Regional QLD September 2018

The month in review: Regional QLD

By Herron Todd White
September 2018

Sunshine Coast

As we mentioned in the June Month in Review Half-Time Check-in, the residential property market has been performing quite well across the different property types.

We have noted a fall in the volume of sales but the reason for this has been the limited stock available. The coast also tends to go into somewhat of a hiatus through winter. Enquiry levels slow with urgency disappearing out of the market. There are less holiday makers and given that it is the middle of the calendar year, most people stay put. Properties and areas that have good market appeal, however, do tend to perform well.

The spring fever in the property market is plugged as the best time to sell your home which is a viewpoint that has been inherited from the southern markets of Melbourne and Sydney. You can understand why given that they begin to defrost after suffering through another winter where the weather is less than ideal.

Given that the Sunshine Coast is a growing region, the busy periods tend to be later in the year moving towards the summer months. People are on the move after the school year and others have that psychological end of year, New Year’s resolution view that they are going to make the move. These factors combined with the holiday makers being everywhere experiencing what the Coast has to offer also helps to widen the market place.

There are some elements that could make the market very interesting over the upcoming summer period.

As our team patrolling the coast continues to chat to agents, the feedback is pretty consistent. There is an expectation that stock levels will rise over the coming months. It appears that a number of vendors have been holding off for this busier period in the market. There is also a perception that as the southern markets continue to slow, they will be able the capitalise on the last moments of the current cycle.

So, it will be interesting to see if the momentum we had last summer links up with this summer. We believe it will given that there have been no major scares in the southern markets and no major changes to interest rates which instils some confidence.

There is one aspect that may impact the market. What will be the effect of the tightening credit policies and procedures brought about by the Banking Royal Commission? Anecdotally some of our lending clients have expressed that it has been tougher to get loans through and some agents have had contracts fall over because of finance.

As we have previously mentioned in other Month In Reviews, the Sunshine Coast is pretty high on people’s lists. Infrastructure projects such as the new Maroochydore CBD, Sunshine Coast Airport expansion and works to the Bruce Highway are all great with the big game changer being the Sunshine Coast International Broadband Submarine Cable project which is still to be announced.

The next 12 months, like the last, will be interesting to say the least.

Toowoomba

With spring fast approaching, Toowoomba traditionally emerges from hibernation after the long autumn and winter periods. Sales activity is typically much slower over the cooler months, most likely due to stable workforces and drier conditions during these periods.

The Carnival of Flowers, the main tourist attraction for Toowoomba, is held once a year in September and is broadly considered the spring board for property sales in the city. The influx of tourists, blooming gardens and warm weather combines to increase listings and moreover, interest from potential buyers.

The lead up to December is often the busiest time of the year in terms of sales activity as those residents with impending transfers in the new year tend to start looking at properties in the lead up to Christmas.

December and January tend to be the quietest months of the year in terms of sales volumes.

2018 sales activity continues to be very slow with volumes in line with those demonstrated in 2011 post the catastrophic flood event that hit the city. A suburb snapshot from the established suburb of Newtown confirms this.

Regional QLD property

Dwellings above $500,000 tend to be more influenced by seasonal variations as sales activity in these higher price brackets can be influenced by transitional workers such as school teachers, medical professionals and defence force personnel who are active buyers and sellers around the end and start of each calendar year.

Sales activity is slow and the median price is stable in Toowoomba with the drought affecting the broader Darling Downs region likely to keep market conditions relatively stable over the next twelve months with a bump in activity expected between September and December.

Townsville

The residential market remains at the start of the recovery stage with reasonable turnover levels in the sought after mid to inner suburbs, but slow sales in the outer areas and/or suburbs with perceived social issues.

As we move into spring and the weather warms, are we likely to see increased activity in the traditionally touted Spring Selling Season?

A look at sale volumes for houses over the past ten years suggests that the season of spring generally sees a slightly higher volume of sales than the other seasons, accounting on average for around 27% of the yearly sales. Within spring, October and November typically see the highest volume of sales. This is the period before the full effect of summer hits along with the typical tropical wet season. It is also the period before the end of year school holidays begin and where buyers looking to be in a new home before Christmas become active.

Anecdotal evidence suggests that spring sees more buyers at open houses and active in the local market. With our market at the start of the recovery stage, median prices remaining soft, low interest rates and a tightening rental market, this spring is likely to again see these seasonally increased levels of market activity.

Rockhampton

Well Rockhampton has officially had its two weeks of winter with minimum overnight temperatures hitting single digits on only a number of occasions, and as we approach the start of spring, temperatures are forecast to hit close to 30 degrees Celsius this coming weekend.

The question this month is does the rise in temperature and onset of the spring weather also affect our attitudes towards the property market?

In simple terms the answer is yes as we often see an increase in sales activity as both buyers and sellers start thinking about Christmas and what they want to achieve before year’s end. Various sporting seasons, both locally and on a national level, are finishing up at this time of the year which in turn gives people more time off the couch or frees up their weekends with less commitments meaning more time to get out and inspect properties listed for sale.

To back this up, the graph below represents a brief overview of genuine residential sales throughout the Rockhampton region for the 2017-2018 financial year. After some examination of the results it clearly indicates that spring and summer (September to February) resulted in about 20% higher sales activity on the overall number of sales (437 sales) compared to autumn and winter (March to August) at 356 sales. Late spring in October and November were stand out months before an expected decline in December as people wind down for Christmas and the new year for a two to three week period.

Finally we anticipate a similar trend to continue as we approach the last quarter of 2018 however the possibility of a looming federal election may put a spanner in the works.

Regional QLD property 2

Gladstone

For those who haven’t noticed, things are on the move in Gladstone.

There is solid buyer interest, evidence of multiple offers being made as well as agents reporting that vendors are achieving values closer to their first asking price.

We have seen the return of investors as well with cash offers and some buying within self managed super funds. Vacancy rates are tightening and rentals have shown increases. All these positive signs have led to marginal capital value increases across different market sectors. This increased activity is expected to carry on into spring in 2018.

Spring time typically sees an increase in buyer activity in the region as buyers start thinking about the end of the year and wanting to get the buying process completed and be all moved in prior to Christmas. Some vendors in Gladstone are currently holding their properties and waiting until the end of the year to reassess where the market is at. It is the expectation that the market will continue to improve throughout the remainder of 2018 on the back of continued affordability in the region.

Bundaberg

“Spring is nature’s way of saying let’s party” (Robin Williams).

Spring fever is in the air…. The birds are singing, bees are humming, the sun is shining and spring cleaning is underway. Now is the time to get outdoors and get your houses ready for sale….

Houses and units remain affordable in the region with agents reporting house sellers achieving closer to their first asking price despite a slight softening in median price growth for houses. Sellers are encouraged to take advantage of the current market while there is still a strong demand for property in the region.

So as the sun starts to shine stronger ahead into 2018 it is suggested that sellers need to be realistic in order to achieve sales and buyers enjoy the hunt for your affordable home or investment.

Mackay

The Mackay residential market has continued to strengthen over the past 12 months, with increased sales volumes, reducing time on market and general optimism that the worst is behind us.

A number of factors have contributed, including an improved resource sector leading to greater employment opportunities, large infrastructure projects currently under way and improved construction industry.

This general boost in the Mackay economy has already seen positive impacts on the residential market. Rental vacancies have reduced dramatically and sit just below 2%, the lowest in many years and significantly down from the highs of 9.8% in the downturn.

The big shift started around mid-2017 and gained momentum through to the spring. It is anticipated that as the colder months leave us, the Mackay market will continue its momentum through spring and into the end of the year. All agents are reporting increased demand, with less time on market.

With rental vacancies being tight, we are starting to see an increase in rental values across the board. It is considered that the once elusive investor will start to re enter the Mackay market, with not only solid rental returns on increasing rents available, but the possibility of capital growth now a real attraction.

Emerald

The Emerald market, and in general the Central Highlands region, is on the bounce.

The resource sector, including solar farms, is strong as construction and production are being ramped up. A labour shortage is evident already and it’s just the beginning of what appears to be our next boom.

For Emerald, some sellers have taken their properties off the market and are waiting until the end of the year to reassess.

We have the Gregory Mine planned to reopen in 2019 under new ownership with speculation that 300 workers will be needed. All news currently leads to nothing but positivity for our markets. The last boom went for eight years and you could have jumped on at any stage and sold in the peak. How long will this firming last is anybody’s guess but it looks onward and upwards in the foreseeable future at this stage.

We are heavily reliant on strong coal prices and with local mines now making profits again and feeling secure this has increased production targets which in turn has increased jobs which is flowing through to property demand. Our vacancy rate has tightened considerably, there are multiple offers on sale properties and properties are selling at listing prices suggesting that the spring season will see values continue to firm.

Hervey Bay

Spring time on the Fraser Coast is whale season and is the busiest time for tourists. This year in particular we have seen caravan parks at capacity with mostly visitors from the southern states escaping the cold.

Agents typically report that enquiry for property is ongoing at this time, however the rate of sales has been reported to be consistent with no stand out increase based on previous years. The supply of lower priced stock has been subdued for a while now and most agents note that they never seem to have enough listings in the sub $350,000 price bracket.

A good indication of the high demand from tourists (many being grey nomads) for this area can be seen from the recent opening of a new caravan park in Urangan. This caravan park has been full since opening the gates which has delivered some economic benefits for Urangan.

Demand is expected to remain fairly similar leading into summer, as the medical and construction sectors continue to provide valuable employment for the area.

 

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