CoreLogic National housing Update December 2017
December Market Outlook
Putting in a pool
Helpful hints for removing a house
What do minimum rental standards mean for landlords?
Adelaide December 2017
Brisbane December 2017
Cairns December 2017
Canberra December 2017
Darwin December 2017
Gold Coast December 2017
Melbourne December 2017
Newcastle December 2017
Perth December 2017
Regional NSW December 2017
Regional NT December 2017
Regional QLD December 2017
Regional SA December 2017
Regional VIC December 2017
South West WA December 2017
Sydney December 2017
Tasmania December 2017
Wollongong December 2017
CoreLogic NSW housing Update December 2017
CoreLogic QLD housing Update December 2017
CoreLogic SA housing Update December 2017
CoreLogic VIC housing Update December 2017
CoreLogic WA housing Update December 2017
Feel less financially stressed this Christmas
Buying off the plan? 5 things to consider before you sign
Lenders demanding greater detail of living expenses for loan approvals
Regional QLD December 2017
The month in review: Regional QLD
By Herron Todd White
Toowoomba has been fortunate to benefit from major infrastructure projects including the Toowoomba Second Range Crossing, the completion of QIC’s Grand Central Shopping Centre extension and the imminent Inland Rail Project.
As predicted in February, despite these major infrastructure projects, the Toowoomba and surrounding suburbs residential market has continued to remain relatively stable throughout 2017 following a slowing level of sales activity in 2016. This followed the peak experienced throughout 2014 and into mid 2015. Although sales activity has been steady across the board, the market has continued to be multi-speed and property specific. There has been little consistency with variations in sale prices and buyer interest making it difficult to determine well performing suburbs and specific property types.
In 2016, an oversupply of new residential product emerged (particularly units), which led to a slight increase in vacancy rates, a reduction in rental rates and subsequent exit of absentee investors. Sales volumes retracted in an orderly fashion and median prices passed their peak. Throughout 2017 a balance appears to have emerged with vacancy rates continually falling from an average of 3.5% across 2016 to 2.3% as at October 2017. The median house price appears to have plateaued at approximately $370,000 while the unit median price has slowly declined to approximately $305,000.
The infrastructure projects are believed to have assisted in holding vacancy rates low with many employees living in the Toowoomba area during the construction processes.
As mentioned in February, the key development areas for new housing included the suburbs of Glenvale, Cotswold Hills, Torrington, Kleinton, Highfields, Cambooya and Westbrook with a mix of owner-occupier and investor orientated estates under development or planned. Smaller lots than the traditional 600 to 1,000 square metre parcels have also been developed in Toowoomba and the acceptance of this small lot product appears to be growing.
West of Toowoomba, the towns within the Surat Basin have experienced significant decline across the board following the decline of the construction phase of the mining and gas boom. These towns are all either regressing currently or have reverted to levels which are more aligned with their predominantly rural based economies. As such, local employment factors are now contributing to the trends witnessed in each of these towns. Rental rates and sale prices have declined significantly following the oversupply situation, however appear to be stabilising and interest in dwellings is being experienced from owner-occupiers. A significant over supply situation remains in the unit market which continues to place downward pressure on this sector. The Roma market is relatively inactive and downward pressure appears to remain while Dalby is showing good signs of stabilisation with a strong occupancy rate leading to positive movement in rents.
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 8 out of 10!
The Sunshine Coast property market in 2017 has continued on from where 2016 left off. Activity has been good with increases in values experienced in most areas. The market has started to experience some issues that we are going to have to work our way through.
The significant sales recorded throughout the market in the first half of the year has had the effect of lowering the stock levels. Whilst the upward movement in prices has helped to encourage vendors onto the market, stock levels continue to remain relatively low. Good if you are in the market.
Another factor affecting the market in the second half of the year was the impact of APRA’s policy changes to investor lending. These changes have effectively limited the number of interest-only investor loans, thus putting the brakes on the investor market.
With Sydney, Melbourne and in part Brisbane markets performing well over a number of years, significant amounts of interest and in effect buyers have been looking to relocate to or invest in Sunshine Coast property. Let’s face it – with the strong values in the southern capitals, our property in some cases is pretty cheap especially given what’s on offer.
We were experiencing most of the activity at the entry levels of the coast property markets and in particular along the coastal stretches and areas close to amenities. Well the good news has moved upward through the higher value levels as well as to the inland areas. Upgraders have been active as well as the influx of people to the coast. As we have mentioned, we do not believe there have been any main problems with this market other than limited stock levels that has effectively curbed sale volumes.
The unit market has been somewhat similar to the housing market in that entry-level properties have tended to perform pretty well. There have been a few more unit complexes under construction over the year. From all reports the well designed and finished units are having a good level of market acceptance. There has also been a bit of an increase in the larger permanent style units and also larger townhouse and small lot housing on the back of empty nesters wanting to downsize.
The rural residential market has continued to see good improvement and has gained some good momentum. Confidence in the better quality properties in the $750,000 to $1.5 million price range has been improving.
The prestige residential market has also continued to strengthen. As mentioned this market is closely related to the southern markets of Sydney, Melbourne and Brisbane so at the moment has been pretty good. Buyers in this segment are certainly purchasing for a position or lifestyle choice and in quite a number of cases is the future retirement home and principal place of residence. The majority of activity in this market is occurring up to the $2 million mark running right along the coast from Caloundra up to Noosa.
2017 has been another good year in the property market across most sectors on the Sunshine Coast. With the hospital finally opening and a number of good long term projects such as the Sunshine Coast Airport Runway extension and Sun Central (New Maroochydore CBD), there are exciting times ahead.
The Fraser Coast showed some positive signs of a recovery throughout 2017, with values making slight increases in some price points and rising demand particularly for property over $500,000. This has been the case in Maryborough also with a noticeable increase in sales of property over $350,000. Renovated Queenslanders finished to a high standard are now fetching between $350,000 and $450,000 which is a welcome change to the minimal activity over the past five years. Sales of blocks of flats in Maryborough have routinely attracted gross yields of between 5% and 9%. The buildings are typically older dated properties in need of refurbishment, tenanted to long term residents. Rents appear to have now steadied after a period of slow increases throughout the year for both Hervey Bay and Maryborough.
Selling prices for Esplanade property in Hervey Bay have improved with a number of properties selling between $900,000 and $1.4 million, which has not been experienced for many years. The continued house and land packages throughout the numerous estates in Hervey Bay appears to have slowed during the latter part of this year. The supply of these new homes seems to be meeting demand with little excess stock available. Local brokers report that first home buyers are still few and far between now that the local council incentives have been concluded. Most agents indicate that buyers in the region are a mix of locals, interstate and intrastate residents. Overall the future is looking optimistic for the area with the expectation that values will grow at a slow to gradual pace in the near future.
The Bundaberg residential market stayed relatively flat with a slight decrease in both volumes and price. The rental vacancy rate is hovering on about 4%. We predicted at the start of 2017 that there would be increased confidence in the region and that this would translate into an increase in values. Unfortunately this has not been the case.
With mortgage rates at all time lows, it is a mystery as to why the market has not begun moving upwards.
The key to the area is that Bundaberg is very affordable.
Values across the Central Highlands region stabilised in 2017. In Emerald, Clermont and Moranbah, values firmed slightly and rental vacancy rates tightened across the region. Employment demand in the resource sector is currently strong off the back of sustained higher coal prices. A quiet confidence has returned to the resource sector with some reporting a skilled labour shortage already. This in turn has started a recovery in the property market with median house prices on the rise along with rent increases. Potential purchasers are even enquiring about available vacant land (not seen for five years) and a few new houses are starting to pop up. All in all the optimism is rising and the negative sentiment and low business confidence is finally starting to shift with all indicators pointing in the right direction for a much more positive future over the next few years if coal prices remain at current levels or better.
Overall, 2017 was the most positive we have seen our market perform in nearly five years. Most property sectors have now bottomed out and stabilised and we have even seen some evidence of an increase in values. Sales activity has been strong for most of the year with buyers very aware of the great affordability the region represents. Affordability is currently the driving force for the Gladstone region market.
Good quality existing stock is attracting multiple offers and significantly reduced days on the market. This has also led to an increase in new construction activity. Owners and upgraders are opting to build their forever home due to record low land values.
Mortgagee in possession sales appear to comprise about 30% of all sales and while the number of repossessions has not declined, most stock appears to sell in a reasonable time frame providing they are priced appropriately.
In February we reported that the vacancy rate sat at 8% indicating there was still an oversupply of product. We further stated that until that rate was at least halved, there was unlikely to be any change in rental values. Fast forward to the end of 2017 and the vacancy rate sits at 3.5% indicating the rental market is nearly balanced. Already over the later stages of this year, we have seen a slight uplift in rental levels across most property sectors.
At the start of the year, we reported a more optimistic outlook for the residential property market in 2017 in comparison to previous years. At the time, this optimism was based on a general improvement in mining and associated service industries, affordable house prices and low interest rates.
As the year panned out, these factors did attract more to the property market with volumes increasing slightly towards the latter half of the year. Some of these transactions were those holding off during the bottom end of the market, probably due to a wait and see approach, prior to committing. Owner-occupiers have been the primary players in the market, particularly so for those moving into family sized homes of around the $450,000 to $550,000 mark.
The lower end of the market (sub $250,000) has not improved as much. This market is typically driven by investors, which there is a current lack of, possibly due to a reduction in rental income and a tightening of lending conditions. On a more positive note, there has been a drop in vacancy rates from an average of 6.5% to a consistent 4.5% in the second half of the year. We do find though that there is a time lag between a drop in vacancy rates and an improvement in the investor market.
Reflecting on the year that was, there are a few additional factors which have affected our market.
These include major projects which started later in the year by both the Livingstone Shire Council and the Rockhampton Regional Council to improve the liveability factor in our region. These projects include the foreshore and town centre revitalisation developments in both Yeppoon and Rockhampton. The developments are currently in various stages of completion, however certainly helped to improve the outlook in the latter half of this year.
Probably the most significant event has been the lead up to and then the naming of Rockhampton as the FIFO hub for the Adani Carmichael mine. It is reported that approximately 1,100 FIFO workers are to be located in the Rockhampton region for the two year construction period. Post construction, this workforce is expected to be reduced to approximately 625.
Overall the Rockhampton region property market performed largely in line with what was anticipated coming into 2017 and the last month or so has even provided some added bonuses to end the year in a better overall position than this time last year.
It’s that time of the year again, where we get to look back and see how accurate our crystal ball gazing was in February when we wrote “The Year Ahead.”
In February we wrote…“The Mackay residential market isn’t expected to show any real signs of improvement in terms of value in the first half of 2017. We think there will be a consolidation of values during this time and that sales volumes will continue to be strong in early 2017.”
Nailed it!! The Mackay residential market has shown solid sales rates not only in the early stages of 2017, but right through the year. Values did stabilise through the year and appear to be at the bottom of the market with some early indications of slight increases across the back end of 2017.
However, the gains (if any) have only been slight. There are still a number of hurdles the Mackay market will need to overcome before we see any material or substantial growth in values. Firstly, 4740 still appears to be a swear word with some of the banks, with harsher lending policies still in effect. Also, the downturn in the market saw significant value loss, with the average loss in value of dwellings being around $100,000 and higher. This in turn has eroded a lot of equity for potential purchasers. A common theme from local agents and punters is they would love to buy in this market, however due to the drop in value of their existing house don’t have the deposit or ability to purchase.
In February we wrote…“There has been negative buyer sentiment in Mackay over the past few years. We have seen this sentiment start to change during the last half of 2016, leading to higher sales volumes across the residential market, albeit at value levels not seen in Mackay in over ten years. This is seen as a possible predictor that the market has reached the bottom. Only time will tell if this negative sentiment can be reversed during 2017.”
There has definitely been a swing in buyer sentiment throughout 2017. It appears the penny has dropped that the market had reached the bottom, with buyers who were holding off now entering the market. There appears to be a number of factors leading to this increased confidence not only in the residential market but in the general Mackay economy. The rise in price of metallurgical coal and continued record production has seen employment opportunities in the resource sector improve dramatically in the past 12 months. Also major infrastructure projects such as the Eton Range Bypass, new fire station and Mackay Ring Road Project to name a few, plus the increased employment opportunities linked with repairs from cyclone Debbie have also contributed. Couple that with record low interest rates and the ingredients were there for the stabilisation of the residential market.
This consolidation has not only been associated with sales, but rental values and vacancy rates also improved throughout 2017. Rental vacancies started the year at around 7% and based on latest REIQ figures, halved by the end of the year.
My opening statement last year I think summed up our attitude and thought process at the start of the year… “I have to admit, the last few years I have dreaded writing the year ahead predictions, but this year I have a renewed sense of optimism that the worst may be behind us and that the Mackay residential market will stabilise.” Nailed it!!
Throughout 2017, Townsville’s residential property market progressed to the start of recovery phase as sentiment continued to consolidate. Even so, the market remains fragile with the housing sector continuing to advance more noticeably than the land and unit markets.
We have seen positive market drivers including a relatively sustained period of business positivity, increased sentiment surrounding the mining sector and increased jobs growth and falling unemployment during the course of 2017, with the trend in the number of jobs being advertised in October 2017 for the Townsville region increasing by a healthy 34% compared to the same period in 2016.
The housing market is highly suburb selective with reasonable turnover levels in the sought after mid to inner suburbs, but slow sales in the outer areas and suburbs with perceived social issues. The market is being driven by owner-occupiers including a number of first home buyers. The unit market has seen a slight increase in trend terms in sale volumes however volumes remain at low levels compared to recent years.
Our HTW Monthly Rent Roll Survey indicates that the rental vacancy rate tightened considerably throughout 2017. Population growth is a big driver of the rental market, with growth over the past four years being at below the long term average growth rates. With a number of large scale projects either commencing in 2017 or readying for commencement, workers from out of town are being attracted to the region, which has assisted in reducing the vacancy rate. The overall trending vacancy rate has reduced from 5.61% in January 2017 to record a trending vacancy of 3.9% as at October 2017.
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.