Regional QLD

The Smartline Report – July Edition

The month in review: Regional QLD

By Herron Todd White
July 2016

As the Toowoomba market looks set to continue to soften into the second half of 2016, the sub $500,000 price bracket remains the most active as it attracts investors, owner-occupiers and renovators alike.

Toowoomba’s median house price sits marginally below that of the previous year at $363,000 with reduced sale volumes also recorded. Of all dwelling sales recorded in 2016 to date, approximately 41% were between $300,000 and $400,000 while sales over $500,000 only constituted approximately 18%. Therefore despite reduced volumes, the sub $500,000 price bracket which comfortably encompasses the median price remains significantly more active than higher price points.

At the $500,000 price point there is a broad range of properties available.

As for rental demand, Toowoomba’s vacancy rate is at 3.7% which is almost double that of previous years and accordingly, there has been a parallel weakening of rental values. Despite this, sub $400 per week rentals have continued to see a relatively stable level of enquiry.

Overall, despite the softening market conditions there is likely to be continued demand across the board for properties for sale below $500,000 and it is predicted that the owner-occupier dominated suburbs such as East Toowoomba, Middle Ridge, Kearneys Spring, South Toowoomba, Mount Lofty, Darling Heights and Rangeville will continue to record a more stable growth pattern than new investor driven developments across Toowoomba’s western suburbs.

Sunshine Coast
The question of where to park a lazy $500,000 always remains somewhat challenging, especially given the fact that early and easy capital growth is very difficult to come by. This is a price point that is also very competitive in the market.

Beach side properties that provide a modest home with a higher value land component is still a good pick. However, you should be quite selective and along with being prepared for a long term hold. The gains are not likely to be so easily won over within the next 12 months. There are little to no new beachside estates in the pipeline therefore leading to these properties not being easy to replicate. This is one of the reasons why this product seems so appealing to us.

The other options we believe continue to have some legs are the rural residential markets in and surrounding the hinterland townships. The market is still yet to recover and remains fairly soft. There is an ability to purchase these properties at below replacement costs which has to hold you in good stead for the future. The future upside magnifies if you can afford to get into the $700,000 to $800,000 range where you really do get a lot of home for your money.

Units in small complexes with low body corporates and near to beaches (typically built in the 1980s) still provide good value at below $300,000, and up to around $400,000 for the refurbished ones, however this market has been picked over in the best areas like Alexandra Headland and Cotton Tree.

The Sunshine Coast market has been in recovery for some time now.

Doing your homework to buy well, and ensuring your investment horizons are more long term, are two ways to try and get the best results. The continued good news story of the Sunshine Coast University Hospital, due for completion in 2017, and other infrastructure projects planned for the coast should hold us in good stead.

Hervey Bay
Property on the Fraser Coast represents some excellent value for money if you should have a lazy $500,000 lying around. Depending on buyer preferences, $500,000 can buy an executive 4-bedroom, 2-bathroom home with pool and shed on 2,000 square metres in Hervey Bay or perhaps a high rise, top to upper floor unit (circa 2007) with ocean views along the Esplanade. Units have significantly reduced in value since the GFC within most large developments, with a recent sale reflecting a 45% reduction since purchase in 2006. Rural residential properties in Oakhurst and Tinana near Maryborough are reasonable buying, with most selling between $350,000 and $500,000, with little activity over this price point. If uninterrupted ocean views are a priority, property in River Heads might be a consideration with a wide range of homes to choose from, particularly within the Turtle Cove Estate on the fringe. Most agents in the local area have reported that they have adequate buyers for property at the present time, however struggle to sustain a good volume of listings. In conclusion, there is some terrific buying across most sectors with prices remaining stable and this is not expected to change in the short term.

In the Bundaberg region you could buy land in a new estate and build the home of your choice within reach of the lazy half million. For example you could build a 4-bedroom, 2-bathroom home with a 2-car built in garage.

Or if you prefer some more extras you could buy a three to four year old established home with a pool and a shed. Prices are steady and have been for the past few years.

There have been a couple of sales of triplex properties or four flat buildings that have been in the $500,000 to $600,000 range with returns around 6% to 7% for a mid 1990s brick complex.

If units are your thing, you could buy two 2-bedroom units approximately ten years old.

In short, the Bundaberg region is still a great place to live with great affordability for housing.

In the current market, for half a million dollars you can pick up a well appointed, modern home with a pool or shed on an allotment above 800 square metres and located in an established suburb close to all major urban amenities. Properties in the $500,000 to $600,000 price range are thinly traded in the current market.

Alternatively you could purchase a couple of modern 3-bedroom townhouses (roughly $250,000 each) or several older 2-bedroom townhouses (sub $100,000 each). Half a million is also considered near enough for entry level rural residential property. This market sector has seen some more significant declines in 2015 after having held its value over the past couple of years.

Markets in Rockhampton and surrounding areas have most certainly softened since we reported our lazy half million dollars this time last year. This year the market quite possibly presents some of the best opportunities we have seen for years. While not the best news for potential sellers, owner occupiers and investors will get more bang for their buck than ever. As always though, buyer beware!

An investor looking to park $500,000 in Rockhampton would be weighing up a modern (say five to ten year old) 4-bedroom, 2-bathroom home in the northern suburb of Norman Gardens which would fetch a rental between $450 and $500 per week against an older 3- or 4-bedroom Queenslander, gable style home on the Range on the southside. Both styles of home would appeal to owner-occupiers and investors alike and are desirable suburbs providing good amenity and proximity to schools and the CBD. Investors would be looking at a gross yield of 4.5% to 5%.

There are plenty of options in the early $300,000s up to $400,000 in the suburbs of Berserker and Kawana in north Rockhampton where you will find some well-presented 3- and 4-bedroom homes achieving yields of 4% to 5%.

Doing your research is key in these areas. Vacancy rates have been on the increase over the past 12 months. While still 5.5% to 5.7%, this is a steady increase from the lows seen in the golden years of the mining and gas boom.

Potential buyers should be wary of outer areas of Rockhampton such as Gracemere and Mount Morgan where supply has well and truly exceeded demand. Vacancy rates have been on the rise over the past 12 months and are now sitting at around 8.5%. The number of days on the market has also increased significantly.

The Palaszczuk Government’s announcement to increase the First Home Owner’s Grant from $15,000 to $20,000 for newly constructed homes (valued less than $750,000) for the next 12 months is likely to result in some increase in construction activity in the area and will provide a lifeline for some of our struggling tradesmen. However, it also has the potential to detrimentally impact vacancy rates with increased stock in the long term.

Capital growth is unlikely in the short to medium term in the Rockhampton region. Despite record low interest rates there is still a lot of uncertainty in the camp particularly around job security. It appears there is little joy on the horizon to drive the market in any forward direction. We anticipate rents will remain flat. There is likely to be a lot of fence sitting as punters wait for the dust to settle from the outcome of the federal election.

It’s that time of the year again where we see what the lazy half million might get you in the Mackay market and reflect on last year and how much the Mackay residential market has changed. Last year we wrote… “Last year we stated that you would get a lot more bang for your buck than the year before and 12 months later you can now get even more! If you are a glass half empty type, then the Mackay market has seen significant falls in value on the back of the mining downturn in the Bowen Basin. Values across the board are down 15% and fast approaching 20%. However, if you are a glass half full type, then the current market presents some of the best buying opportunities seen in Mackay in almost ten years. The big question is has the market hit bottom?

Unfortunately that is a bit tricky to establish at present and only time will tell.” Unfortunately, the verdict 12 months on is that we have not hit the bottom, with values falling further in the past 12 months. So the lazy half million will get you even more bang for your buck than seen in almost 12 years. For $500,000 you are looking at a large executive style rendered dwelling around 10 years old or younger with shed and pool in the northern beaches, with some change still in the back pocket. In the better quality estates in the north, you can now get good quality brand new dwellings from most of the builders in Mackay for under the $500,000 mark. In the traditional older suburbs south of Mackay, there have been very limited sales of older style Queenslanders over the $500,000 mark. It is considered that you can get a fully renovated large Queenslander for this price point now.

Again this statement from last year still holds true today. “The big question is has the market hit bottom? Unfortunately that is a bit tricky to establish at present and only time will tell.”

A lazy $500,000 in the Whitsundays will give you lots of choices: You can purchase land and build your new home or you can purchase a modern dwelling that has 4-bedrooms and 2-bathrooms with a double garage.

You can even throw in a shed or a pool in the suburbs of Jubilee Pocket or Cannonvale. You can buy a renovator’s delight in Airlie with no views within walking distance of the heart of Airlie. If views are more your thing, you can purchase a 1990s high set with ocean and distant island views in Cannonvale and also Jubilee Pocket. You can move out to the country with the little rural residential areas just on the outskirts and get yourself a 1990 to 2000 dwelling on one to two hectares. How about purchasing yourself a modern unit with ocean and island views and use as a permanent or holiday rental. The middle level for the Whitsundays is $550,000, with entry level upgraders along with out of town investors. There is an 8% to 10% gross return on investments. Investors again are spoilt for choice depending on their investment requirements: • Dwellings with a view or land for capital growth • A new dwelling which will benefit from full depreciation and tax benefits. The Whitsundays has remained stable over the past year.

With the median house price in Townsville currently trending at around $330,000, an investment of $500,000 will net you a good quality modern home in desirable residential suburbs or a renovated house within the inner city suburbs.

Our suggestions from 12 months ago have not changed much with the median price and market sentiment softening during this period making it very much a market for owner occupier buyers.

Following the recent announcement of Federal funding from both sides of government for the proposed CBD Stadium and Entertainment Precinct, houses in the inner city localities of South Townsville, North Ward and Belgian Gardens would be a desirable location for a $500,000 investment. These suburbs typically have renovated older style houses, typically on traditional sized lots within close proximity to the CBD and The Strand.

Other suggested localities include the middle class suburbs of Idalia, Annandale and Douglas. For $500,000 you could buy a good quality masonry block constructed home within a modern residential estate featuring lifestyle facilities such as parks and walking and bike paths. These areas are also within close proximity of major employment hubs including Lavarack Army Barracks, Townsville Hospital and James Cook University.

Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2016. Australian Credit Licence Number 385325

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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.