5 resolutions for home buyers this new financial year
Getting your affairs in order
Buying a co-owner out of a property
CoreLogic National housing Update June 2018
June Market Outlook
Adelaide June 2018
Brisbane June 2018
Cairns June 2018
Canberra June 2018
Darwin June 2018
Gold Coast June 2018
Melbourne June 2018
Newcastle June 2018
Perth June 2018
Regional NSW June 2018
Regional NT June 2018
Regional QLD June 2018
Regional VIC June 2018
Sydney June 2018
Tasmania June 2018
Wollongong June 2018
CoreLogic NSW housing Update June 2018
CoreLogic QLD housing Update June 2018
CoreLogic SA housing Update June 2018
CoreLogic VIC housing Update June 2018
CoreLogic WA housing Update June 2018
Winter warmers: hot tips to heat your house for less
Preparing your home for sale
What you need to know about commercial loans
Regional QLD June 2018
The month in review: Regional QLD
By Herron Todd White
The residential property market is still performing quite well across the different property types. The first six months of 2018 saw a slight fall in the volume of sales compared to this time last year but the main reason for this has been the limited stock available. General buyer activity has been good but some agents over recent weeks have begun to notice that enquiry levels have slowed with some urgency disappearing from the market. Whether this is just a seasonal impact or something more sinister is too early to tell. Properties and areas that have good market appeal are still performing well.
Of the various residential property types, existing dwellings and vacant land are still outperforming the residential unit market. The lower end of both are in demand, particularly the sub $600,000 market. Property along the coastal strip from Caloundra to Noosa Heads as always is in demand and well positioned good quality rural residential properties in hinterland localities are also generating good interest. The market for property on the Sunshine Coast is still being heavily influenced by the interstate migration from the southern states as well as Brisbane buyers relocating north.
The southern end of the coast has two large small lot affordable housing estates which comprise predominantly sub $600,000 single unit dwellings. Land continues to sell prior to titles being issued in most cases, however we have also begun to see a decline in investor activity with the tightening of credit and investor loans by the banks really taking effect. Further north, land is still selling well at Bli Bli and Peregian Springs although the supply of vacant land in new estates generally decreases north of the Maroochy River with limited sites available.
The improvement in the prestige and higher end properties has historically been driven by a high percentage of interstate investors from Sydney and Melbourne. This is especially the case in the Noosa region. The relative affordability when comparing Sydney and Melbourne prices to those of the Sunshine Coast demonstrates pretty good value. It also appears that the Sunshine Coast is pretty high on a number of the lists of the baby boomers who have started to retire.
The next large infrastructure projects likely to give the coast another boost are the continued development within the much anticipated Maroochydore CBD as well as the Sunshine Coast Airport expansion. Works to the Bruce Highway are also well underway which will provide a muchneeded improvement to traffic flow once completed. The next big game changer is the Sunshine Coast International Broadband Submarine Cable project which is still to be announced. This project has the potential to make the coast into a major tech hub.
We are expecting the Sunshine Coast residential property market to simmer along in much the same fashion as the first half of 2018 with values being good.
Net migration from the southern states is expected to continue now it appears that the southern markets are cooling and people are selling up and moving north for lifestyle reasons. It appears the market may be in the early stages of transitioning after several years of strong growth across all residential property markets.
The residential housing market in Hervey Bay is very stable with good steady demand for property priced below $350,000 and consistent sales of executive homes in the upper price brackets above $500,000. There has also been a small increase in sales of Esplanade properties over $1 million. Rents are sitting firmly at present after a progressive period of increases over the past eighteen months. Construction of new homes (for house and land packages) has slowed in recent months. The housing market in Maryborough continues to be relatively stable with prices very affordable and low compared to nearby Hervey Bay. Yields have been returning between 7% and 10% (gross) for small blocks of flats of three or more in Maryborough/Granville which is encouraging.
The Fraser Coast region is finally appreciating some stability in local government due to the recent mayoral election which is likely to improve confidence for developers and future investors to the area. The new emergency department for the public hospital is currently making good progress. The completion of a new caravan park in Urangan close to the pier is almost finalised. It is expected that values will continue to gradually improve throughout 2018 for Hervey Bay, with the market in Maryborough predicted to remain flat overall.
The Emerald region continues to strengthen with no signs of slowing down. The local resource sector is performing stronger in both coal and solar. A few coal mines have recently sold strongly and a few have indicated reopening mines which have been closed for a number of years. There are many jobs in both coal and solar on offer and many individuals with no previous mining experience entering the workforce.
We anticipate another labour shortage and this in turn usually pushes up wages as companies battle to hold on to workers and high wages are offered to attract more workers. This in turn then pushes up rents and values in the property market as supply struggles to keep up with demand. We are just starting to see some disposable income coming back into the town which hopefully starts to lift business confidence which has been low for five years. This is all off the back of higher coal prices and if the price stays steady or increases, we can only see the employment demand increasing and an upward cycle in our property market continuing. The vacancy rate is now below 3% and tightening.
When looking at how the Whitsundays market is travelling coming up to the midyear point, you can’t help but comment on how the region is recovering in the wake of Cyclone Debbie. There are still noticeable signs of recovery with Daydream and Hayman Islands closed to the public and boats filled with tradesmen travelling to Hamilton Island daily. On a smaller scale, we are still seeing a number of houses and units that are in need of repair. It appears that the demand for tradesmen in the region continues to be strong.
In regard to tourism, the Whitsundays market has been experiencing a growth in domestic and international tourist visitors compared to the past few years. It is worth noting however that although visitor numbers have increased, tourists are staying for a shorter period and are spending less in the region. This is as expected with some of the major attractions and smaller businesses still recovering.
The Whitsundays region is also supported to a lesser degree by mining. We have started to see increased optimism in the mining industry with the high price of coking coal and significant infrastructure projects in the works. This recovery is well reflected by the Mackay region unemployment rate. In 2012 the unemployment rate was 3.2%; it rose to 8.4% in 2015 and is currently sitting at around 4.4%.
We have started to see positive growth in the residential market of Airlie Beach and surrounding suburbs. The graphs below reflect the median price of a standard residential dwelling, the average rent per week and yields achieved. As shown, there has been a significant increase in sales volumes from the third quarter of 2017 with a mild increase in the median sale price. The rental market has increased at an unsustainable rate with gross yields at 5.6% and an average rental of $480 per week.
Looking forward to the second half of the year, there are a few things that we should all be paying close attention to. Firstly we look forward to the completion of a number of larger projects including the reopening of Daydream Island. With the completion of these works, we anticipate a significant number of workers leaving the region. This will most likely lead to an increase in the vacancy rate and a decline in the median rent back to sustainable levels. We cannot predict the full effect that this will have on our market. We do however expect that as the construction work declines, tourism will continue to increase with a renewed appeal to the region.
This month, we turn our attention to the midyear review and take stock of how the year has progressed so far. For the Mackay residential market, it’s full steam ahead so far in 2018.
Economically speaking, Mackay is probably in its best shape in almost five years, with falling unemployment, a buoyant resource sector, increased infrastructure projects and generally improved sentiment.
Projects underway include the $500 million (approximately) Mackay Ring Road project which is in full swing, the sports precinct out by Central Queensland University, Vines Creek Bridge and the Eton Range Bypass just to name a few. The Mackay Regional Council has also announced a number of infrastructure projects such as flood mitigation and drainage work in East Mackay.
This has then had a flow on effect to the residential market. We have seen vacancy rates virtually halve in past 12 months, leading to increased rental values (only slightly so far). We have seen increased buyer demand for owner-occupied dwellings, with reducing days on market and good activity across almost all sectors.
However, we should temper the above comments a little bit. While activity has increased and general sentiment has improved, we have not seen any real increases in value as yet. There are still a number of hurdles in the Mackay market, mainly harsher lending policies still in effect for the 4740 postcode and the large equity reduction seen in the market over the past six years.
All in all though, the past six months has definitely been a big improvement for not only the Mackay residential market but the whole Mackay region and we look forward to a continuation of this for the rest of the year.
So we are nearly at the halfway point of the year and I’m sure all of our avid readers wonder how the often turbulent Gladstone market has been tracking. At the beginning of 2018, we made many positive statements about what was happening in this market; statements such as increased sales volumes; declining vacancy rates; reduced days on the market; multiple offers being made; and an increasing trend in new dwelling construction.
Now at the midpoint of the year, we have some solid evidence that these statements were not just speculation. Some recent transactions have shown the slight increase in capital values that the market is showing:
- A 3-bedroom, 2-bathroom townhouse in Telina sold in April 2017 for $176,000. Resold in March 2018 for $185,000 representing an approximate 5% increase in value.
- 1990s 3-bedroom, 1-bathroom brick dwelling in Telina sold in January 2017 for $226,500. Resold in May 2018 for $259,000 representing an approximate 14% increase.
We do not suggest the entire market has magically risen 5% to 15% over the past six months however we are definitely aware that times are changing and market sentiment is definitely trending upwards. We have seen a minor shift in values with many price points now pushing the boundaries of the value levels of six to 12 months ago.
Other indicators include the vacancy rate which currently sits at 3.7%. This rate has been slowly trending downward from 4.7% in January 2018. The latest quarterly data from the RTA shows that the median rent for a 4-bedroom house ($260 per week) has increased $20 per week from the same period 12 months ago. 2-bedroom units have also tracked upward by $10 to a median of $150 per week over the same time period.
After an upward trend in new construction activity throughout the first half of 2018, new construction now appears to be slowing, but for a positive reason! There is a general lack of land available in Gladstone but seemingly good demand. This is likely to push the value of land upwards and perhaps some larger developers will start to release lots in estates that have typically been in a holding pattern over the past several years.
Another positive is the sharp decline in the number of mortgagee in possession transactions.
It is the expectation that the market will continue to improve throughout 2018 on the back of continued affordability in the region.
We are through half of the year already and heading into the cooler months which generally bring a bit more activity in the market. The Rockhampton market has been weakening for some time now with sales numbers steady over the past few years. January to March was overall quite positive, providing a good start to the year. Whilst the months since have not been as buoyant, there are still signs within the area that market improvement is just around the corner.
Overall the housing sector as a whole has continued to plod along with no real stand out areas although the prestige market has seen more activity in recent times. There is still good buying within most price brackets, with the best buying being in the sub $300,000 established homes. Newer homes have tended to hold their prices better over the past few years but are still offering buyers good value for money. The construction of new homes has improved slightly, however there is still a way to go, generally due to modern established homes offering better overall value for money at the current time.
The Rockhampton unit market continues to provide purchasers with a wide variety of options. A number of unit projects are in progress in various areas throughout the Rockhampton area. Of note, The Gallery, which is the latest Riverside high rise apartment complex, is all but completed, with a number of units still available for purchase. The Skyview complex is also under construction with units still available and The Loft apartments are getting pre-sales together. New walk-up units are also available on both sides of the river in older more established areas. Older units are generally priced in the lower section of the market and are generally offering good buying.
The second half of the year is looking positive. There are a number of projects both small and large either about to start or that have had announcements with funding pending. Rookwood Weir and the lingering project are the two largest projects that are mooted for the area. Should either of these go ahead, they will help drive the Rockhampton and Central Queensland economy in the future. Should further action towards these projects take place within the next few months, we would expect the property market to react positively. Other projects taking place in Rockhampton include the construction of the Rockhampton Hospital Carpark and the soon to start duplication of the Capricorn Highway to Gracemere and the Bruce Highway Northern Access upgrade.
Although there is still some way to go, the Rockhampton market is showing some positive signs that will hopefully lead to market improvement. The prestige market has seen more activity in recent times with a number of sales over $1 million and a few more that have not been far off that mark. Rental vacancy rates have dropped to around 3.5% with some agents reporting possible small rent increases. The coal industry is more buoyant and strong employment continues in this sector. Together with the current and future projects, these factors should see a more positive outlook for residential property in the region.
We would expect the Bundaberg residential market to continue with a stable rate of sale and median sale price in the later half of 2018. There is little evidence to suggest a market movement, whether positive or negative, which has been the case over the past few years.
Bundaberg is a relatively compact residential market with its main advantage being the generally low-cost affordability of housing compared to other regional cities. We do note that the volume of sales of vacant land has risen over the past six months.
The Toowoomba residential property market has continued to remain steady throughout the first half of 2018 following a general decline since the peak of activity at the end of 2013. Although sales activity has been steady across the board, the market has continued to be multispeed and property specific. There has been little consistency with variations in sale prices and buyer interest across the established suburbs. The prestige market, however, has been performing strongly, particularly in the eastern suburbs as has the upper end of the rural residential lifestyle market.
The median sale price has displayed some growth over the past 3 years, currently sitting at approximately $390,000 up from $375,000 in June 2015. Another key indicator of the steady property market is the volume of property listed for sale. As of April 2018, there were approximately 1,740 houses and units listed for sale in postcode 4350. This is near a 6 year high and does not show well for price growth in the short term.
The unit market has followed a similar trend to the housing market, with low sales volumes following the oversupply of unit product that became apparent throughout 2016. Land sales volumes steadily increased in the 3 years between 2012 and 2015; peaking at 1,063 sales in 2015. In 2016, 681 sales were recorded and 677 in 2017.
In contrast, vacancy rates across Toowoomba are approximately 2.3% as at April 2018, which is considered tight and below the balanced market level of 3%. The Toowoomba Second Range Crossing project under construction appears to have assisted in maintaining low vacancy rates, with many workers residing in the region. It is anticipated that the low vacancy rate and substantial infrastructure projects in the pipeline may reignite interest in Toowoomba residential property from investors.
The steady market conditions currently being experienced in the residential property market are expected to continue throughout the remainder of 2018.
The remainder of 2018 is likely to remain status quo with overall confidence and market sentiment positive.
The inner city 4810 postcodes remain buoyant with inner-city projects including the Townsville Stadium and proposed waterfront precinct being positive factors.
The present market is highly suburb selective, with reasonable turnover levels in the sought after mid to inner suburbs, but patchy sales in other areas and suburbs with perceived social issues.
During 2018, the trending rental vacancy rate has remained in a balanced market range with the overall trend vacancy rate at just over 3%. This is significantly lower than the prevailing trend in vacancy rate for the similar period of 2017 at 5.52%.
The unit market is currently steady, albeit at low volumes, with some resistance still being experienced due to the holding costs associated with unit ownership including body corporate fees and high insurance costs.
Our overall feeling is that the remainder of 2018 will remain similar to what we have seen to date so far, with any changes to demand or sentiment heavily reliant on factors such as unemployment, job security and population growth.
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.