The month in review: Regional QLD
By Herron Todd White
Demand for residential property in Hervey Bay appears to be steady, with renewed interest in construction activity of late. House and land packages continue to be popular with a range of buyers including some superannuation fund investors for property mainly priced below $350,000. There have been increased sales
for higher priced stock between $500,000 and $750,000 which is encouraging. Most of these properties are on sites over 2,000 square metres providing executive modern homes with extensive ancillary improvements. Units located in premier locations situated close to the beach and CBD are reasonably sought after, particularly for onground, 2- bedroom, 1- or 2-bathroom units. Overall, market sentiment seems to be generally optimistic, with confidence gradually gaining momentum.
Market values for established residential dwellings in the city of Gladstone have generally stabilised over the course of 2015. Market activity has also stabilised over the last few months after a flurry of activity at the end of 2014 as property values stabilised to more realistic values.
Vacancy rates have also remained relatively stable since the beginning of 2015 with rates hovering between 4.5% and 5.5% which is still above average for Gladstone and reflective of the oversupply in some market sectors.
The market for inner city apartments and suburban townhouses is still pretty tough in Gladstone and conditions are unlikely to improve in the short to medium term. Sales volumes are very low and the sales that are occurring are showing very significant decreases of between 40% and 50% from sale prices achieved during the peak of the market.
Values for vacant land are continuing to come under pressure. It is much more cost effective in the current market to purchase an established modern home than it is to purchase a block of land and then build.
Sales volumes for land are very low.
The Tannum Sands and Boyne Island markets appear to have regained the premium over Gladstone which
they lost during the growth stage of the last market peak. Sales volumes have increased slightly in these
localities and values have stabilised.
We still consider it a possibility that there will be further market correction in the next 12 months over which time all LNG construction work will cease on Curtis Island. The exact effect this will have on the residential market is unknown.
To date 2015 has been a sluggish start for residential property across the Rockhampton region. After a notable decline in the strength of the resource industries across Central Queensland we have seen large reductions in sales activity, sale prices and rental prices particularly in newly developed areas such as Gracemere and Parkhurst. For example we are now seeing modern 4-bedroom, 2-bathroom homes selling and renting under $300,000 and $300 per week respectively, down from $400,000 and $400 in 2013.
More established localities within Rockhampton City such as Wandal, Frenchville and The Range have weathered the storm with a higher degree of resilience, particularly in the $250,000 to $450,000 range. Properties listed above this price point often require an extended selling period.
In addition to the above factors, 2015 saw an Australian first for the lowest cash rate on record which now sits at a staggering 2%, creating one of the most competitive lending environments seen in a very long time. This is combined with a newly released Federal budget which has been summarised as the Have a Go budget and includes a significant number of tax incentives for new and small businesses.
Moving forward these factors may and will hopefully take the spotlight of the weakening resources industry by creating a positive outlook and increased confidence which should in theory create a stronger residential outlook for the Rockhampton region for the later half of this year.
2015 also saw the first major Cyclone to hit the area in over 40 years. On 20 February, Cyclone Marcia reached Category 5 only hours before hitting Rockhampton and Yeppoon. In many respects a natural disaster such as this has devastating consequences however it has to be said that the aftermath appears to have been in many ways a silver lining to the region. A huge volume of work was created in various fields, community spirit and engagement was enhanced and some insurance claims in many instances will be of overall benefit to
the individual landowners upgrading old to new.
In summary 2015 to date and moving forward can be most certainly summarised as a buyer’s market, so for those thinking about entering the property market for the first time or looking for that additional long term investment, now is the time to act.