Regional QLD July 2018

The month in review: Regional QLD

By Herron Todd White
July 2018

Sunshine Coast

In the two previous years, our tip was to park your lazy $500,000 in an older original dwelling along the coastal strip anywhere between Noosa to the north and Caloundra and Golden Beach to the south. If you had taken our advice, you would have enjoyed two years of excellent capital growth as demand for these entry level, well positioned beachside properties has generally continued to be very strong. It is likely a $500,000 beachside property purchased mid 2016 would be more like a $600,000 property in the current market.

Today it is more difficult to find sub $500,000 properties along the coastal strip, however there are still some beachside localities that provide this opportunity and it’s these areas which we think will again be the best place to park your dollars. Golden Beach, Battery Hill and to a lesser extent Aroona to the south and to the north Mudjimba, Pacific Paradise and Mount Coolum are probably the only areas in which you may find a freestanding dwelling for around $500,000.

Units in these beachside localities also provide plenty of investment opportunities for under $500,000 and we have seen some upward movement in the sub $500,000 unit market, however nowhere near the increases seen in the housing and vacant land markets. Again it has been the smaller complexes with lower body corporate fees aimed more at owneroccupiers as opposed to the larger holiday unit complexes which have shown higher increases and we would expect this trend to continue.

The other markets which still offer good value for money are the hinterland townships, from Glass House Mountains and Beerwah to the south through to Cooroy and Eumundi to the north, which are all positioned along the northern railway line. Most of these towns still have a reasonable supply of traditional residential properties (larger allotments) for under $500,000, although you will get less for your money compared to this time last year. Entry level rural residential properties on land sizes of between 2,000 and 4,000 square metres still offer very good value for money and property can still be purchased below $500,000. Whilst previously these areas had experienced some capital growth, they hadn’t kept pace with properties along the coastal strip, however since mid 2017 these areas have performed well with sales showing good growth in most instances at rates more in line with the capital growth rates seen along the coastal strip.

The other options last year were house and land packages in the new estates around Caloundra West (Stockland’s Aura Estate) and Palmview (Avid’s Harmony Estate) where it was and still is possible to enter the market at or below $500,000. Supply of these modern small lot developments is likely to continue as more land is developed and we still think the high levels of supply may limit growth in the future.

The past 12 months has generally been another good performing year across all residential property markets here on the Sunshine Coast. Stronger interstate migration levels to south-east Queensland combined with significant local infrastructure projects including the new Maroochydore CBD make the Sunshine Coast an attractive investment destination if you can find a lazy $500,000. Happy investing!

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 similar, however sales volumes have continued to soften over the past twelve months and values have remained steady.

The Toowoomba property market is relatively affordable when compared to many locations in Australia, therefore half a million can purchase a wide range of properties. The $500,000 price point is mostly dominated by the owner-occupier sector and comprises many different properties such as renovated older character homes within the established inner suburbs, original and renovated 1970s to 2000s brick homes in many suburbs, new houses in developing areas and homes on larger acreage lots in close-by neighbouring suburbs.

Investors are far less active above the $400,000 price point in Toowoomba.

With this month’s focus on the $500,000 price point, we have provided recent examples of property sales in this segment.

Below is a sale of a typical, owner-occupier home in the established area of Middle Ridge. This property sold for $500,000 and comprises a 4-bedroom, 2-bathroom dwelling with double garage.

An alternative option for buyers seeking larger lots is represented by the sale of a 6-bedroom, 2-bathroom dwelling in the satellite suburb of Westbrook for $510,000. This property features a 2,371 square metre lot and a detached shed.

QLD regional 2

For those seeking older style character homes, this property in Mount Lofty sold for $500,000 and comprises a renovated, extended 4-bedroom, 2-bathroom dwelling with detached double garage and six square metre Colorbond shed.

QLD Regional 3

The $500,000 price point in Toowoomba and surrounding areas is well above the median house price which is around the $390,000 mark. Therefore, there are many areas across the region where homes can be secured at this price. Areas which may generate superior capital growth or resale appeal are likely to be concentrated in the eastern suburbs including Mount Lofty, East Toowoomba, Rangeville and Middle Ridge.

It is also possible to secure two dwellings at this price point in Toowoomba. Some older style detached dwellings (2- to 3-bedroom, 1-bathroom) in the western suburbs including Harristown, Newtown and Wilsonton are selling at between $200,000 and $300,000 and can provide strong rental returns. Two older style or even semi modern strata units can easily be purchased for under or up to $500,000, reflecting the affordability of the Toowoomba residential market.

Townsville

As Townsville’s fragile start of market recovery continues, a $500,000 investment would secure you a good quality modern home in a desirable suburban residential estate or a home in a desirable inner city suburb. It remains very much a buyer’s market as the recovery continues to find its feet.

Inner city projects including the new stadium currently under construction along with the proposed waterfront precinct and the general amenity offered by the city centre and The Strand makes the suburbs of South Townsville, North Ward and Belgian Gardens desirable locations for a $500,000 investment. Over the past six to twelve months, the suburbs of North Ward and Belgian Gardens have seen a firming in prices. These suburbs typically comprise older style homes with a $500,000 investment getting you a renovated home on a small allotment or a renovator on a larger allotment.

The middle class suburbs of Idalia, Annandale and Douglas are in close proximity to major employment hubs such as the Lavarack Army Barracks, Townsville Hospital and James Cook University. A half a million dollar investment in these suburbs would provide you with a good quality masonry block home with additional features such as a pool, high quality fit out or aspect. These suburbs provide good amenity including supermarkets, walking and bike paths, parks and barbecue facilities.

The majority of buyers in this price bracket currently in the market are intending owner-occupiers. With the inner city market historically the first market to feel any price pulse at the start of a recovery, houses in the suburbs of North Ward and Belgian Gardens are likely to continue to be attractive investments.

Rockhampton

Time to focus once again on what you can get for a lazy half a million. Upon reflection from this time last year, we are happy to report our position on the property clock has improved, from a declining market to now be at the bottom of the market. As a result, $500,000 will purchase a similar product type as 12 months ago.

For purchasers looking to spend $500,000 in the Rockhampton region, there are a number of options. Modern homes on the northside, predominantly Frenchville and Norman Gardens, will provide the option of purchasing an established 4-bedroom, 2-bathroom dwelling with double garage in a wellregarded locality.

Alternatively, in our sought after localities south of the river, a Queenslander, typically in neat, updated condition, without views can be purchased.

Each of these options are generally sought by owneroccupiers, typically second or subsequent home owners looking to upgrade before the local market starts to see an improvement in prices.

Investors on the other hand, have more options available to them for the use of their $500,000. Whilst they could seek a return on something like the above, returns would be considered quite low (in the order of 4% to 5%). Perhaps purchasing two or three cheaper properties in our investor pockets in the older, established and centrally located suburbs would provide a greater return on investment. These property types include anything from an aged Queenslander, to ex Queensland Housing Commission stock to 1970s highset homes.

The Rockhampton unit market is generally fairly thinly traded, however $500,000 could see you purchase an established 2-bedroom riverfront unit.

Sets of flats remain a constantly sought after option for investors. Currently $500,000 is likely to buy a set of up to five flats. With recent sales of flats showing gross returns in the order of 8% to 9%, this is probably the best return available in current market conditions.

The short to medium term performance of the Rockhampton market and region overall is generally considered to be a period of stabilisation. Capital growth is not expected to be huge but returns should remain fairly solid in the interim with vacancy rates showing a tightening trend, currently at approximately 3%.

Buyers at this price point should be reasonably comfortable investing into the current market, where prices seem to have been stabilising over recent months and a number of infrastructure projects are in the pipeline for the region including Rookwood Wier, the Capricorn Highway duplication and the Rockhampton Ring Road project.

Gladstone

Several options are available for those with a cool $500,000 to park in the Gladstone property market. On the whole, these options are very similar to what we described on this topic back in July 2017.

One option for example, for those who have the capital and are willing to wait until market conditions improve, is to pick up a handful of older style 2-bedroom units or townhouses around the city fringe. There have been multiple transactions of this type of property in the past year, with values mostly sub $100,000 and showing gross returns of approximately 4% to 7%.

At the other end of the spectrum, properties which transact at around the $500,000 mark appeal more to the owner-occupier than the investor.

Locations such as Boyne Island and Tannum Sands have the added lifestyle appeal due to their close proximity to the beach and the Boyne River. In this area, $500,000 is generally able to purchase a large, well-established dwelling on a moderately sized block which may even benefit from river or sea views. Although dwellings at this price point are typically older and perhaps slightly more dated than what this price point can find elsewhere, the added benefit of being within close proximity to the beach and the Boyne River compensates for this.

There are also properties located within various established suburbs of Gladstone itself or even some of the outer rural residential areas which are certainly able to command this sort of money. Dwellings in these areas are typically generous in size (above 180 square metres of living), well-appointed and often include a shed or pool and sit on large allotments.

Mackay

It’s that time of the year again, where we get to see what the lazy half million will get you in Mackay and take a look back and reflect on where we were 12 months ago. Last year we wrote:

“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. For $500,000 you are looking at a large executive style rendered dwelling around ten 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.”

It feels a bit like ground hog day writing this article. The residential market in terms of value has not seen any material increases over the past 12 months. The biggest difference with spending the lazy half million in the current market is that you have to act twice as quickly on less available stock to secure a property before it sells from under you! The past 12 months has seen increased buyer activity with greater demand and shortening times on market.

Last year, for the investment market we wrote:-

“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.”

This still holds true in Mackay, with one small exception. Over the past 18 months, rental vacancy rates have tightened significantly and currently sit around the 3% mark with rental values starting to increase.

It is considered to be an ideal time to invest in Mackay. Values are currently at levels not seen in almost 13 years. Optimism is returning to the mining industry on the back of increased prices for coking coal and flow on effects to the resource sector including increased employment opportunities, not only in mining, but in large infrastructure projects currently underway including the $500 million Mackay Ring Road project and the new sports precinct project.

Hervey Bay

The Hervey Bay market has experienced minor movement over the past 12 months, however less involvement from first home owners due to the cancellation of the local incentive schemes. Investors are far less active above the $450,000 price point with typically owner-occupier purchasers active above the $500,000 price range.

$500,000 in Hervey Bay can accommodate a wide range of buyers with many different types of property. This price point would include the entry level range for esplanade properties, typically comprising of circa 1950s older style dwellings in need of refurbishment and on smaller lots. Some larger quarter acre Esplanade lots are beginning to reach this price point.

Modern homes on larger lot sizes between 2,000 and 4,000 square metres are available in Wondunna, Urangan and Urraween which generally start around $460,000. Improvements mostly include 4- to 5-bedroom homes built within the past ten years with a pool, granny flat or shed.

Push out to the outer rural residential suburbs of Sunshine Acres and Walligan and decent sized homes on hectare allotments with good infrastructure improvements can be purchased around that price point.

In terms of high density living, the unit market is still considered very stable with little to no market movement in the past six months. In the current market, $500,000 is considered to afford a 3-bedroom, 2-bathroom unit appreciating good ocean views in a complex built after 2005 with extensive common improvements.

Emerald

What will a lazy half a million in Emerald get you in the market place? Nearly any residential property you would like apart from acreage. There are a few prestige properties on one acre or more now selling above $600,000 and a few prestige residential homes in good locations selling above $500,000 but in general 95% of the market is still below the $500,000. You could buy two modern 4-bedroom homes in inferior location for $500,000 or an executive modern 4-bedroom home in a good location with pool and shed for $500,000. Nearly all multi unit complexes showing 8% to 10% gross yield are selling below $500,000 and you could purchase three 3-bedroom strata titled units for $500,000 away from the centre of town. The options are endless with a lazy half a million in Emerald as the market continues to firm, sales turnover is increasing, rental vacancy rates are tightening and jobs growth is strong. All the stars are aligned currently for the market slowly moving upwards as is evident by the sales from month to month. New housing construction has increased and is selling off the plan from $350,000 to $450,000.

Whitsundays

When looking at purchasing within the Whitsundays, $500,000 will open up a number of options for investors and owner-occupiers. An owner-occupier could purchase a modern 4-bedroom dwelling with a high quality fit out or a circa 1990s dwelling on a rural residential block close to town.

Before we begin talking about the possible investment options, it is important to note the current rentals in the Whitsunday region are at inflated levels. This is due to the large number of tradesmen who have come to the region to assist with the recovery from Cyclone Debbie. When reviewing investment options please keep in mind that the following rentals may not be achievable in the long term.

Starting with a low risk option, an investor could purchase a similar modern dwelling to the owneroccupier and benefit from rental returns of circa $520 per week and possible capital gains in the long term. Our next suggestion comes with a low to moderate risk and involves purchasing two 3-bedroom apartments in Cannonvale, each returning circa $320 per week. As long as both apartments are tenanted this can be a great source of income. If you are looking for a higher risk investment with a higher potential return it might be worthwhile to consider purchasing a property in Collinsville for $100,000 and a modern, 4-bedroom dwelling with a standard fit out in Cannonvale or Jubilee Pocket for $400,000. With increased optimism in the mining industry, future projects in the works and a high coking coal price, Collinsville could be an area that experiences substantial growth over the next few years. At present the property in Collinsville would rent for circa $150 per week and the modern dwelling would rent for circa $460 per week.

In addition to the rental returns, properties in the Whitsundays market are currently experiencing signs of positive capital growth with an increase in domestic and international tourists visiting the region. We anticipate that this growth will continue with a number of large projects such as the restoration of Daydream Island to be completed in the near future.

In summary now is a good time to look at purchasing as an owner-occupier or investor as the market is starting to show signs of positive growth and at the $500,000 price point, you will be afforded a number of options depending on the level of risk you are willing to take.

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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.