As predicted in February, the Toowoomba residential market passed its peak and retracted slightly during 2016. An oversupply of new residential product has emerged (particularly units), leading to a slight increase in vacancy rates, a reduction in rental rates and subsequent exit of absentee investors. Sales volumes have retracted in an orderly fashion and median prices appear to have passed their peak. Commencement of the Toowoomba second Range crossing is believed to have assisted in capping vacancy rates at circa 3%, with many new employees renting throughout the construction process.
Whilst the Toowoomba market in general has been soft, renovated colonial homes across East Toowoomba and Mount Lofty have been stand out performers seeing strong interest and sale prices. These properties appear to be in the price ranges exceeding $700,000. Properties in the sub $300,000 price bracket have also performed well as this sector has traditionally been underpinned by first home buyers and appeals because of affordability. Due to the exit of absentee investors, the properties not performing so well are vacant land and new units in the western suburbs including Glenvale and Harristown, with lower land values and rebates being observed. Modern dwelling and land sales in Kleinton and Highfields have also slowed significantly.
Values have declined significantly throughout the Surat Basin western corridor. Vacancy rates have declined from the circa 40% peak experienced in Miles, as the now highly affordable rental rates have encouraged a new wave of renters to take up the supply of modern 4-bedroom, 2-bathroom dwellings.
In general there were no surprises in the Toowoomba market and predictions made at the beginning of the year appear to have been relatively accurate. We give our predictions a score of eight out of ten!
Some of the stand out trophy sales in East Toowoomba and Mount Lofty are pictured below (images sourced from RP Data).
At the beginning of 2016 we said that market conditions were likely to remain volatile in all market sectors with potential for further price decreases. Our predictions were pretty much spot on given that values and rents have continued to fall over the course of 2016 and the volatility in the employment sector has had a big impact on the market.
Values have fallen approximately 10% in most property sectors since the beginning of 2016. Since the peak of the market in 2011 and 2012, established housing has dropped approximately 50%. Units and townhouses on the other hand have dropped as much as 80% in the same time frame. Despite much talk around town that we have hit the bottom of the market, we continue to see declines in values. Sales activity has definitely increased, as values in the region are the lowest they have been in over a decade. Rental values appear to have somewhat stabilised however given that Gladstone’s vacancy rate is still well above average (7.5% in October according to SQM Research), there is potential for further decreases in 2017. It is important to note that the vacancy rate has been steadily declining over the course of 2016 which shows the oversupply is slowly being reduced. Mortgagee in possession activity also increased significantly in 2016. Until such time that mortgagee in possession activity slows and the vacancy rate drops considerably, it is difficult to predict when we will reach the bottom of the market.
We knew that 2016 would be a telling year as construction of the LNG projects on Curtis Island would come to an end. All construction work was officially completed approximately one month ago. Over the course of 2016 several other major employers in the region (Rio Tinto, QAL, NRG, Aurizon) have enacted cost cutting measures through their businesses and cut hundreds of jobs. New job opportunities in Gladstone are very weak and without a major project on the horizon, the Gladstone economy is likely to remain subdued. These job losses have had and will continue to have a direct effect on the property market in the Gladstone region.
Looking back over 2016, the year overall was a fairly steady one.
The $70 million Knauf plasterboard factory that is reportedly bringing over 600 jobs to the region started is currently to frame stage. The Innes Park North and Bargara South beach front residential development is still in the pipeline and should also stimulate interest in our very affordable region. Also commencing in 2016 was the new $90 million waste water treatment plant at Rubyanna.
The residential market for both houses and units has remained steady and consistent over the past quarter with overall confidence being subdued. As these previously mentioned developments move forward, confidence in the market should lift during 2017.
Across the Central Highlands in 2016 we witnessed the end of significant falls (which started in 2013) as predicted as a result of the resource sector downturn and restructuring. The majority of sales in these towns were mortgagee in possession. The mining dominated towns of Blackwater, Dysart and Moranbah saw an overall fall of up to 80% from the peak in 2012. The major regional town of Emerald experienced falls of up to 70% for units, 50% for houses and 30% for modern good quality product. Values were back near 2004 levels across the region. The majority of purchasers in 2016 have been local owner-occupiers. The first half of 2016 really left the region with the final wash-up after experiencing several mine closures and thousands of job redundancies over the past four years.
We felt in the second half of 2016 values started to level as mines began to retain their current workforce numbers and no more closures were seen. Over recent months coal prices have been trending upwards and this has resulted in some positive outlooks and speculation. In the last month, some towns have seen rental vacancy rates tightening and others have seen values jump by up to $30,000 as supply quickly shrinks. It appears some have been wanting to buy (currently renting due to very low rents) and waiting for the bottom to come. With the positive news starting to circulate in the resource sector, sales turnover has increased, supply has tightened and values have started increasing again, particularly in Clermont, Moranbah and Dysart. In reflecting on 2016, it was the year we saw our markets bottom and stabilise.
It’s that time of year again when all of a sudden, it is time to reflect on the year that was. Did 2016 live up to our expectations?
This year has seen some changes in the landscape of the Rockhampton property market. What was once an investor driven market sector, the lower end of our market has seen a withdrawal of investors (both local and interstate). This has seen the sub $300,000 market in Rockhampton weaken significantly throughout the year.
The market seems to be very accepting of well presented properties, with some achieving list prices due to multiple offers in short time frames. Conversely, dwellings requiring maintenance or repairs are staying on the market longer and longer, with values declining. Again, this is highlighting the reliance the lower market sector has on investor activity and first home buyers taking advantage of the market decline which has been occurring.
While no new events took place in our region, the continuation of the mining downturn has continued to shape property market conditions locally. This is despite the positive indicators coming from other industries pertinent to the local economy, such as agriculture.
In February we had anticipated many of the above factors would play a key role in the performance of the property market throughout 2016. Despite this, the level of decline in the lower market sector has been surprising.
Fortunately, 2016 has not been all doom and gloom for the region. There was some activity in the upper and prestige market sector, in excess of $700,000. Our highest sale of the year occurred at $1.225 million. Positioned in the well regarded locality of The Range, this property consisted of a two-storey, fully renovated Queenslander providing 5-bedroom, 4-bathroom accommodation and 3-car garage with a living area of over 400 square metres plus a self contained 1-bedroom, 1-bathroom flat. The property benefits from district views and above average ancillary improvements.
There are also another couple of prestige properties recently placed on the market this month that are being well received and watched with interest to see their influence on the market.
Another factor worth reflection is vacancy rates. The results are in for the past quarter and the region as a whole has shown a surprising tightening of the rental market. Since December 2015, vacancy rates have been between 6% and 7%, however the past quarter has shown a reduction in rates down to 4.6%. This is another positive influence to end the year and will be watched closely.
There has even been some positive buzz surrounding some Central Queensland mines and we wait with interest to see what 2017 has in store for our region.
It’s that time of the year again when we get to look back on the year that was and see how our predictions back at the beginning of the year panned out with full 20/20 hindsight. Back then, we stated…
“Although sale volumes have started to slowly increase, a majority of sale transactions tends to be occurring in the sub $300,000 market. Local agents are reporting that buyers are becoming more fastidious due to the large supply of properties listed for sale. There is still a relatively negative outlook among buyers and sellers in the Mackay region and market evidence suggests that property values are still declining in the short term. It is difficult to see any growth in values in 2016 without some big momentum shift in the Mackay economy. However it is hoped that some levelling will occur towards the mid to latter half of 2016.”
With this prediction, we were pretty close to spot on. The Mackay residential market continued to decline throughout 2016 with values of at least 10% and higher in some areas. We saw a large number of mortgagee in possession properties hit the market which also put more negative sentiment into the market. However, as per our prediction, sales volumes started to increase through mid 2016 with many purchasers seeing value not seen in Mackay in over 10 years. On the back of the increased sales volumes, we saw the rate of decline in property values slow, with the hope being we are very close to the bottom of the market. With respect to the last sentence, there does now seem to be some momentum shift in the economy in Mackay and a more positive outlook for the short term future. The spot price for metallurgical coal has risen significantly in the last few months, sugar prices are up and the Mackay Ring Road is just about set for construction. It is considered all these factors may shine some light on the residential market in the short term future.
At the beginning of the year we stated…
“It is difficult to predict what will happen to rental values and vacancy rates in the Mackay region over 2016. We believe that any movement (if any) in rental values and vacancy rates will largely depend on what happens to property values and interest rates.”
The rental market has been a good news/bad news story during 2016. The good news is that vacancy rates have fallen pretty consistently throughout 2016 from over 9% to sit currently just below 7%. The bad news is we saw a decline in rental values during 2016, although with a slight tightening of the vacancy rates, it is hoped that rental values may stabilise shortly.
It’s that time of the year again, when we get to look back on the year that was and see how our predictions at the start of the year panned out with full 20/20 hindsight. Back then, we stated…
“The year ahead is expected to deliver steady market conditions for residential property with what appears to be a stable supply and demand across the region.
There is speculation on the Chinatown development in the heart of Airlie and also the proposed extension/upgrade to the Whitsunday airport.
There appears to be an oversupply of entry level units at this point in time. Prestige units appear to be slowly on the increase and it is expected that these markets will continue throughout 2016.
House and land packages appear to be a sought after product with some builders stating they have work for the next nine months. This will form a steady stream of work for many local contractors, which all has a positive outlook for 2016.
The rural residential lifestyle properties are in good demand with people upgrading to an affordable lifestyle property. This is also expected to continue throughout 2016.
The downturn in the mining sector has impacted ever so slightly on Airlie Beach and its surrounding suburbs. We are looking forward to a fantastic 2016.”
So the residential market has continued to be steady.
The speculation related to the Chinatown and extension and upgrade to the Whitsunday airport have not come into play and with the change in local government, we will adopt a wait and see approach.
There is also an oversupply of entry level units at this point in time and the more prestige units turn over at a slower rate. The residential market is just cruising along nicely.
Hamilton Island is seeing more movement than it has had in some time with interstate buyers snapping up units following on from the good Sydney and Melbourne markets.
The Townsville residential property market started to gain some positive market sentiment in the second half of 2016 with conditions showing signs of having been through the worst and starting to stabilise. Although confidence is starting to increase, the market is still fragile and very much consistent with the bottom of the cycle.
The first quarter of the year saw the closure of Queensland Nickel Refinery (QNI) and with it the loss of some 800 jobs compounding the lack of buyer and business confidence and unemployment concerns.
The second quarter saw the local election take place along with campaigning for the Federal election. During this time support for a new Townsville stadium by both sides of politics started increasing the level of excitement in Townsville.
The third quarter saw the federal election run and the new Sports Stadium and allied Priority Development Area becoming the talk of the town. These projects have lifted sentiment in the market with the challenge now to get these projects going sooner rather than later.
As a result of these big events, market conditions have stabilised along with a steadying in sale volumes and median sale price.
High unemployment levels have continued throughout 2016, with anecdotal evidence suggesting people are leaving the area in search of employment. The rental vacancy rate has climbed throughout the year to be trending over 6% with vacancy rates for units significantly higher than that of houses. We had anticipated that the vacancy rate would progressively return to a more balanced market throughout 2016, however high unemployment coupled with lower than average population growth have affected this sector.
Overall the residential market finishes 2016 with a better market sentiment than it started, however the market remains fragile and price driven.
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