Regional QLD

The Smartline Report – October Edition

The month in review: Regional QLD

By Herron Todd White
October 2015

The Toowoomba residential property market continues to sit within an affordable price bracket, with a median house price of $370,000 for the first half of 2015.

The market comprises three price segments: entry level or first home buyers and investors at up to $400,000; upgraders from $400,000 to $750,000; and prestige properties above $750,000. All sectors have been performing well throughout 2015, particularly the prestige market. So far for 2015, there have been 50 sales recorded over $750,000 which shows a significant improvement compared to the 51 sales and 52 sales recorded for the entire 2014 and 2013 calendar years respectively.

For the most part, the unit market continues to occupy the entry level and investor sector, however, there has been some prestige unit development. Newtown, Glenvale and South Toowoomba have accommodated a significant number of new unit projects in the past two years which have contributed to median price growth. We consider the low interest rate environment and strong competition amongst lenders has aided an increase in activity in this particular sector, while for the $500,000 and above value range, an uplift of approximately 10% to 20% is attributed to the influence of new unit and house builds.

Accordingly, if development in this sector eases, a stabilisation in values and volumes may occur.

The best performing segment in an overall softening market is in the range of $200,000 to $300,000. This is the entry level, affordable and not living beyond your means price point. Many houses which were at levels of $400,000 to $450,000 during the peak are now selling in this bottom range and the market feels it is near the bottom of the fall and the worst is over. Property in the range of $300,000 to $450,000 could experience more softening and these properties have much more chance of a purchaser finding out in six months that it’s worth less than the purchase price. Sales turnover is a third of what it was in the peak and rents are very low which leaves some potential purchasers happy to continue to wait in case the market drops more while others are taking advantage of the lowest prices in ten years.

Hervey Bay
Sales of property up to $350,000 appear to be the most sought after in the Fraser Coast area.

Demand for property in the higher price ranges (up to $700,000) has increased over the past twelve months, with agents reporting a mixture of local and out of area buyers in this price category. Most properties achieving high sale prices are on larger sites over 2,000 square metres within the suburbs of Wondunna, Urraween and Urangan. Buyer expectations include expansive dwellings with pool and sheds with some homes being relatively new or extensively renovated to a good standard. The elevated demand for higher priced stock may be due to the influx of medical staff to the new private hospital with higher overall disposable incomes which is encouraging. Construction activity continues to improve with at least five new stages of existing estates under way and steady sales activity for completed house and land packages. Rental demand remains consistent, with vacancy rates reportedly low which is expected to continue in the short to medium term.

In the Bundaberg region the lower end of the market is quite active at the moment with sales from $150,000 to $250,000. This price point sees houses that were previously flooded and now fully renovated offered for sale with sales indicating a strengthening market for previously flooded properties and older houses needing renovation in suburbs that did not flood in 2013. These suburbs include Bundaberg North, Walkervale and Bundaberg South. The $250,000 to $350,000 bracket is also performing quite well for those upgrading from the lower price bracket. Local agents indicate that they have had a solid past couple of months with most reporting a need for more listings which bodes well for prices in the coming months.

The low entry level and mid priced market sectors are the most active in the Gladstone market at present. These sectors have stabilised over 2015 to pricing levels that have not been seen in Gladstone since before the major LNG projects were approved. The entry level market sector generally comprises established housing in the $200,000 to $350,000 price bracket. At the peak of the market in 2011 and 2012 there was no property available at all for under $300,000. The mid priced sector comprises established housing in the $350,000 to $500,000 price bracket. Most of the uptake of these dwellings is by owner occupiers with minimal investor activity occurring. In addition to these market sectors, there has been moderate activity in the upper market sectors, where owner occupiers are upgrading to above average quality homes in the $500,000 to $750,000 price bracket. Prestige housing in Gladstone generally ranges upwards of $750,000 and varies between large, modern, high quality homes in rural residential locations such as Beecher and Burua, to large homes with harbour or district views in Gladstone or the beachside suburbs of Tannum Sands and Boyne Island.

The property market in the Rockhampton region has been softening in recent times with sales numbers dropping and values also weakening in certain price sectors. This has been mainly due to the downturn in the mining industry and investor sales being slower as well with rents and rental vacancies also weakening.

With the downturn in the mining industry and lack of investors, purchasers are now seeing property offering good value for money compared to a number of years ago. In particular the low and entry level markets and some mid price properties are seeing more activity than the higher priced markets.

The most affordable areas of Rockhampton include Depot Hill and Rockhampton City on the south side and Berserker, Park Avenue and areas of Koongal in the north. Entry level buyers can pick up property now in the low to mid $100,000s which may or may not be in a flood prone area. These are generally older style dwellings with limited ancillary improvements and vary in condition. Cheaper priced properties of better quality and generally out of flood areas can be expected to achieve up to around $250,000.

A mid price range property can expect between $250,000 to $400,000 and will vary in size and age depending on the buyer’s requirements. These properties have not weakened as much as the entry level properties however we are seeing prices soften in this sector. Suburbs where these mid price properties are more prevalent include sections of Frenchville and Norman Gardens, Kawana, Koongal and parts of Park Avenue in the northern suburbs. Wandal and Allenstown offer the majority of this price point on the south side of Rockhampton.

The unit market has also been affected by lack of investors. Units that have been selling have generally been between $150,000 and $250,000 for entry level and $250,000 to $350,000 for mid-price units. The majority of these unit sales have been in the northern suburbs. Pricing has also weakened for these price points within the unit market.

The Mackay residential market is currently in the grip of the biggest market downturn seen in Mackay in over ten years. The downturn in the mining industry and subsequent flow on to the resource sector based in Mackay has seen value levels fall around 20% and possibly higher in some areas. Sale volumes have reduced significantly since the peak period of 2012.

However, within a poor market we have seen one sector perform relatively well compared to the rest of the market. That market segment appears to be the upgrader sector priced between $450,000 and $650,000.

Prior to the market correction, Mackay had one of the highest median house prices in regional Queensland. To purchase a large executive style home in the best estates would set you back between $650,000 and $800,000 which was outside the budget of many locals. Now that the market has softened, we are finding these are the properties transacting, albeit at much reduced price levels.

Estates such as Northview Gardens located at Glenella have seen good buyer enquiry level and sales volumes. Good quality dwellings are currently selling at between $100,000 and $150,000 less than they were three years ago and in some cases are selling for less than they were eight years ago.

Other good quality estates are seeing similar results, for example Cuttersfield Estate in Ooralea has had a number of recent sales between $500,000 and $600,000 for near new large rendered dwellings. In almost all these cases, the dwellings are selling for less than the cost to produce only two and half years ago.

Agents are reporting good buyer enquiry level still in this market segment. It is hoped that maybe that’s the first indication that prices may start to stabilise in these markets or at least halt the slide in values we have seen in the past two years.

The Whitsunday residential market is currently showing some signs of slowing and weakening. The Whitsunday region had been steady with no real major shift in values over the past 12 months. It is over the past three months that residential units appear to be slowing and showing signs of falling slightly.

The market that appears to be doing okay is the rural residential lifestyle properties of two hectare lots with homes of all shapes and sizes. These are priced from $450,000 to $950,000.

The market for high end units that benefit from expansive views appears to be steady, driven by out of town purchasers.

The Whitsunday market had previously benefited from the success of the mining sector with buyers coming into the Whitsundays for the affordability. This influence has now stopped due to the downturn in the mining industry.

Agents are reporting limited activity and buyers are careful in their purchases.

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 – 2015. Australian Credit Licence Number 385325


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