Regional QLD Property Market Update June 2019

Sunshine Coast Property Updates

As anticipated, we have seen a general slowing in the market in 2019. A significant number of agents have indicated that general enquiry has fallen which has effectively led to a lack of urgency in the market. On the back of this, stock levels have increased in some areas as well as the number of days on market.

Whilst there has been a general softening in the market, there are still sales being made. Property that is well located with a good offering and is priced at the right level are selling. It’s just that instead of selling in the first week or two, it’s more like six to ten weeks – what would appear to be more like a normal market.

In our The Year Ahead issue in February, we talked about the negatives and positive for the coast. To be honest, they haven’t changed great deal. The continued slowing of the Sydney and Melbourne markets hasn’t helped confidence. A big hurdle has been a federal election campaign that dragged on and the uncertainty that created was challenging.

The positives continue to be the massive infrastructure projects underway. The Maroochydore CBD, Sunshine Coast Airport expansion and the Sunshine Coast International Broadband Submarine Cable project are all under construction and all massive for the area.

As always, the beachside areas have been performing well relative to areas further inland. The coast lifestyle is the major driving factor and this is expected to continue albeit at a slower pace. The coastal strip in the sub $800,000 price range is expected to continue to be in demand.

The larger estates of Aura at Caloundra South and Harmony Estate at Palmview are still generating some good interest but it does appear that stock levels are increasing with spec homes hitting the market. These estates still offer the most affordable new homes on the coast with land size being forgone.

This is being mirrored in the hinterland subdivisions in the railway townships, such as Habitat in Palmwoods. Larger land sizes are the big driver in this market with upgraders being active.

The prestige market in the Noosa area as in other areas on the coast has slowed a little. The influence of the Sydney and Melbourne markets you would think is having an impact. However, in discussions with various agents dealing in the prestige markets, there are still people around with plenty in their pockets to spend, its just that they are discerning with personal preferences, presentation and motivation which impacts heavily on the ultimate sale price. The weak Aussie dollar has been good with ex-pat and international buyers helping to fill the void.

There are a number of unit complexes under construction or proposed which see an increase supply particularly within the Maroochydore area. There are good levels of interest in owneroccupier style units within smaller complexes with low body corporates. This swing to permanent living units has been reflected in the popularity of a number of new unit complexes that directly target this market with investment grade product being more challenging.

One thing that is certain is there are a lot more people around the coast. It used to be in holiday periods but now it seems to be all the time. This can’t be a bad thing to help support the market.

Speak with a Sunshine Coast Mortgage Broker today.

Darling Downs/Toowoomba Property Updates

The Toowoomba residential property market remained steady throughout the first half of 2019 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 for houses across the Toowoomba Regional Council LGA has displayed little growth over the past four years, sitting at approximately $380,000 at the end of 2018, up from $375,000 in June 2015. Another key indicator of the steady property market is the volume of property sales. In the six months ending December 2018, there were approximately 1,320 transactions across the Toowoomba Regional Council LGA. This is slightly less than the same period one year earlier, when approximately 1,375 sales were recorded and further highlights the steady residential property market.

The unit market has followed a declining trend, with low sales volumes following the oversupply of unit products that became apparent throughout 2016. Land sale volumes have continued to decline since a peak in mid 2015.

Toowoomba has seen an explosion of retirement village developments in recent years, ranging from medium density multi-level projects to low density detached dwellings. These projects are spread right across the city, from Glenvale in the west to Highfields in the north, with more projects being planned. This retirement living boom could be a driving factor in the low volume of land sales and sluggish level of housing transactions.

The surprising factor is that residential vacancy rates continue to decline. In postcode 4350, the vacancy rate was just 2% as at April 2019. This is considered tight and well below the balanced market level of 3%. Should this low level be sustained or continue to decline further, rental rates are likely to come under pressure.

The steady market conditions currently being experienced in the residential property market across Toowoomba are expected to continue throughout the remainder of 2019.

Speak with a Toowoomba Mortgage Broker today.

Townsville Property Updates

The unprecedented monsoonal event of February 2019 and subsequent floods have led to an upheaval in the market as it undergoes a period of adjustment, with some property transactions being driven as much by emotional factors as market fundamentals.

The rental market has tightened significantly following this event, with a reported 3,300 properties suffering water inundation of varying levels. This displacement of home owners and renters along with the arrival of assessors and builders has resulted in huge demand for rental stock, with vacancy rates falling to a very tight overall trend vacancy of 1% as at April 2019.

Overall, local agents are reporting good levels of interest and sales over the past few months, with anecdotal evidence suggesting some tenants are entering the home owner market following the floods after receiving a payout on contents insurance which provides them the deposit required.

To date the suburbs hardest hit by the flooding have seen limited activity as the rebuilding process continues and therefore the impact on value levels remains undetermined.

Speak with a Townsville Mortgage Broker today.

Cairns Property Updates

The Cairns residential property market has continued along a fairly steady path for the first half of the year with no noticeable changes. Values are fairly steady, volumes remain flat and there is no obvious oversupply in any residential market sector. Vacancy rates remain tight with limited quality stock available and little new supply coming online.

The GA Group projects are progressing well and it is starting to look like there won’t be any follow up projects such as Nova City ready to go, so we may see a dip in construction activity once they are complete.

The announcement from Cathy Pacific that they will pull out of Cairns after flying in for 25 years is an unwelcome dent on confidence and adds further to the feeling that the gains in tourism in recent years might be levelling off.

Overall it is difficult to be particularly optimistic about the next six months and a continuation of existing conditions may be considered a good result by the time we get to December.

Speak with a Cairns Mortgage Broker today.

Rockhampton Property Updates

It feels like Christmas was only last week however we are now only a few weeks away from the end of the financial year. This month we take a look at the half time score and reflect on how the year is progressing. 2019 to date has seen some improvement across the Rockhampton and surrounding residential markets. Of note, the rental market has improved with a significant decline in vacancy rates resulting in a slight increase in median rents across most sectors. In terms of sales activity the top end of the market ($700,000 and above)

has been on fire in recent months with a new record price for a residential house coming in at a touch under $1.8 million. In addition to this, there has also been a larger than the average number of sales occur between $900,000 and $1.3 million which is well above average for the number of sales in this sector, having only averaged about two to three sales per annum in recent years.

The mid-range sector of the market ($250,000 to $400,000) is tracking reasonably well, especially owner-occupier homes which have been well maintained and well presented. Rental properties, on the other hand, are often much more difficult to sell as they generally take longer and are often sold at a higher discount.

The lower end of the market (sub-$200,000) still appears to be under duress, with a high number of listings of inferior quality stock. This has continued to keep prices down and recovery in this sector still seems to be some way off however on a brighter note it does appear as though the number of bank re-possession sales is on the decline.

Also of note is that new housing construction seems to have been somewhat buoyant in the first half of 2019, with Norman Gardens in particular seeing an increase in new homes compared to the same periods in 2017 and 2018.

In summary, we feel the local property market has hit the bottom and is in the process of recovery. In terms of performance, we think the first half of 2019 would rate as a six out of ten and hopefully this continues to improve throughout the back half of 2019.

Speak with a Rockhampton Mortgage Broker today.

Gladstone Property Updates

Over the first half of 2019, we have continued to see positive signs for the Gladstone residential property market. We have seen minor capital growth of 5% to 10% in some market sectors and some locations in the region. This growth is certainly not across the entire market however it definitely continues the momentum from 2018 in a positive way. The market is still being driven by its affordability with limited new employment opportunities in the region. We expect affordability to be the driving factor of our market for the foreseeable future. Rental levels have continued to rise across 2019. In most cases rents are jumping 10% per week each time a sixmonth lease is renewed or commences. Vacancy rates are hovering around the 3% mark and have remained relatively stable so far this year.

Mackay Property Updates

So far, so good is the phrase that comes to mind when looking at the half time score for the Mackay market. The momentum generated throughout 2018 continued in 2019, with most agents reporting good demand, shorter selling periods and increasing sale volumes. This trend has been evident across almost all market sectors except for units which are continuing to struggle. There is a general optimism in the Mackay economy and the resource sector. Large infrastructure projects (such as the Mackay Ring Road) are well underway, increased employment opportunities in the resource sector and servicing industries in Mackay, as well as a building industry that is slowly bouncing back, are some of the factors underpinning this momentum.

The vacancy rate has fallen to lows not seen in half a decade and sit well below 2%, which has resulted in some significant increases in rental values, between $20 and $50 per week for standard dwellings. This tightening of the rental market and increased rental value pressure has had a flow on effect in the owner-occupier and investment housing sale market and contributed to increased demand. However, on the back of this momentum, we have not seen any significant rises in median house prices yet, with small gains of around 3% to 5% only in some areas.

One issue reported by local agents is the effect of the uncertainty prior to the election and possible changes to taxation around property. They report that there has definitely been a wait and see attitude, especially from investors, which resulted in a drop in enquiry and sales volumes over the past month.

Speak with a Mackay Mortgage Broker today.

Hervey Bay Property Updates

The Hervey Bay market is still improving with continued activity across most asset classes.

House and land packages in the estates generally priced below $450,000 are appealing to a mix of owner-occupiers and investors. The relativity of prices within some estates is becoming a concern with a broad range of cost for a similar product.

Vacant land prices appear to have improved, especially along the Esplanade with a number of sales now over $500,000 for quarter acre lots with views.

The rental vacancy rate remains tight which is appealing to investors in the mid-range asset class. Gross returns in the order of 5% are achievable.

Dundowran Beach and Craignish continue to be the most active for property priced above $700,000. These areas appeal to buyers due to the larger lots, good size homes and generally extensive ancillary improvements. Since November 2018, there have been seven sales of property over $700,000 in these areas.

There have also been two sales at $1.1 million and $1.2 million along the Esplanade following three earlier sales from January 2018 including a penthouse unit for $1.29 million. These sales are encouraging for the area, indicating that buyers are willing to spend the money if property is priced right, no matter what the price level. Looking forward to the next six months and hopefully continued growth in all asset classes.

Speak with a Hervey Bay Mortgage Broker today.

Emerald Property Updates

At the halfway point of the year, the market is still trending upwards but buyers do appear to be showing caution with sale volumes below what we had expected.

The bottom end of the market has lifted to around $200,000 for houses. For the right product, we have seen values come back to within around 10% to 15% of the peak experienced in 2011 and 2012. The space to watch currently is vacant land sales with the top end reaching new highs in recent times.

The wow factor this year to date has been the top end and two sales over the $1 million mark. One of the sales is a resale from $890,000 only six months prior. This same property sold at the bottom of the market for $635,000.

So you can see that for the right product – modern, good location, good ancillary improvements, multiple buyers – values are pushing up. The market appears slow to steady across the region at present with no increase in sales volumes which is typical before an election and end of a financial year. If some of the new proposed coal mines in the area start physical construction or production then we will surely see demand higher than supply.