in the current market to purchase an established modern home than it is to purchase a block of land and then build. Sales volumes for land are very low.
The Tannum Sands and Boyne Island markets appear to have regained the premium over Gladstone which they lost during the growth stage of the last market peak. Sales volumes have increased slightly in these localities and values have stabilised.
We still consider it a possibility that there will be further market correction in the next 12 months over which time all LNG construction work will cease on Curtis Island. The exact effect this will have on the residential market is unknown.
Rockhampton
To date 2015 has been a sluggish start for residential property across the Rockhampton region. After a notable decline in the strength of the resource industries across Central Queensland we have seen large reductions in sales activity, sale prices and rental prices particularly in newly developed areas such as Gracemere and Parkhurst. For example we are now seeing modern 4-bedroom, 2-bathroom homes selling and renting under $300,000 and $300 per week respectively, down from $400,000 and $400 in 2013.
More established localities within Rockhampton City such as Wandal, Frenchville and The Range have weathered the storm with a higher degree of resilience, particularly in the $250,000 to $450,000 range. Properties listed above this price point often require an extended selling period.
In addition to the above factors, 2015 saw an Australian first for the lowest cash rate on record which now sits at a staggering 2%, creating one of the most competitive lending environments seen in a very long time. This is combined with a newly released Federal budget which has been summarised as the Have a Go budget and includes a significant number of tax incentives for new and small businesses.
Moving forward these factors may and will hopefully take the spotlight of the weakening resources industry by creating a positive outlook and increased confidence which should in theory create a stronger residential outlook for the Rockhampton region for the later half of this year.
2015 also saw the first major Cyclone to hit the area in over 40 years. On 20 February, Cyclone Marcia reached Category 5 only hours before hitting Rockhampton and Yeppoon. In many respects a natural disaster such as this has devastating consequences however it has to be said that the aftermath appears to have been in many ways a silver lining to the region. A huge volume of work was created in various fields, community spirit and engagement was enhanced and some insurance claims in many instances will be of overall benefit to the individual landowners upgrading old to new.
In summary 2015 to date and moving forward can be most certainly summarised as a buyer’s market, so for those thinking about entering the property market for the first time or looking for that additional long term investment, now is the time to act.
Townsville
At the halfway mark of 2015, the residential property market has to date remained relatively unchanged from the beginning of the year.
Unemployment in the region remains higher than the state average, while business confidence in Townsville during the second quarter of 2015 has continued to improve with a slight uplift in the index according to the PwC Townsville Business Confidence Survey.
Anecdotal evidence suggests that the renovation market has seen more activity of late, potentially attributed to the low cost of finance and the availability of tradesmen in the current environment.
Older established units have also seen reasonable interest due to the low price entry, particularly units priced below $200,000 along with duplex or maisonette style properties that offer increased utility by way of dual income or live in one side and derive an income from the other.
The residential rental market has remained in oversupply into 2015, with a slight increase in the overall trending vacancy rate between January and April 2014 from 5.2% to 5.4%. There continues to be break-leases evident and incentives being offered by way of free weekly rent to entice tenants.
Overall the market remains cautious, with the level of activity being very much dictated by local economic factors.
Data supplied by HTW
June 2015 Market Update Region by Region
Overview
Taking time to assess ‘where you’re at’ is a valuable use of your minutes. By pausing and evaluating what’s happened in the past, you’re often more prepared to tackle the hurdles ahead. This month we’ve used the excuse of June’s mid-year position to reflect upon the first half of 2015 in property markets. Each of our offices has handed in their scorecard on how real estate is performing in their area, and the results are compelling.
Brisbane
Here we sit with June upon us and it seems Brisbane is in the midst of another fair-to-middling performance.
2015 started with plenty of promise and certainly there are any number of buyers’ agents and other observers out there claiming the Sunshine State capital is the best prospect for the Australian property investor. Unfortunately, out on-the-ground experts say there’s been a bit of a lull in urgency amongst buyers in those usually firing inner-city northern markets. New Farm and Paddington, for example were two suburbs that were achieving good premiums up until a couple of months ago, but demand has waned a little. Whether it’s a matter of vendors overpricing their property or other factors at work, bidders don’t appear to be hyped-up at auctions and paying the big dollars they once were. Many are adopting a wait-and-see stance with a number of homes hanging around on the market. Despite this general outlook, renovated and brand new abodes with all the bells and whistles in desirable locations sell well and with a bit extra on the contract price.
Conversely, some southern inner-city suburbs are doing fine. Demand for dwellings in in West End and Highgate Hill continues to be strong for both entry level and properties nearing the $2 million mark.
Of course the Brisbane State High catchment continues to help sellers attract a premium.
The gigantic red-flag for Brisbane is inner city units, and their soft pricing is likely to continue for at least the next couple of years. Towards the end of the year and throughout next year, we’ll see a number of large off-the-plan developments settle simultaneously and the ability to absorb the supply looks shaky. Look out for increasing vacancy rates, particularly in second hand stock, as renters start moving into newer developments once they’re constructed. If you must buy a new unit, look for something that has appeal for owner-occupiers to help mitigate the risk.
In our middle-ring northern suburbs, we were seeing a ripple of capital growth, but this too has a slowed a little according to our team. The price point to look for here is entry level, particularly in desirable suburbs. This is the property likely to continue enjoying good results. Mid-ring in the south is experiencing increasing levels of interest, although secondary products sit on the market for extended periods. There’s good rental demand for established units in areas such as Coorparoo and Greenslopes, and proximity to infrastructure and public transport are important factors.
Outer lying suburbs in the northern corridor are doing quite well with a lot of interest evident in the house-and-land packages in new infill estates. Land purchases are in high demand pushing prices up and, subsequently, sales rates remain quite high.
In the south, outer suburbs are relatively static. Sales are occurring but there’s no evidence of an increase in values.
There are still a number of townhouse developments being built with the predominant purchaser being interstate investors and that means a risk of oversupply and a decline in rental returns.
Interest rate cuts haven’t done much to stimulate our market. The biggest impact has been to push existing borrowers towards refinancing in order to improve their cash flows. First home buyers continue to be underrepresented in the market however investors still remain active in our inner ring.
Toowoomba
As we approach the second half of 2015, the Toowoomba residential property market continues to experience an upswing.
Due to reduced mining activity in surrounding locales as mining projects shift to operational phases, we may see the incline experienced in these areas in the first half of 2015 begin to ease at some point in the second half of 2015.
At present, the greater 4350 postcode demonstrates a vacancy rate of 3% which has increased from the sub 2% recorded in the early stages of 2014 and there has been a reduction in unit and small lot development activity from the investor market.
Despite this, low interest rates and the robust nature of the Toowoomba market have enabled momentum to remain stable in other sectors and land values continue to rise as demand outweighs supply.
As for sales, while there is a firming consumer sentiment as asking prices across all property types continue to rise, it is the sub $450,000 price bracket that is likely to remain the most popular due to its affordability and proven broad market appeal.
Across the board, the Toowoomba residential market has performed in line with expectations and thanks to low interest rates, this period of upswing looks likely to continue into the second half of 2015.
Gold Coast
The Gold Coast was one of the hardest hit regions of Australia following the GFC, with mortgagee in possession sale rates running above 6%. With the world financial situation, banks tightening their lending and LVR parameters, the Australian dollar soaring in value, the commodity boom and tourism being particularly hard hit, the perfect storm was unleashed.
However, that all seems to be well behind us now as the property market has recovered and turned upwards. Prices are well off the bottom across all residential property categories. Land values on the Gold Coast are reported to have increased by 10.7% over the past year according to the Queensland Valuer General’s 2015 annual report dated 5 March 2015.
Very positive economic changes have been driving the property market on the Gold Coast including:
• Increasing population. Current Gold Coast population is now at 535,000 (source: Gold Coast City Council web site) with projections of a population of circa 680,000 by 2021 (source: Queensland Office of Economy and Statistical Research Population Prediction Report dated 2011).
• Tourism is back stimulated by the lower Australian dollar and strengthened by new international flights direct to China and other parts of Asia.
• Increase in building development and infrastructure projects.
• Increase in number of new homes being built and apparent increase in number of substantial renovations of dwellings.
• Increased international investors including the very influential and growing Chinese investment market and cashed up Auckland based Kiwis.
• Increased interstate buyers with many cashed up investors from the very buoyant Melbourne and Sydney markets.
• Predictions of improving employment in the tourism sector and also boosted by the impending 2018 Commonwealth Games.
The increase in volume of transactions is particularly evident since the September 2013 federal election.
According to our data, purchasers still favour the sub $500,000 price bracket which accounts for 71.5% of transactions, compared to 23.5% for $500,000 to $1 million and 5% over $1 million.
While the prestige residential market proportionately accounts for a small part of the market in terms of number of transactions, the prices are on the rise on the back of overseas investors, locals and interstate buyers taking a shine to mostly waterfront houses and a limited number of luxury high rise units.
CENTRAL GOLD COAST
Growth has been solid throughout 2015 in the central areas of the Gold Coast as a result of increased demand across all property types within the area.
The main reasons for this increased demand include the reduction of interest rates, improvements in rental returns and increased overseas investments in new developments.
Broadbeach Waters, Mermaid Beach and Mermaid Waters have seen strong growth (25% to 35% increase in land values). An example of this is 145 Allambi Avenue, Broadbeach Waters which sold for $760,000 in August 2013 and was recently resold for $1,015,000 with no improvements to the property.
The unit market in Broadbeach and Surfers Paradise has seen improvement in the lower price points in smaller developments. Most of these sales were to local and interstate investors as the rental returns were covering mortgage and body corporate costs. The larger high rise developments are still seeing limited growth due to the high body corporate rates restricting the overall investment appeal. We should see increased growth in holiday units as building managers are reporting a decrease in vacancy rates as more tourists come to the Gold Coast.
Robina, typically a popular location for young families, has also seen strong growth as it is within close proximity of amenities such as schools, shopping centres and transport. In recent months demand for rental properties has increased and vacancy rates have dropped as more construction jobs are available on the Gold Coast due to new developments. For example the average townhouse rental rate has increased $20 to $30 per week across all developments.
The majority of new developments across the central areas are showing high sale rates with developments like Sunland’s Concourse Villas/Marina Residences and Robina Land Corp’s City Village and Riverlilly selling out within a few months. The majority of buyers have been overseas investors, although we are seeing an increase in owner occupiers looking to downsize from the family home and first home buyers.
NORTHERN COASTAL (SOUTHPORT TO HOPE ISLAND)
This year the Northern Coastal area has performed very well to date. Sales agents continue to report a general lack of sales stock with improved buyer activity putting upward pressure on values. Notable changes have been a significant reduction of time to sell with many listed properties selling within just a few days. Some properties are selling sight unseen by interstate investors, something not seen since the 2007 boom period and we are also seeing multiple offers and properties selling prior to auction. The strongest performing property categories have been:
1. Vacant residential allotments;
2. $800,000 to $1,500,000 market range; and
3. Lightly improved sites with development potential. In one Hope Island residential estate, 500 square metre allotments that were selling for circa $250,000 are now selling for circa $290,000. Vacant allotments have jumped circa $100,000 in some of the more in demand canal estates.
The traditionally more popular suburbs, generally those close to the Broadwater and Canal Estates, have been the best performers with increases estimated to be as much as 15% to 20%. The $400,000 to $600,000 range for the more typical family suburban style home has performed well. Two and three bedroom duplex units have also been in good demand. The unit market between circa $180,000 to $450,000 range appears to have improved, however, not as well as other sub market categories as stock levels remain high in some buildings. The unit market above $500,000 in the Broadwater precincts has lifted strongly with some complexes showing recovery of as much as $100,000 per unit. We note that property managers are reporting that they are now increasing rentals on properties as vacancy rates fall and demand increases. In some cases we have had reports of as many as 50 rental applications for a single property. Some of this demand has been within the more popular school zones.
We further note that the mainly established Northern Coastal property market will continue to strengthen due to the scarcity of land and influences of higher density town planning. The short term outlook is very positive.
M1 NORTH-WEST TO MOUNT TAMBORINE
Throughout the first half of 2015 the property market in the north-western Gold Coast, also known as the growth corridor continued to strengthen with agents generally reporting a shortage of stock and strong buyer activity.
Modern dwellings close to infrastructure such as schools and shopping centres appear to be the best performing. Notable estates include Highland Reserve, Riverstone Crossing and Coomera Springs. These estates all comprise predominantly modern dwellings of above average quality with good surrounding infrastructure. Prices in these estates range from $450,000 to $600,000 with an average increase in value over the past 24 months of approximately 10% to 15%.
Vacant land also appears to have strengthened throughout Upper Coomera and Maudsland with land becoming scarce. The more popular estates include Riverstone Crossing, Stone Creek, Coomera Retreat and Highland Reserve.
A notable sale is 16 Murray Circuit, Upper Coomera. This is a vacant 604 square metre allotment which sold mortgagee in possession on 27 August 2012 (arguably the bottom of the market) and is currently under contract for $202,000. This is a reflection of the increasing demand for vacant allotments.
Mount Tamborine appears to have stabilized with an increase in the volume of sales, however there has been no notable increase in values. These types of regional areas generally appear to have a bit of lag in market segment conditions compared to the local markets.
House and land packages remain the most concerning segment. Inferior quality estates in Upper Coomera and Pimpama continue to see large
volumes of interstate investors paying a premium for new product. We are also seeing very small lot sizes in these areas (as small as 250 square metres). This product is relatively untested with little to no re-sales to gauge how this style of product will be viewed by the local market.
UPPER NORTHERN CORRIDOR
The first six months of 2015 was generally considered a positive period for the upper northern corridor. Investors have continued to increase their appetites for house and land packages within recently established residential estates. To fulfil this appetite, developers have decreased lot sizes as evidenced in the new stages of The Meadows at Pimpama and Yarrabilba at Yarrabilba, with some lot sizes below 250 square metres. On the other side of the spectrum residential estates such as Gainsborough Greens at Pimpama and Ormeau Ridge at Ormeau Hills have retained lot sizes or only marginally reduced sizes due to these estate attracting a higher percentage of owner occupiers.
Recent sales include:
• 6 Leland Street, Yarrabilba: 250 square metre allotment that sold for $110,500 in January 2015.
• 38 Leland Street, Yarrabilba: 250 square metre allotment that sold for $110,500 in January 2015.
• 13 Matas Drive, Pimpama: 300 square metre allotment that sold for $188,500 in January 2015.
Although there have been no settled sales within Pimpama of allotments below 250 square metres it is present within the new stages.
Values of rural residential properties in the upper northern corridor have remained stable within the first six months of 2015. A number of real estate agents in the area have complained about lack of stock on the market or set to go to the market.
Owners of rural residential properties in the area are optimistic about changes to upcoming or recently implemented planning schemes; there is
optimism that some areas within the historically rural residential only areas could see a reduction in the required lot size per dwelling, therefore increasing the potential to subdivide or construct an additional dwelling on the lot.
Rental amounts in the area remain steady as infrastructure is being approved, on the drawing board or is currently under construction. An example of this is in the Yarrabilba Estate, with the planned kindergarten currently under construction and the recent sale of the school site and shopping centre site. The development of amenities such as these should increase rental amounts in the direct vicinity.
If the first six months are anything to go by, the upper northern corridor will continue to grow in terms of number of dwellings, however there is potential that a trend to decrease allotment sizes will continue and in turn increase the developer’s gain.
Established residential suburbs in the upper northern corridor including Eagleby, Edens Lands and Mount Warren Park have continued to attract owner occupiers. Real estate agents in these areas are noticing reduced time on the market if the property is reasonably priced. Beenleigh is considered the central business district of the upper northern corridor and has historically remained a sleeping giant for the area. The Beenleigh Town Centre has continued to attract foreign and interstate investment with high purchase prices being noted and purchases of multiple neighbouring properties.
SOUTHERN GOLD COAST AND TWEED COAST
In 2015 there has been a continued improvement in the residential property market across most but not all sectors.
Vacant land has perhaps been strongest with the majority of estates having been sold out or close to selling out. There is reportedly no developer stock available at Casuarina and very strong resales.
There has been a recent resale of a 500 square metre allotment in The Pocket for $520,000 which was originally purchased off the plan for approximately $395,000. There has been an improvement in prices for vacant land at Terranora as demand is now stronger than supply. The Hidden Valley estate at Tallebudgera is almost sold out. Sales have been strong at The Observatory and Varsity Heights Estates at Reedy Creek and also strong at Palm Beach Heights at Elanora.
From Miami to Pottsville the housing sector has continued to improve throughout 2015, being strongest in the under $750,000 price bracket. In most localities, demand is outstripping supply. In many cases sales evidence is not directly supporting new sales, particularly on the Tweed Coast.
There has also been strong sales activity in the over $750,000 price bracket in waterfront localities such as Currumbin Waters, Palm Beach and Burleigh Waters.
Duplex units have been selling well across the board along with townhouse or villa units in small complexes. There is currently a new duplex unit under contract at Palm Beach for $800,000, with very limited sales evidence to support this sale price.
Sales activity and market demand for low rise units in the under $400,000 price bracket is average. There has recently been some strong sales activity for low rise units along The Esplanade at Burleigh Heads.
There have also been some gains in well located high- rise units. There is a 2-bedroom, 2-bathroom unit in the rear Ambience building at Burleigh Heads under contract for $730,000, which previously sold in June 2011 for $625,000.
Caution remains for low rise and high rise units in larger, older buildings in secondary locations where high body corporate fees may apply. Local agents are reporting limited levels of demand for these properties.
There are a number of positive factors currently influencing the property market on the Southern Gold Coast and Tweed Coast including historically low interest rates, population growth and improvement in the local economy.
SCENIC RIM
The Scenic Rim and Lower Logan localities have started 2015 at a slow and steady pace. While the adjoining areas appear to be gaining momentum, this market hasn’t shown significant price changes so far. Agents are reporting a decrease in stock levels and good enquiry, however the underlying current is that purchasers have the upper hand and vendors firmly believe it is a buyer’s market.
There is more activity in the northern suburb of Jimboomba with enquiry levels and sales rates decreasing through Beaudesert and Canungra as you move geographically further away from Brisbane. Enquiries and rate of sale have increased and while most of the area has shown little value increase, recent sales in Cedar Vale have improved by up to 10% from this time last year. This may be attributed to the new release at Jimboomba Woods which comprises similar 4,000 square metre lots to Cedar Vale however further away from the Mount Lindesay Highway.
Purchasers are comparing established three year old homes against a new product and are willing to compromise on dwelling age to be closer to the Highway to commute to Brisbane.
Canungra Rise was released to the market this year. A multi stage and multi product estate within walking distance of the Canungra main street, it is anticipated that purchasers will be the end user local market.
Standard residential lots in the estate are priced from $195,000 to $210,000 and the sales agent is reporting eight sales to date. Construction is due to commence later this year. This is the first new larger subdivision released in Canungra since before 2000.
Sales rates in Beaudesert have been low over recent months. There have been a couple of properties resold that were initially purchased by interstate investors. These 4-bedroom, 2-bathroom, double lock-up garage homes were purchased off the plan in October 2011 for $396,000 and were resold three years later for $345,000. Older houses on more centrally located lots continue to remain static although stock levels below $300,000 are decreasing.
While this area continues on a level path, sentiment from purchasers, vendors and agents varies in each area and is dependent largely on the perceived value. There are still a number of vendors selling under duress and this will continue to hold off any substantial value increases.
Sunshine Coast
Throughout the first half of 2015, the Sunshine Coast property market has continued to improve. Demand has improved and sale volumes remain strong due to the continued momentum from the Sunshine Coast University Hospital helping confidence.
The housing market has been strong in the lower value bands. The sub $600,000 on the coastal areas and sub $350,000 in the hinterland towns remain the strongest sectors of the market. Stock levels or the lack of stock is becoming a concern. The higher priced properties have started to benefit as well. The prestige market has become less patchy with significantly improved activity and some price increases.
The land market remains strong with developers pre-selling stages well in advance while also increasing prices. The reduction in lot sizes continues to help with market appeal and affordability. The construction of multi tenanted houses (3-bedroom house with a 1- or 2-bedroom flat) and duplexes continue to be popular with investors however the market depth remains unknown with limited re-sales, especially for the multi tenanted houses.
The unit market remains patchy. We have seen an increase in sales volumes, however this is very much area and property specific with units in well located complexes suited to owner occupier or permanent rentals remaining the best performers.. Units in larger complexes with high body corporate or operating costs remain hard to sell. There are a number of new complexes proposed and being marketed which are all good signs.
Activity in the rural residential market has improved also. Personal preferences, presentation and motivation of purchasers can impact heavily on
the ultimate sale price and can result in wider parameters than more traditional residential properties.
It is still typical to purchase properties below replacement cost in some cases but the pendulum is swinging.
Hervey Bay
Demand for residential property in Hervey Bay appears to be steady, with renewed interest in construction activity of late. House and land packages continue to be popular with a range of buyers including some superannuation fund investors for property mainly priced below $350,000. There have been increased sales for higher priced stock between $500,000 and $750,000 which is encouraging. Most of these properties are on sites over 2,000 square metres providing executive modern homes with extensive ancillary improvements. Units located in premier locations situated close to the beach and CBD are reasonably sought after, particularly for onground, 2- bedroom, 1- or 2-bathroom units. Overall, market sentiment seems to be generally optimistic, with confidence gradually gaining momentum.
Gladstone
Market values for established residential dwellings in the city of Gladstone have generally stabilised over the course of 2015. Market activity has also stabilised over the last few months after a flurry of activity at the end of 2014 as property values stabilised to more realistic values.
Vacancy rates have also remained relatively stable since the beginning of 2015 with rates hovering between 4.5% and 5.5% which is still above average for Gladstone and reflective of the oversupply in some market sectors.
The market for inner city apartments and suburban townhouses is still pretty tough in Gladstone and conditions are unlikely to improve in the short to medium term. Sales volumes are very low and the sales that are occurring are showing very significant decreases of between 40% and 50% from sale prices achieved during the peak of the market.
Values for vacant land are continuing to come under pressure. It is much more cost effective in the current market to purchase an established modern home than it is to purchase a block of land and then build. Sales volumes for land are very low.
The Tannum Sands and Boyne Island markets appear to have regained the premium over Gladstone which they lost during the growth stage of the last market peak. Sales volumes have increased slightly in these localities and values have stabilised.
We still consider it a possibility that there will be further market correction in the next 12 months over which time all LNG construction work will cease on Curtis Island. The exact effect this will have on the residential market is unknown.
Rockhampton
To date 2015 has been a sluggish start for residential property across the Rockhampton region. After a notable decline in the strength of the resource industries across Central Queensland we have seen large reductions in sales activity, sale prices and rental prices particularly in newly developed areas such as Gracemere and Parkhurst. For example we are now seeing modern 4-bedroom, 2-bathroom homes selling and renting under $300,000 and $300 per week respectively, down from $400,000 and $400 in 2013.
More established localities within Rockhampton City such as Wandal, Frenchville and The Range have weathered the storm with a higher degree of resilience, particularly in the $250,000 to $450,000 range. Properties listed above this price point often require an extended selling period.
In addition to the above factors, 2015 saw an Australian first for the lowest cash rate on record which now sits at a staggering 2%, creating one of the most competitive lending environments seen in a very long time. This is combined with a newly released Federal budget which has been summarised as the Have a Go budget and includes a significant number of tax incentives for new and small businesses.
Moving forward these factors may and will hopefully take the spotlight of the weakening resources industry by creating a positive outlook and increased confidence which should in theory create a stronger residential outlook for the Rockhampton region for the later half of this year.
2015 also saw the first major Cyclone to hit the area in over 40 years. On 20 February, Cyclone Marcia reached Category 5 only hours before hitting Rockhampton and Yeppoon. In many respects a natural disaster such as this has devastating consequences however it has to be said that the aftermath appears to have been in many ways a silver lining to the region. A huge volume of work was created in various fields, community spirit and engagement was enhanced and some insurance claims in many instances will be of overall benefit to the individual landowners upgrading old to new.
In summary 2015 to date and moving forward can be most certainly summarised as a buyer’s market, so for those thinking about entering the property market for the first time or looking for that additional long term investment, now is the time to act.
Townsville
At the halfway mark of 2015, the residential property market has to date remained relatively unchanged from the beginning of the year.
Unemployment in the region remains higher than the state average, while business confidence in Townsville during the second quarter of 2015 has continued to improve with a slight uplift in the index according to the PwC Townsville Business Confidence Survey.
Anecdotal evidence suggests that the renovation market has seen more activity of late, potentially attributed to the low cost of finance and the availability of tradesmen in the current environment.
Older established units have also seen reasonable interest due to the low price entry, particularly units priced below $200,000 along with duplex or maisonette style properties that offer increased utility by way of dual income or live in one side and derive an income from the other.
The residential rental market has remained in oversupply into 2015, with a slight increase in the overall trending vacancy rate between January and April 2014 from 5.2% to 5.4%. There continues to be break-leases evident and incentives being offered by way of free weekly rent to entice tenants.
Overall the market remains cautious, with the level of activity being very much dictated by local economic factors.
Data supplied by HTW
