Regional QLD April 2017

The month in review: Regional QLD

By Herron Todd White
April 2017

The Toowoomba market may be described as multispeed at the moment. Some suburbs are performing better than others but overall, there has been a strong start to 2017. Agents are still reporting slow enquiry from investors with the take-up rate of new units slowing considerably from the highs of previous years.

Absentee investors drove the unit market from about 2012 to 2015; however, there has been a marked decline in investor demand for this product over the past two years. Notwithstanding, new unit complexes positioned in in-fill areas, namely across the eastern and southern suburbs such as Centenary Heights, Rangeville and Middle Ridge, are still popular with owner-occupiers, which is underpinning values.

Conversely, there is some concern that there is a concentration of units and duplexes across the western suburbs including Glenvale and Cranley. New home construction is still strong, with activity in new residential land estates across Middle Ridge and Kearneys Spring.

New homes in the sub-$650,000 price bracket in Middle Ridge are seeing steady demand with properties priced at or near the market generally selling within one to two months. Homes that are overpriced are taking much longer to sell in this market given the ample supply.

2016 and early 2017 have seen the prestige market perform much better than previous years. Renovated colonial homes in East Toowoomba and modern resort-style homes in Mount Lofty and Middle Ridge have been transacting well. A number of sales in the plus-$2 million price point have occurred since the start of 2016.

Original cottages with renovation potential across South Toowoomba, North Toowoomba, Centenary Heights, Newtown and Harristown are sought after given their relatively affordable price point, say $250,000 to $450,000, and their value-add potential.

Satellite suburb markets are also showing mixed signs. While Westbrook to the south of Toowoomba is seeing some reasonable activity in the $400,000 to $550,000 price point, the northern satellite suburb of Kleinton is steady to slow, with the take-up of new land and spec-homes much slower than previously observed. Homes on larger lots of, say, 2,000 to 6,000 square metres are transacting well at the moment.

Regional towns in the Darling Downs can be almost uniformly described as slow and steady. The markets in Dalby, Chinchilla, Miles and Roma are slow given the post-mining boom environment; however, there may be some upside in 2017 as coal seam gas exploration activities ramp up. Caution is still advised when investing in mining markets given their historic price and rental volatility.

Sunshine Coast
Being a coastal area, beachside localities are always popular amongst buyers. Demand for these areas along the central and southern parts of the coast is currently being driven by the much-anticipated opening of the new Sunshine Coast University Public Hospital. However, the major driver of demand in the northern beachside localities is the lack of vacant land. Properties priced under $750,000 are highly sought after at present, which will generally buy you a 3- or 4-bedroom mostly original 1990s dwelling within close proximity of the beach. Recent sales activity has shown an increase in the number of sales occurring at or in excess of full asking price as well as more multiple offers being presented which is indicative of a peaking market where demand is greater than supply.

Buyer activity is from investors and owner-occupiers; however, as a result of strong growth over the past two years, this market is becoming out of reach for the majority of first home buyers. Strong price growth is forcing first home buyers into the new estates further west where in the $400,000 to $500,000 range, you can pick up a relatively new dwelling albeit on a much smaller allotment. The other option that seems to be gaining some momentum amongst first home buyers is the hinterland townships where entry level older dwellings on traditional-sized allotments start in the low to mid-$300,000s and more modern dwellings are priced at $400,000 to $500,000.

Price growth in the housing market has also seen first home buyers opting for older walk-up units located along the coastal strip. Prices for this type of unit have improved with the increased demand. Typically, we are seeing these older units in original condition selling in the $300,000 to $400,000 price range. Units in larger, high-rise tourist resorts with high annual body corporate fees have not experienced the same demand, which is a concern for the future, particularly as these complexes start to age.

The most active price point for property on the Sunshine Coast is still the $350,000 to $650,000 price range, which can still buy a wide variety of properties including older beachside properties, more modern dwellings in the newer estates, as well as established rural residential properties in the hinterland. Interstate migration will always play an important role, with the Sunshine Coast being a popular retirement area; however, it is anticipated that demand for property in general will increase as a result of the new hospital. Demand from working professionals associated with the new hospital is expected to increase demand for higher end properties above $700,000.

As to whether the recent growth is sustainable is the million-dollar question. This will largely depend on external factors such as changes to interest rates, decline in economic activity or decrease in market sentiment, which could see a rapid softening in the market resulting in downward pressure on values.

Rockhampton has become one of the most affordable areas to buy in recent times, with the Real Estate Institute of Queensland’s most recent quarterly update revealing a median house price of $273,000. Affordable prices and low interest rates are making it a good time to buy.

Market activity, while not breaking records, has seen the majority of sales in a more affordable price bracket of sub-$350,000. As we have seen in the past, a large number of these sales are in the more popular areas on the north side such as Frenchville, Norman Gardens and Berserker. On the south side, The Range, Allenstown and Wandal continue to be the stronger performers, but not at the same level as their north side cousins.

The majority of sales on the south side are of older dwellings. Most of these properties are in an average but comfortable and livable condition. The north side of Berserker offers similar-style accommodation whereas Frenchville and Norman Gardens offer more modern, if somewhat dated, accommodation.

Buyers in recent times have been a mixture of investors, families and first home buyers. Listings continue to be more popular in the sub-$350,000 price bracket. With the prices having come back we are seeing good buying, particularly in some of the northern suburbs. We see this trend continuing in the short term.

Running through the City of Rockhampton is the Fitzroy River. Its catchment covers an area of 142,665 square kilometres, making it the largest river catchment flowing to the eastern coast of Australia. Cyclone Debbie, and the tropical low the cyclone produced once it reached landfall, dumped vast amounts of water within the catchment area during late March – early April 2017. The Fitzroy River is expected to peak at 9 metres in Rockhampton in the first week of April 2017. At this level, flood water may affect up to 3,000 residential properties. Most of these properties are the oldest homes that are located in a known flood area and sit at the lower end of the market.

Rockhampton has experienced similar major flooding in the past, with the most recent being in 2011 (9.2 metres). Smaller flood events occurred in 2012 (7.1 metres) and 2013 (8.61 metres). History dictates that the market in the low-lying areas of the city that are affected by flood water does suffer immediately after a major flood event. This is mainly due to limited or no sales activity during the weeks/months of clean-up.

There does not appear to be one definite location or suburb that is attracting more activity than any other. All suburbs have their own positives and at the end of the day it comes down to buyer preference. Price point is a key factor as to what is selling. Basically, dwellings priced under $200,000 and units priced under $100,000 are attractive in the current market. Activity has been solid in these sectors for the past few months and available stock is starting to decline. The heightened activity in this price sector is having a flow-on effect on higher-priced housing sectors and will eventually lead to movement in pricing.

Owner-occupiers are the most active buyers at present; however, a small number of investors are still entering the market. Gentrification is starting to occur in some fringe suburbs and estates, which in the past have typically been investor-owned properties.

The Bundaberg market remains stable. We have seen an increase, however, in the median house price due to the surge of increased volume of sales in the $300,000 to $400,000 price bracket. This shows a volume-of-sales increase, not necessarily a price-value increase.

We have also seen vacancy rates drop.

We have noticed the inner-city locations attracting more activity along with suburbs including Kepnock and Svensson Heights recording a noticeably larger volume of sales. In saying this, Bargara and coastal suburbs always remain popular choices amongst buyers.

This month’s topic is what’s hot in your area – and to all the avid Mackay followers we are going to sound like a broken record because the answer is the same as last month when we talked about first home buyers.

In general terms, no one area is currently considered hot, with good enquiry levels over the majority of market sectors.

Currently, there is a strong interest in properties in suburbs close to and surrounding the Mackay CBD including Mackay’s northern suburbs. Older, completely renovated dwellings including 1950 cottage-style and 1970 butterbox-style dwellings are reportedly moving quickly and local agents have stated that buyers are starting to offer higher than the list price in some instances to secure such properties. For these style dwellings, the price generally ranges from mid to high $300,000.

Mackay residents are starting to talk more positively about the local property market as greater employment opportunities become available in the region, with major projects such as the Mackay ring road and Eton bypass and the renewed confidence and employment in the mining sector. We believed that the Mackay residential property market has stabilised and that the worst appears to be behind us; however, only time will tell.

Hervey Bay
There does not appear to be one particular location that is running hot at present; however, overall the market is active with agents reporting good sales volumes across all areas. Property priced appropriately is selling within a relatively short time across all price brackets; however, the higher the price, the more limited the buyer pool. Sales activity for house and land packages in new estates is strong, with the local and state government grants on offer helping this market. Eligible purchasers can obtain up to $32,000 for their first new home and this appears to have stimulated first home buyers. Owner-occupiers and investors are also actively purchasing these house package deals. Continued supply of new product, however, is limiting capital growth in the established home market and until supply starts to decline, values are likely to remain steady.

No one area is particularly hot in the Emerald market. It appears to be the right time to be buying in all segments and depending on what one can afford all price ranges are active. The bargain hunters are definitely out there looking for a renovation project that they may be able to flip if the market continues to improve. Properties in poor condition or that require maintenance are definitely discounted in the market and showing no signs of firming yet as supply is still slightly higher than demand.

Jump up to Moranbah and things are very different. Demand is now greater than supply and we are seeing properties selling above list price. It’s still a very long way from where the market peaked, but some properties have jumped $50,000 in the past five months. Currently properties requiring maintenance are not showing any signs of a discount as supply is low. Investors are active again on units and multi-unit properties with some showing gross yields up to 12%.

Post-Cyclone Debbie, local agents advise that vendors are withdrawing their properties from the market until a full appreciation on the condition of the homes is assessed. Those people who have damaged homes that are unsafe to occupy are looking for short to medium-term rental accommodation. This, combined with a significant influx of tradespersons to the area who also require somewhere to stay during the clean-up/rebuild, has resulted in all the available rental properties being snapped up. Once clean-up has been completed it is considered that the market will return to similar levels pre-cyclone.

Another fact to note is there are some visible small landslides that have affected parts of the area. Those properties that have been affected will require geotechnical reports to assess suitability for any future potential development.

Post clean-up, the Whitsunday market is looking positive for the remainder of the year with all real estate agents predicting that properties will be selling.

There doesn’t appear to be any particular area that is hotter than the other, with sales moving in all areas, from small units; vacant land; mum-and-dad style suburban homes and residential lifestyle properties. We have also been advised that some of the more luxurious units have been selling off the plan, along with some prestige land sales.

The Whitsunday area is also abuzz with a prestige home selling between $5 million and $10 million in the past month.

While there is increase in activity there has been no noticeable increase in values; however, watch this space. Let’s hope the supply and demand will see some increase in value.

With an improving sentiment in the local residential property market, anecdotal evidence suggests that there is improving interest in the fringe CBD suburbs of North Ward, Belgian Gardens and South Townsville.

Historically, as the property market starts to gain momentum it is these inner city suburbs that feel the first upswing in price movement. This, coupled with the interest being generated on the back of the stadium and the Waterfront Precinct, is making buyers, both owner-occupiers and investors alike, take notice.

The typical price entry for the inner city suburbs is around $300,000 for a cottage renovator, with the most active price bracket being the $300,000 to $600,000 range. Housing in these areas are typically older-style, timber-framed dwellings, many with some classic features. Condition ranges from original to fully renovated. There are also more modern multi-residential developments interspersed throughout. We are currently seeing interest in both housing and units by investors, with owner-occupiers more focused on housing stock.

Overall, while these fringe suburbs are not currently considered hot property, it appears, anecdotally anyway, that interest is building.

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