CoreLogic National housing Update November 2017
November Market Outlook
Making rentvesting work for you
Should you rent to people with pets?
Buying property with friends
Adelaide November 2017
Brisbane November 2017
Cairns November 2017
Canberra November 2017
Darwin November 2017
Gold Coast November 2017
Melbourne November 2017
Newcastle November 2017
Perth November 2017
Regional NSW November 2017
Regional NT November 2017
Regional QLD November 2017
Regional SA November 2017
Regional VIC November 2017
South West WA November 2017
Sydney November 2017
Tasmania November 2017
Wollongong November 2017
CoreLogic NSW housing Update November 2017
CoreLogic QLD housing Update November 2017
CoreLogic SA housing Update November 2017
CoreLogic VIC housing Update November 2017
CoreLogic WA housing Update November 2017
What are the costs for buying a new home?
Self-employed? What you need to know about taking out a mortgage
Go hard or go home? Not necessarily
Regional QLD November 2017
The month in review: Regional QLD
By Herron Todd White
Toowoomba Property Update
The Toowoomba rental market appears to have stabilised after vacancy rates fluctuated between 3% and 4% between January 2016 and January 2017 following an apparent oversupply of investor driven new housing and unit product. Since a large exit of absentee investors and cooling of the market, vacancy rates have continued to fall to a more comfortable rate of 2.6% as at September 2017. This could be a result of less new product being brought to the market and a gradual taking up of new properties. Additionally, the Toowoomba Second Range Crossing project is well underway, employing approximately 700 people. With many based locally, anecdotal evidence suggests that a many of these employees occupy a number of rental properties and are contributing to the current lower vacancy rate. This may be proven once the Range Crossing is completed at the end of 2018.
Toowoomba and surrounding suburbs have a very diverse rental market with a large range of rental properties in all areas and at varying price ranges. The unit rental market varies anywhere from $160 to $450 per week depending on size and location. The housing rental market can vary anywhere from $180 to $700 per week. Having such a diverse rental market naturally means a diverse range of tenants and household types ranging from students accessing the University of Southern Queensland, patients of the three hospitals, workers of the recent and current development projects, families relocating for the range of schooling available and workers and professionals.
There is no obvious market favouring tenants or landlords with reasonably stable supply and demand factors at present. The Toowoomba area has traditionally had a stable rental market with reasonably low vacancy rates and enough rental competition to keep rents at acceptable levels. With new product still being made available to the property market, big infrastructure projects completed, underway and pending, the rental market will be one we will be continuing to study closely.
Sunshine Coast Property Update
Being a coastal area, beachside localities are always popular amongst tenants. Demand for housing in these areas along the central and southern parts of the coast is currently being driven by the opening of the new Sunshine Coast University Public Hospital. The rental market along the coastal strip is still difficult to get into, with the majority of property managers reporting multiple applicants for each property. The areas with good access to schools and shops and to a lesser extent public transport, are always popular amongst tenants.
There has been a large increase in dual occupancy homes constructed across the coast, which has increased the supply of more affordable rental properties within these areas. Tenants now have the ability to get into a near new small 1- or 2-bedroom attached unit for $300 to $350 per week within the new estates through the addition of these dual occupancy homes.
The top end of the rental market tends to top out at around $1,250 per week regardless of the property value, however a short lease could achieve a rental up to $1,500 per week. This will get you an executive style canal front property, a penthouse apartment with ocean views or even a prestige rural residential dwelling on a couple of acres. On the other end of the scale the most affordable rentals are located within the hinterland townships with an older style very basic 1 bedroom unit in Nambour being available for rent at $190/week.
Tenants on the Sunshine Coast cover the full spectrum from students, young families saving for a deposit, single income families, casual employees as well as people renting while the new family home is being constructed.
Agents at the coalface are still reporting good tenant demand, not only along the coastal strip but throughout the whole of the Sunshine Coast. Demand for houses and townhouses, particularly anything with a pet friendly yard, continues to be strong and as a result we have seen rental increases upwards of $20 per week for most rental properties. The majority of rent rolls are reported with vacancies under 2% in coastal areas and under circa 4% in hinterland areas.
The supply of units is increasing with new multistorey developments recently completed mostly located within close proximity to the new hospital.
Hervey Bay Property Update
Vacancy rates on the Fraser Coast tend to fluctuate however have generally been below 5% for an extended time now and currently sit at 2.6%. Although the supply of homes in Hervey Bay continues to increase as more estates are developed, rental demand appears to be meeting supply. The rental price in most asset classes in Hervey Bay has remained relatively stable or showing a slight improvement over the past 12 months. Modern on ground 4-bedroom, 2-bathroom dwellings achieve between $360 and $400 and 3-bedroom, 2-bathroom dwellings between $340 and $380 per week unfurnished. Three-bedroom townhouse units achieve around $300 to $340 depending on proximity to the Esplanade and 2-bedroom villa style units can achieve up to $300 per week. The Fraser Coast has a very broad demographic profile so the tenancy mix for each asset class can vary considerably as well. Given the continued population growth and supply of affordable housing, we consider rental demand and supply to remain relatively steady over the next six to 12 months.
Bundaberg Property Update
The current rental market in the Bundaberg and Bargara area is steady.
REIQ data on the right shows this trend from the June 2016 quarter to now.
The most active rental price points in the market appear to be for 3-bedroom houses around $285 per week. For this money you can get a very tidy 3-bedroom, 1-bathroom, with 1-car accommodation. Bigger and better quality homes show around $320 to $360 per week in both the Bundaberg and Bargara areas. Affordability is still the key factor in this market.
Gladstone Property Update
The timing of this topic comes at a remarkable time for the Gladstone rental market. For the first time since December 2012, the vacancy rate in the Gladstone region has dropped below 4% – just! The rate for September 2017 is currently sitting at 3.9% and has fallen steadily over the course of 2017 from 7.1% in January.
The oversupply that has plagued the Gladstone property market over the past several years is diminishing and the general feel of the market is that times are changing.
Typical rental ranges for several property sectors include:
- modern, 4-bedroom, 2-bathroom homes are currently renting for roughly between $200 and $300 per week;
- modern, inner city 2-bedroom apartments are between $180 and $300 on a furnished basis;
- 3-bedroom townhouses are between $150 and $250 per week;
- older townhouses or units are typically under $120 per week.
The declines in rental values are finally finished and stabilisation has occurred over 2017 for most property sectors. Some agents are also reporting small increases in rental values, mainly for 4-bedroom modern homes.
While we do not expect rapid change in the rental market, we do expect that the vacancy rate will continue to decline for the remainder of the year and into 2018, leading to a balanced rental market with opportunities for growth.
Emerald Property Update
The vacancy rate has continued to tighten in Emerald over the past 12 months with varying agencies reporting it to be around 4% to 6%. Stock in some areas is now very limited and all agents are reporting that rents are starting to rise slowly. There appears to be a quiet confidence in the economy with some positive indicators around the resources sector. Base rent is still $120 per week for a basic 2-bedroom unit and $600 per week for a modern executive home in good location. We predict the vacancy rate to slowly continue to tighten.
Rockhampton Property Update
The focus on the rental market in Rockhampton and the surrounding satellite suburb of Gracemere has been of particular interest over the preceding months and more so of late given recent announcements.
Over the past couple of years, the pendulum of power has been well and truly on the side of the tenant as higher vacancy rates and ample supply have allowed tenants to negotiate on rates and terms. However, recently there has been a steady decline in vacancy rates with Rockhampton’s overall vacancy rate dropping by over 2% since June to now sit in the mid 4% range. Gracemere has followed a similar path to Rockhampton and now has a lower overall vacancy rate than Rockhampton, sitting in the low 4% range.
Within Rockhampton itself, there are a number of different sub-markets which appeal to certain tenants. With all three of Rockhampton’s hospitals located on the southern side, health professionals typically tend to live in the areas surrounding the hospitals due to convenience. Those employed by the university on the north side of Rockhampton tend to prefer the areas surrounding the university, including Norman Gardens and Kawana. Likewise those working at the abattoir gravitate towards the surrounding suburbs of Koongal and Lakes Creek.
What has been consistent across all markets in all areas is that tenants have displayed a preference for better presented and maintained properties. Properties that provide limited facilities have relied almost solely upon price incentives to attract potential tenants. Conversely, the better presented properties appear to have maintained better vacancy rates. Generally, the weekly rental market is in the high $100s up to the high $400s per week depending on the location and quality of the accommodation. At the high $100s, a prospective tenant would be looking at a small, older style unit or a very dated smaller house in a secondary location. From this point, the quality, location and size start to improve. In the $400s per week a prospective tenant would be looking for a well presented home in a desirable location or a newer unit in Rockhampton’s CBD with city or river views. Over $400 per week, the rental market starts to thin out quite quickly, however the highest recent rentals lately have been $600 per week for a fully furnished unit in Rockhampton’s CBD overlooking the river and $600 per week for a large executive house in a sought after location.
Recently, it was announced that Rockhampton and Townsville were the joint winners of the FIFO base for the Carmichael Coal Mine (Adani) in the Galilee Basin. With a guaranteed 1,100 construction workers to be based in the boundaries of the Rockhampton Regional Council over the next couple of years, it will be a matter of wait and see as to what impact this has on the vacancy rate in the greater Rockhampton area. Should vacancy rates drop significantly, it would start to place upward pressure on the weekly rental rates and start to swing the pendulum of power more and more towards the side of the landlord.
Mackay Property Update
Mackay experienced an oversupply of rental stock after the downturn and vacancy rates were sitting at over 9%. However over the past two years things have started to shift. According to the REIQ, vacancy rates sat at 6.4% in the March quarter of this year and fell to 4.5% in the June quarter, however some property managers have recently reported vacancy rates are now at sub 3%.
Although there does not seem to be an increase in population in the region, we believe that the low interest rates and house prices in Mackay have allowed tenants to purchase properties which they had previously been renting and this has started to dry up rental stock.
Modern 4-bedroom dwellings in inner or sought after suburbs are currently renting at around $400 to $450 per week whereas those in outer suburbs are currently renting at around $300 to 350 per week. Three-bedroom dwellings in inner or sought after suburbs are renting at between $300 and $350 per week and those in outer suburbs are currently renting at between $280 and $320 per week. Semi modern to modern 2-bedroom units located in inner suburbs are currently renting at between $200 and $250. Older style 2-bedroom units or semi-modern units in outer suburbs are currently renting at between $170 and $210 per week.
The rental market in the region is currently considered to be at a balanced level and we expect this to remain the same throughout the rest of 2017. There are some large infrastructure projects in the works for the Mackay region and growth will depend on whether or not employment will be local or not. Other growth factors will depend on employment in the mining and mining related industries.
Whitsunday Property Update
Due to Tropical Cyclone Debbie the rental market has changed significantly with the influx of builders and tradespeople. The rental market is tight and rents have increased. This has also put pressure on the average renter who may have been displaced due to damage to the property they were renting and who now has to find some short term accommodation while their property is being repaired.
While the unit rental market has increased, it is not in as high demand as the detached dwellings market as builders and tradespeople are looking for room for trailers etc.
It will be interesting to see how the rental market unwinds as most building companies say that they have work for the next two years with the repairs from Tropical Cyclone Debbie. With more dwellings being repaired and the demand lessening for tradespeople as time goes by, it will be interesting to see if the market will remain stable.
In a normal property cycle, all markets (sale and rental) start to firm at the same time. We are experiencing the selling market firming with early signs of increases, so at this stage we are all set to see some improvement in the market as a whole in the Whitsundays.
Townsville Property Update
Since early 2014, Townsville’s residential rental market has been trending at an overall vacancy rate above 5%, exhibiting an oversupplied rental market.
Our latest HTW Monthly Rent Roll Survey indicates that the rental market conditions throughout 2017 are showing a progressive return to more balanced conditions, with the overall vacancy trend levels as at October 2017 standing at 3.3% for houses, 6.2% for units and 4.4% overall. The unit market continues to exhibit an oversupply of product available relative to demand, which has been the case over the past three to four years with the unit market consistently showing a higher vacancy rate compared to the housing sector.
Median rents have been in decline for the past three to four years, however these appear to have now been arrested for houses with vacancy rates starting to reduce. The latest quarters are now indicating tentative increases for houses, whilst unit rents remain soft. During the September 2017 quarter the trend median house rent stood at $315 per week and the trend median unit rent at $252 per week. In trend terms, the September 2017 median rents for houses reduced by 11% and units by 14% from their corresponding levels in September 2013.
Population growth is a big driver of the rental market, with growth over the past four years being below the long term average growth rate. As local economic conditions strengthen and rebuild we are likely to see a more positive population growth over the coming year. There are a number of large scale projects either underway or readying for commencement which is attracting workers from out of town. This is assisting in reducing the vacancy rate.
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.