Regional QLD July 2017

The month in review: Regional QLD

By Herron Todd White
July 2017

Ipswich
Ipswich is a relatively affordable market, particularly in comparison to nearby Brisbane, therefore a lazy half million could buy you a semi renovated character style home in an established area of Ipswich or a modern house and land package on circa 500 square metres in a new estate. However we would be more inclined to seek the larger block of land with the character home in the established older suburb of Ipswich as the better performing property in the region.

At this price point you could afford to purchase two properties in the Ipswich area, however a single property of the highest quality possible is more desirable, with features such as large land and character style home.

This price point is likely to remain relatively stagnant in the short to medium term in line with the broader market for Brisbane. The market remains relatively affordable with rental returns in the order of 5% gross. Should there be improvement in interstate migration, this could in turn have a positive impact on the Ipswich market.

Toowoomba
Looking back twelve months, the prediction of a steady Toowoomba market has proven to be accurate. The total number of properties listed for sale year on year is very similar. Sales volumes have softened slightly while values remain steady.

With this month’s focus on the $500,000 price point, we have provided recent examples of property sales in this segment which is mostly dominated by the owner-occupier sector. Investors are far less active above the $400,000 price point in Toowoomba.

Below is a sale of a typical, owner-occupier home in the established area of Middle Ridge. This property sold for $493,000 and comprises a 4-bedroom, 2-bathroom dwelling with double garage and pool.

QLD1

An alternative option for buyers seeking larger lots is represented by the sale of a 4-bedroom, 2-bathroom dwelling in the satellite suburb of Westbrook for $492,500. This property features a 1,000 square metre lot and a detached shed.

QLD2

For those seeking larger homes with renovation potential, below is an example of a 1970s, 4-bedroom, 2-bathroom split-level home with original features located in the well-regarded suburb of Rangeville.

QLD3

Acreage lots with large dwellings and shedding can be found in Highfields, approximately 13 kilometres to the north of Toowoomba. A recent example is shown below of a 4-bedroom, 2-bathroom, semi-modern brick dwelling situated on a 2,600 square metre lot. It features landscaped gardens and shed.

QLD4

The $500,000 price point in Toowoomba and surrounding areas is well above the median price which hovers around the $360,000 to $375,000 mark. Despite this, there are many areas across the region where homes can be secured at this price.

Sunshine Coast
When asked this question in 2016 our tip was to buy older original dwellings along the coastal strip anywhere between Noosa to the north and Caloundra and Golden Beach to the south. We expected these areas would continue to strengthen however not to the extent we have seen over the past twelve months.

Twelve months on, it is now very difficult to get into these markets with only a few select areas around Currimundi, Battery Hill, Pacific Paradise and Mudjimba where it is still possible to get into the market for a modest freestanding dwelling for under $500,000.

So this year it’s these areas which are one of the areas to park the lazy $500,000. Demand is exceeding supply therefore we expect these areas to continue to increase in value. Clearly this is subject to no major downturn or erosion in confidence.

Units along the coastal strip are also an option however growth in the unit market has failed to keep pace with the dwelling market over the past 12 months and we don’t see this trend changing. Well positioned units in smaller walk up complexes with low body corporate fees have improved in value. However supply of these types of units is generally relatively high, particularly around the Caloundra beachside suburbs, so there is an opportunity to get into the market for under $500,000.

The other market which still offers good value for money is the hinterland townships, from Beerwah to the south through to Cooroy to the north, which are all positioned along the northern railway line. Most of these towns have a good supply of traditional residential properties (larger allotments) for under $500,000. The entry level rural residential properties on land sizes between 2,000 and 4,000 square metres offer the best value for money and can still be purchased below $500,000. While these areas have experienced some capital growth, they haven’t kept pace with properties along the coastal strip, so these properties may be set for some good capital growth over the next 12 months.

The other options are house and land packages in the new estates around Caloundra West (Stocklands Aura Estate) and Palmview (Avids Harmony Estate) where it is possible to enter the market at or below $500,000. Supply of these modern small lot developments however is set to remain strong and even increase as more land is developed which may limit growth in the short to medium term.

Here’s hoping the 2017 to 2018 financial year continues in the same vein as the past year for property on the Sunshine Coast. Happy investing!

Hervey Bay
A lazy half million in Hervey Bay can buy a wide variety of property depending on the location, size of the site and improvements. Property along the waterfront Esplanade has been selling in this price range, with most dwellings being older circa 1950s basic dwellings in need of complete refurbishment. There are also modern homes only one street from the Esplanade which sell in this price range, within a developing estate known as Ocean Blue in Pialba. Best performing property for the Fraser Coast in terms of potential capital growth for the short to medium term is considered to be within Dundowran Beach and entry levels homes along the Esplanade.

Executive homes on larger lot sizes between 2,000 and 4,000 square metres are generally available in Wondunna, Urangan and Urraween above $450,000. Improvements mostly include 4- to 5-bedroom homes built within the past ten years, with a pool, granny flat or shed. Rural residential property on lot sizes between two and four hectares close to Hervey Bay appeals to a certain market sector seeking space for horses and other livestock. In most instances there are no reticulated water or sewage services which can be a deterrent.

Hervey Bay Esplanade unit prices are considered to be very reasonable overall, after a long steady recline over the past seven to eight years. In the current market $500,000 is likely to buy an upper level 2- to 3-bedroom modern unit with good ocean views in a circa 2005 to 2008 complex with extensive common improvements.

You can expect to achieve high value for money in Maryborough, with property over $400,000 generally being renovated Queenslanders which have been finished to a high standard. There are also some well appointed homes on larger sites in the fringe suburb of Tinana.

Emerald
$500,000 would allow you to buy a residential or rural residential property in approximately 90% of the Emerald market. Good quality five year old homes are selling at $450,000 to $500,000 with pool and shed. $500,000 could also allow you to buy four units in the current depressed unit market. We have seen a slight firming in the good quality homes market but no movement in modern units yet. The market appears to be waiting for the coal price to stabilise, the impact of solar farms and the outcome of Adani. The confidence in the resource sector is starting to return slowly.

Gladstone
While the market continued to head toward the bottom after this issue last year, what you can now buy for a lazy half a million now is not too dissimilar to this time last year.

If you are adventurous or can afford to hold while waiting for capital gains you could buy a handful of units or townhouses ranging from 1970s to 1980s 2-bedroom townhouses (sub $100,000), modern 3-bedroom townhouses ($150,000 to $200,000) or modern 2-bedroom inner city apartments ($200,000 to $300,000). Gross yields are generally between 3% and 5% for units in Gladstone.

For half a million dollars you can pick up a well appointed, modern home with a pool and shed in either an established residential area in Gladstone or on a rural residential lot in the outer areas. Properties in this price range are becoming more attractive to upgraders looking to cash in on the record low prices.

Rockhampton
In the 12 months since our previous report, the Rockhampton housing market has softened slightly with signs that the market appears to be nearing the bottom. People looking to invest $500,000 within Rockhampton and surrounding areas are presented with a number of options ranging from newly constructed homes, existing homes, duplexes and units.

The newly constructed housing market in Rockhampton is dominated by Norman Gardens and Parkhurst with land starting from $159,000 in Norman Gardens for approximately 600 square metres and $156,000 for over 700 square metres in Parkhurst. With land prices at this price point, it allows the investor plenty of room within their budget to construct a new home. Rental yields for newly constructed homes in these suburbs range from 4% to 5% gross. On the outskirts of Rockhampton, Gracemere presents the cheapest entry level into the housing market, with land starting from around $100,000 for approximately 600 square metres with gross rental yields consistent at around 4% to 5% also. For existing residential housing, entry level begins at around $100,000 for older style homes in secondary locations, although these homes often require significant work in order to entice renters due to the large amount of stock still available. At around $500,000 for existing homes, a purchaser would expect a quality home in a sought after location, however this market is primarily dominated by owner-occupiers as investors are able to achieve better returns at lower price levels.

There are a number of new unit blocks being built and proposed to be built in the short term around the Rockhampton CBD. These units however are primarily owner-occupied or put into short term letting arrangements, with a reported shortage of long term rental units within the CBD. Units within the surrounding suburbs are still available starting from around $150,000 for an older style 2-bedroom unit with an expected gross yield of approximately 6% to 7%. Vacancy rates over the past 12 months have remained relatively stable for both units and houses at around 7%.

Investors spending $500,000 this time last year would have seen limited capital growth. Resales of properties around the greater Rockhampton area indicate that most properties have remained stable or had modest increases depending on location and quality.

Whilst the short term capital growth outlook may be limited, high cattle prices, increasing coal prices and a number of proposed projects means that there is potential for the property clock to move upwards. Whilst it may be too early to declare that the market has bottomed, the subdued residential market provides plenty of opportunities for the savvy investor to purchase one or multiple properties within the greater Rockhampton residential market and provides plenty of value for an investor with $500,000.

Mackay
It’s that time of the year again where we see what a lazy half million might get you in the Mackay market and see how much the Mackay residential market has changed over the past few years. Last year we wrote while reflecting on the year before… “Unfortunately, the verdict 12 months on is that we have not hit the bottom, with values falling further in the last 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, still with some change to be had for 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. You can get a fully renovated large Queenslander for this price point. The big question is has the market hit bottom? Unfortunately that is a bit tricky to establish at present and only time will tell.”

Well 12 months on and it appears time has spoken and we think the Mackay residential market has reached the bottom (although there still appear to be some lower sales out there, they are more isolated now than in previous years). So for the lazy half million, it’s pretty much the same as what we said last year for owner-occupiers.

However for investors, anecdotal evidence from agents indicates that rental vacancies are starting to tighten and in some cases rental values have increased slightly. For an investor with half a million, there have been recent sales of duplex and small flat buildings. For under half a million dollars there have been buildings containing four or five flats selling under $500,000 with gross yields between 8% and 9%. Older style duplex properties have been selling between $250,000 and $300,000 on gross yields around the 7% mark.

Townsville
A $500,000 investment in the Townsville property market will secure you a good quality modern home in a desirable modern residential estate or a renovated home in the inner city suburbs. Our residential market has just moved through the bottom of the market cycle to the start of recovery and still remains very much a buyer’s market.

As momentum continues to build around the North Queensland Stadium to be built in the CBD with earthworks expected to commence later this year, the inner city suburbs of South Townsville, North Ward and Belgian Gardens would prove desirable locations for a $500,000 investment. These suburbs typically have renovated older style homes and are also in close proximity to The Strand and major entertainment precincts.

The middle class suburbs of Idalia, Annandale and Douglas are in close proximity to major employment hubs including Lavarack Army Barracks, Townsville Hospital and James Cook University. A $500,000 investment in these suburbs would provide you with a good quality low set masonry block home with the modern lifestyle facilities offered in these estates including walking and bike paths, parks and barbecue facilities.

Townsville’s current median sale price (April 2017) stands at $335,000 and therefore a $500,000 investment is substantially above this median. To provide some relativity to our market, over the past 18 months 90% of all house sales have been for property below $500,000, whilst 92% of units transacted below $500,000.

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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.