By Herron Todd White
Sunshine Coast Property Updates
First and foremost, we at Herron Todd White Sunshine Coast express our deepest sorrow and wish to pass on our best wishes to those battling the current bushfire crisis across Australia. Although it is certainly not over, the stories of communities coming together to look after each other goes to show that the true Aussie spirit is alive and well.
In 2019, the Sunshine Coast property market was a tale of two halves. The first half of 2019 saw a slow down on the back of the slowing Sydney and Melbourne markets, the effects of the banking royal commission and the lead up to the federal election in May. Move ahead a few months and all these concerns appeared to be turned around. An election result perceived by the market to be favourable, improvement in the Sydney and Melbourne markets and passing effects of the Banking Royal Commission all led to an injection of confidence. The end of 2019 finished very well.
As always, the first quarter will be a good indicator on how the year will unfold. Should the Sydney and Melbourne markets continue to perform well, this will be a good sign for the coast market. Unfortunately, like 2019, 2020 has the dark cloud of not one but two elections looming. The local government election is set down for the end of March and the state election set for the end of October. Uncertainty always presents a challenge to the market.
Coastal areas with proximity to the beach are always highly sought after. The coast lifestyle is a major driving factor and there is no reason this will not continue. The coastal strip from Noosa to Caloundra in the sub-$800,000 price range is expected to continue to be in demand.
It is expected that the larger estates of Aura located to the south of Caloundra and the Harmony Estate at Palmview will continue to generate good interest from both owner-occupiers and investors. We also expect to see good interest in the hinterland subdivisions in the railway townships such as Habitat in Palmwoods, with larger land sizes being the driver.
There are a number of unit complexes under construction with some due for completion this year. From what we have seen, the majority of interest is in owner-occupier style units and complexes that directly target this market are going well. Smaller, investment grade units have been lagging, especially if they suffer from high body corporate fees making it difficult to make a return. The established unit product is also influenced by this.
The prestige markets across the coast have been operating at a number of different speeds. The areas in and around Caloundra to the south and Mooloolaba and Maroochydore to the central parts of the coast have been turning over and have been pretty steady with some good prices. The headline continues to be the Noosa Heads region on the northern coast, which finished off the year well with some record prices being recorded. An example of this is the recent sale of a Hastings Street beachfront unit, Unit 6, Noosa Court for $9 million or $37,500 per square metre and this wasn’t even the best unit in the complex! We have initial reports of a beachfront unit that is under contract for circa $42,000 per square metre. This market is heavily influenced by the Sydney and Melbourne markets, so the improved confidence there has helped as well as ex-pat and international buyers becoming more active on the back of the weak Aussie dollar.
The good news stories continue to be the considerable infrastructure projects underway that should attract new investment to the coast. The Maroochydore CBD and Sunshine Coast Airport expansions have been moving along with the Sunshine Coast International Broadband Submarine Cable project dovetailing in beautifully. Providing Australia’s fastest telecommunications connection to Asia and the second fastest to the United States is an unbelievable opportunity for a regional centre.
2020 is still expected to see some good activity across the residential market. Will it be as strong as 2019 is anyone’s guess given the two looming elections. There is one thing for certain – the Sunshine Coast appears to be positioned well for the future.
Speak with a Sunshine Coast Mortgage Broker today.
Rockhampton Property Updates
As the Rockhampton and surrounding residential markets enter 2020, there is a feeling of optimism and increased confidence for the year ahead. The close of 2019 saw increased sales activity, shorter selling periods and a firming of sale prices. In particular, well maintained and well-presented owner-occupied homes in sought-after suburbs have been leading the charge. Many agents are reporting a shortage of listings due to having sold the majority of their stock. For the first time in many years, buyers are feeling the pinch with stories emerging of some now starting to miss out on their first choice of homes. Vacancy rates reduced dramatically throughout the course of 2019 and are currently very tight. This has resulted in an increase in rents which we anticipate will hold firm during 2020.
So, you ask, what’s driving the change?
Well, we are now seeing significant government infrastructure projects coming to fruition, particularly Main Roads committing to major upgrades including the Gracemere duplication, Parkhurst corridor and of course the Rockhampton Ring Road which is now in the early stages of planning and resumption. This combined with a surprise federal election result in May 2019 gave Central Queensland a boost in confidence, particularly in the resource and mining sectors which have largely experienced improvements in production, and created new jobs throughout the latter half of 2019.
In summary, all the key components are there for what should be a positive year ahead with firming conditions predicted in what is shaping up to be a recovery year for the region. After all, it has to be said that the past seven to eight years have largely been disappointing from a property and economic perspective.
Speak with a Rockhampton Mortgage Broker today.
Gladstone Property Updates
Slow and steady growth is expected over the course of 2020 in the Gladstone region. The market is still being driven by affordability and we will likely see further value increases across 2020. We expect rental levels to continue to increase on the back of low vacancy rates (the current vacancy rate sits at about 1.8 percent).
The trend in new construction activity is expected to remain steady. Builders are currently reporting high enquiry levels, however the supply of land is limited. Near level, 800 square metre plus allotments are in greatest demand. There is still an oversupply of small lots in Gladstone. We have seen a recent trend of developers combining two or more smaller allotments to create larger lots to suit current demand. We expect to see more of this in 2020.
Bundaberg Property Updates
Once again, we begin the year by looking at where we see our residential market heading. I guess you could say it’s our 2020 vision…
The Bundaberg residential market has been a steady performer over the past number of years and we don’t see that changing in a hurry.
Bargara and the entire coastal strip are seeing some positive signs of investment which has the potential to fuel growth along the coast. There are a number of projects happening or proposed that should stimulate interest in the area, such as the redevelopment of the Bargara Hotel, a new tavern near the Stockwell shopping centre, a new eco-friendly residential development at Innes Park/ Bargara South and renovations to the Bargara RSL.
We see the coastal strip as being the shining star in 2020.
Speak with a Bundaberg Mortgage Broker today.
Hervey Bay Property Updates
The Fraser Coast market for the next twelve months is likely to be similar to the market conditions in 2019, with slow capital growth in Hervey Bay and minimal movement in Maryborough. Affordable property below $300,000 in Hervey Bay can still be sourced in some of the older suburbs such as Pialba, Point Vernon and Urangan. Property priced below $200,000 is available in Maryborough with some achieving above seven percent yields, however a vast majority of these homes is likely to be high-set Queenslanders that require overdue refurbishment and ongoing maintenance.
The rental market is expected to remain very tight, with low vacancy levels of below two percent and demand to remain constant. New dwellings in Hervey Bay that sell for $360,000 are now returning $400 per week rent (gross) providing yields of above five percent along with associated tax depreciation benefits. Good value for money can still be sourced in areas close to the beach for older dwellings in need of some TLC.
The suburbs of Dundowran Beach and Craignish are expected to remain popular with buyers with most sale prices ranging between $500,000 and $800,000. The absorption of excess land stock in River Heads has increased over the past 18 months and this looks set to extend into the foreseeable future. New construction activity is also in an upward trend which is especially good for local employment and small business for materials. Unit values have stabilized however do not appear to be achieving any noticeable growth. Employment opportunities will benefit the region when the new aircraft manufacturing facility is built in Urangan (currently under construction) along with the new munitions factory in Maryborough.
Speak with a Hervey Bay Mortgage Broker today.
Mackay Property Updates
Welcome to 2020! We will again dust off the crystal ball and come up with our predictions for the Mackay residential market in 2020.
2019 was a positive year not only for the Mackay residential market but for the general Mackay economy. A buoyant resource sector coupled with large infrastructure projects, particularly the Mackay Ring Road, saw increased employment opportunities and population growth throughout the year. The residential market saw increased demand and slight capital growth. The rental market really gathered momentum in 2019, with vacancies below two percent and rental values increasing significantly.
In 2019, Mackay’s economy was strong, we had record low interest rates and there were excellent employment prospects across most industries, but we only saw minor property value growth. There are a number of factors that contributed to this.
Firstly, the median house price for Mackay fell from $438,000 to around $340,000 at the bottom of the market, a drop of around $100,000. This equity reduction eroded the purchasing power of a number of people who purchased property, particularly if they purchased at the height of the market. Also, the strict lending policies of banks meant that a far greater deposit was required to purchase property.
As we head into 2020, there appears to be no slowdown in the resource sector with significant employment opportunities available. Also, the Mackay Ring Road project is well underway, with the government approving Stage 2 and the Walkerston Bypass being recently listed on the National Infrastructure Priority list. Add the smaller local projects, including The Resource Centre of Excellence, retail expansion including Coles at Andergrove and the Northern Beaches Emporium development plus other council projects including the Mackay CBD to Harbour link, Queens Park revitalisation project and the Rotary lookout in North Mackay and all of these projects and opportunities should keep the economic recovery of Mackay continuing into 2020. Interest rates are expected to continue at record low levels for the short term and there appears to be a softening of some of the strict criteria of the banks.
So what do we think will happen to residential property in 2020? We think the momentum gained in Mackay over the past two years will continue into 2020. We anticipate modest price growth throughout the year across all market sectors, with rentals to remain tight. With continuing record low interest rates, good employment opportunities and a general feeling of optimism across Mackay, we think 2020 will be a good year for the residential real estate market.
Speak with a Mackay Mortgage Broker today.
Emerald Property Updates
We see the market in 2020 continuing on a similar trend to 2019.
A steady firming of values off the back of strong employment in the resource sector has caused rents to increase and the vacancy rate to drop below two percent for most of the Central Highlands’ major towns over the past 12 months.
We always keep a close eye on coal prices as our market has paralleled with this over many decades. Coal prices dropped throughout 2019 but most forecasts have the price stablising to firming slightly over the next three years. The drop in coal price doesn’t seem to have affected the resource sector at present, which appears very vibrant with many jobs on offer and mines looking at increasing production and expanding while new mines are still on the horizon.
There’s a large portion of the Emerald market still stuck in the position of having bought in the boom and not quite able to get out yet. This has definitely slowed turnover below what you would normally expect but we anticipate that those new to the market will continue to push values up slowly. Mortgage repayments compared to rental will also start to influence the market in 2020. If coal prices stay where they are or increase, we can only see the market slowly firming in all areas during 2020.
Whitsunday Property Updates
2020 here we come! The residential market in the Whitsundays is expected to move along nicely so long as we don’t experience any large, dare I say it, cyclones! We seem to be just cruising along in the laidback style of the Whitsundays. Agents are reporting that listings are slowing up a bit and there certainly appears to be less houses on the market at this point in time. Builders have new homes coming to life around the Jubilee Pocket, Cannonvale, and Cannon Valley localities. There appeared to be new increased activity in units during the month of December, so let’s hope they will bounce back. I believe that 2020 will be a great year for property located in the Whitsundays.
Townsville Property Updates
The second half of 2019 saw increased levels of activity in the residential property market. 2020 is likely to be the litmus test to determine whether we are genuinely into better times or merely experiencing a bubble of post flood activity.
Townsville has a strong pipeline of projects proposed for 2020 including a number of developments around the North Queensland Stadium which is nearing completion (to be named Queensland Country Bank Stadium) including the Cowboys Centre of Excellence, a 166-room Double Tree by Hilton Hotels and pedestrian walkway linkages from the city centre and central precinct to the stadium. The $71 million Marine Tourism Precinct which will include a four-star hotel, new SeaLink ferry terminal, car parking, new ferry berths and two new high speed ferries is another development proposed for 2020. Some other projects include the currently underway Flinders Lane retail development along with a number of proposed mixed use residential and food and drink developments in the inner city and Strand precincts.
The inner city 4810 postcode had a good level of activity in 2019 and this is likely to continue in 2020. Suburbs within a five-kilometre radius of the city centre could see increased interest as inner city projects improve the amenity of the area.
After an absence of sales in flood affected suburbs during 2019, we are likely to see these suburbs coming back to the market, providing a better understanding of the impact on value levels following this event.
The balance of the Townsville market will likely remain status quo whilst people monitor unemployment and job security factors. Overall, the outlook for the residential market in 2020 is positive with higher levels of market confidence and improving economic conditions.
Speak with a Townsville Mortgage Broker today.
Toowoomba/Darling Downs Property Updates
2020 looms as an interesting year for the Toowoomba market. 2019 saw a continuation of the trends seen in 2018 and 2017 with slowing levels of sales activity and some value stabilisation following the boom period from 2014 into mid 2015. Although sales activity has been steady across the board, the market has continued to be multispeed and property specific, with declining values and transactions in the lower and middle markets and strong demand and value levels in the upper end of the market. This is expected to continue throughout 2020.
Reduced investor demand has had a downward effect on values in the western suburbs. The two properties below in the suburb of Glenvale provide an example of this negative trend in the western suburbs.
- Year Built: 2013
- Sale Date: 13 September 2016
- Sale Price: $430,000
- Sale Date: 20 August 2019
- Sale Price: $405,000
- Price Change: -$25,000
- Year Built: 2015
- Sale Date: 29 April 201
- Sale Price: $372,000
- Sale Date: 8 March 2019
- Sale Price: $330,000
- Price Change: -$42,000
Kearneys Spring is another Toowoomba suburb suffering from declining investor demand. The two example properties below illustrate the declining trend in unit values from 2012 to 2019 in the suburb of Kearneys Spring.
- Year Built: 2013
- Sale Date: 30 October 2013
- Sale Price: $299,000
- Sale Date: 3 March 2019
- Sale Price: $260,000
- Price Change: -$39,000
- Year Built: 2012
- Sale Date: 4 June 2015
- Sale Price: $280,000
- Sale Date: 20 May 2019
- Sale Price: $259,000
- Price Change: -$21,000
Toowoomba has been a hub for major infrastructure projects in recent years, including the Toowoomba Second Range Crossing, Wellcamp Airport and the Grand Central Shopping Centre expansion. These infrastructure projects have assisted in holding vacancy rates low while many employees resided in the Toowoomba area throughout the construction processes. Now that many major projects are completed, the vacancy rate is expected to climb throughout 2020.
The key development areas for new housing include the suburbs of Glenvale, Cotswold Hills, Torrington, Kleinton, Highfields, Cambooya and Westbrook. Demand for vacant land has slowed significantly as a result of reduced investor demand and limited local buyer enquiry for lots of less than 500 square metres. Sales rates for land in many new housing estates are very slow, especially when compared to recent years when projects often sold out off the plan. Some developers are discounting and offering buyer incentives to attract interest in their respective projects, while a number of projects are out performing the market.
The key challenge for community leaders in 2020 and beyond will be the creation of sustainable employment in order to underpin broad demand for the residential property market.
Towns within the Surat Basin west of Toowoomba have experienced significant declines in values and transaction levels following the sudden decline in the construction phase of the major coal seam gas projects in the area. These towns have largely reverted to levels more aligned with their predominantly rural based economies and as such, local employment factors are now contributing to the trends witnessed in each of these towns. These markets are expected to show continued signs of improvement in 2020 with enhanced interest for dwellings from owner-occupiers as affordability has returned and a sustainable level of activity is returning in the gas sector. Many towns are enjoying strong occupancy rates leading to positive movement in rental values.
Speak with a Toowoomba Mortgage Broker today.
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.