QueenslandProperty Report – January 2014

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Queensland – Property ReportJanuary 2014

National Overview

This quarter we look around the nation to identify affordable properties with the potential to deliver healthy long term gains suitable for first home buyers and also investors. If there is one word that could sum up the key driver for growth, it would have to be ‘infrastructure’. New road / rail links are bringing affordable outer suburbs closer to city centres and employment hubs. New hospitals or tourism precincts are creating jobs. These are valuable factors that will underpin long term capital gains.

ALL ABOARD – NEW RAIL LINKS LET SUBURBS REACH FULL POTENTIALThe inner Sydney property market looks set to be transformed by a number of new light rail systems. Key areas to benefit include the inner west’s Dulwich Hill and Kingsford in the east.

The construction of South West Rail Link is likely to underpin growth in the first home buyer belt of Sydney’s south west, with suburbs like Elizabeth Hills, Gregory Hills and Oran Park well placed to reap the rewards.

For investors with a speculative leaning, suburbs with proximity to Brisbane’s proposed Underground Bus and Train (UBAT) link could offer long term capital growth. The connection is earmarked to run from Dutton Park in the south to Victoria Park in the north, though it’s worth stressing the project is only a proposal at this stage.

ROAD LINKS BRING OUTER SUBURBS CLOSER INThe duplication of Adelaide’s Southern Express Way – due for completion in mid-2014, will vastly improve commuter access to Adelaide’s south. Suburbs like Seaford, Seaford Rise and Port Noarlunga South all offer significant lifestyle benefits and the new road link should bring capital growth to the region.

NEW COMMUNITY INFRASTRUCTURE CREATES OPPORTUNITIESMelbourne’s Broadmeadows is a classic example of an uncut gem for investors. House prices start at the low $350,000s, yet the suburb is located just 16 kilometres north of the CBD. A major investment in community facilities is expected to enhance the area’s appeal.

For investors with a speculative leaning, suburbs with proximity to Brisbane’s proposed Underground Bus and Train (UBAT) link could offer long term capital growth.

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Queensland – Property ReportJanuary 2014

For investors with a five year timeframe, the additional employment generated by the Queensland’s Sunshine Coast University Hospital (due for completion in 2016) should support property values from Caloundra to Maroochydore.

CONSIDER NEIGHBOURING AREASFaced with affordability challenges, it can pay to look at areas where neighbouring suburbs have experienced strong price growth. This is especially true in the Perth suburbs of Parkwood and Lynwood, which remain priced below $500,000 while adjacent suburbs are commanding price tags in excess of $650,000. When suburbs share the same infrastructure facilities, notably transport links, there’s a good chance that price growth will ripple outwards.

A FINANCIAL HELPING HANDIn a number of locations, first home buyers are being encouraged to consider new builds with the enticement of additional state government support. This is especially the case in Tasmania where the recently inflated First Home Builder is seeing buyer interest grow in suburbs along Hobart’s eastern shore in particular Old Beach, Howrah, Tranmere and Oakdowns.

Brendon HulcombeCEO - HERRON TODD WHITE

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Queensland – Property ReportJanuary 2014

Queensland

Now could be the time to buy in Queensland as the property market begins to pick up. While some areas dependent on mining activity are experiencing declines in rental activity, elsewhere in the state, infrastructure projects and growth in tourism look set to underpin long term property price growth. BrisbaneOPPORTUNITIES FOR FIRST HOME BUYERSThe outer suburbs of Brisbane such as Calamvale, Sunnybank, Runcorn, Underwood, Aspley and Chermside are priced below $650,000 making them attractive to first home buyers. Master-planned communities such as Springfield Lakes and North Lakes are beginning to hold more appeal for first home buyers with affordable dwellings priced below $450,000. Improvements to infrastructure including a recently completed railway line will help to reduce commute times adding to amenity and prospects for long term growth.

OPPORTUNITIES FOR INVESTORSSuburbs within 5 to 10 kilometres of the Brisbane CBD provide the best potential for investors in the under-$650,000 price bracket. Suburbs offering close proximity to transport and established infrastructure such as Holland Park, Mount Gravatt, Moorooka, Alderley and Stafford offer healthy growth potential over the long term.

Suburbs with proximity to the proposed Underground Bus and Train (UBAT) link featuring connections from Dutton Park in the south to Victoria Park in the north, may also hold appeal though this project is only a proposal at this stage.

Gold CoastMarket activity in the lower end of the Gold Coast market has improved over the past 12 months. As sales stock levels reduce there has been seen some firming in values.

First home buyers can still pick up detached houses in the Beenleigh area for between $250,000 and $300,000. For investors, 2-bedroom townhouses in Beenleigh are priced between $165,000 and $180,000 with gross yields of around 8%.

Master-planned communities such as Springfield Lakes and North Lakes are beginning to hold more appeal for first home buyers with affordable dwellings priced below $450,000.

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Queensland – Property ReportJanuary 2014

In the more central areas there are still opportunities to buy older style houses in the mid-$300,000 price bracket. Locations such as Labrador, Biggera Waters and Southport, offer the best opportunities though properties at this price are becoming scarce.

On the western side of the Gold Coast, the large Yarrabilba satellite city being developed by Land Lease offers a variety of housing with new house and land packages available from the low $300,000s. At the southern end of the Gold Coast, Murwillumbah offers first home buyers older, 1950s dwellings priced between $250,000 and $300,000.

For investors, the new light rail system due for completion in mid-2014, will provide opportunities for capital growth. Locations such as Broadbeach, Surfers Paradise, Southport and Parkwood will benefit most from the light rail.

Sunshine CoastThe market for homes priced below $500,000 on the Sunshine Coast has turned around over the past year with sales volumes up by over 20% and prices increasing in the better areas. Units have been slower to recover than houses and there are still good buys for first home buyers in the under-$300,000 price bracket. For investors with a five year timeframe, the additional employment generated by the Sunshine Coast University Hospital (due for completion in 2016) should not be underestimated, and it should support property values from Caloundra in the south to Maroochydore in the north.

ToowoombaFirst home buyer activity in the Toowoomba market is generally limited to the under-$400,000 price bracket. For this money buyers can pick up cottage-style dwellings with renovation potential in the suburbs of Newtown, South Toowoomba, North Toowoomba, Mount Lofty, Harlaxton and Harristown.

For investors, a buying budget of $600,000 would provide access to the ‘prestige’ suburbs of East Toowoomba, Rangeville and Middle Ridge, which traditionally offer the highest capital gains. East Toowoomba and some sectors of Rangeville incorporate renovated colonial homes while Middle Ridge features dwellings on lots ranging from 600 square metres to 6,000 square metres.

Higher rental returns are offered by modern duplexes and triplexes across the suburbs of Kearneys Spring, Middle Ridge, Newtown, Rangeville and South Toowoomba. This type of investment can deliver lower levels of capital growth over the longer term than freestanding homes.

Changes to Toowoomba’s local planning scheme have led to a significant increase in development approvals over the past 12 to 18 months, and

Locations such as Labrador, Biggera Waters and Southport, offer the best opportunities though properties at this price are becoming scarce.

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Queensland – Property ReportJanuary 2014

this has underpinned growth in the Toowoomba unit market. Given the consistent rental growth in Toowoomba, units are an appealing investor product. The suburbs attracting the greatest investor interest for units are Glenvale, Kearneys Spring, Middle Ridge, Newton, Mount Lofty and Wilsonton where prices typically range from $250,000 to $400,000.

BundabergFirst home owners in Bundaberg are attracted to the city’s low entry prices, which can be under $200,000 for lowset timber homes. Rental vacancies are virtually non-existent due to the 2013 flooding, which has left many homes under repair. Weekly rents for 3-bedroom homes start at about $250 per week.

Gladstone The Gladstone market has continued to weaken since peaking in late 2011 with the supply of new units and dwellings still increasing. The significant reduction in values has now opened opportunities for first home buyers to enter the market. Gladstone is known for its boom and bust property market and long term investors should see some capital growth once the current supply of housing has been absorbed though the potential for short term capital growth is limited. In the current market, dwellings in the modern but established areas of New Auckland, Glen Eden and Clinton offer the best value for long term investors.

Rockhampton Rockhampton’s median home price has remained steady at about $300,000. The large number of new homes constructed in Gracemere (10 kilometres south of Rockhampton) over the past few years has created an oversupply and vacancy rates have risen from 3% to 9% over the past 12 months. This has also contributed to a softening of prices.

Both first home owners and investors may find the greatest potential for capital growth in the riverfront units being sold off the plan in the City of Rockhampton. There is a lack of this type of property in this central location, and the units offer modern finishes often with river views. Here units are available in the affordable price range of $260,000 to $450,000.

MackayThe rental market in Mackay softened considerably in 2013 following the downturn in the mining industry and an influx of new investor house and land packages particularly in the northern beaches area. Vacancy rates have jumped to more than 6%.

Both first home owners and investors may find the greatest potential for capital growth in the riverfront units being sold off the plan in the City of Rockhampton.

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Queensland – Property ReportJanuary 2014

TownsvilleTownsville’s property market is in the early stages of a recovery, and suburbs within an 8 to 10 kilometre radius of the CBD provide the best potential for long term growth. For investors with a ten year timeframe, the inner city suburbs offer close proximity to the restaurant and entertainment precincts along with The Strand foreshore and beach. The convenience of the inner city suburbs to the entertainment precinct should support long term capital gains. Current price entry to these areas is around $350,000 for houses (often in need of updating) and from $200,000 for units.

CairnsThe Cairns market is moving into a recovery phase and prices are starting to rise, making now an ideal time to buy. The main influence on the local property market is the health of the Cairns economy, which has picked up the pace over the past two tourist seasons. The outlook is for the market to gain some muscle as the economy continues to strengthen. This will accelerate further if a number of major investments including the proposed $4.2 billion Aquis ‘mega-resort’ get the green light.

First home buyers in Cairns can choose from units with a median price of around $190,000, or a choice of houses starting in price at $230,000 (median value $360,000).

Conditions are ripe for investors in Cairns as the rental market remains tight – among the tightest in Queensland – and there is continuing upward pressure on rents. New construction (especially units) is still in the doldrums giving investors an opportunity to get into the local market for a good price.

Conditions are ripe for investors in Cairns as the rental market remains tight – among the tightest in Queensland – and there is continuing upward pressure on rents.

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