Market Report - Queensland (July, 2007)

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With quarterly capital growth in several regions reaching almost three times the state average, Queensland remains a hot favourite with investors. Plenty of opportunities still remain for properties with solid rental returns in areas of high capital growth.

While many investors believe Brisbane is tipped to leap ahead, regional areas are currently outperforming their metropolitan counterparts in generating solid rental yields and strong capital growth.

"There are a number of factors driving this growth," explains Peter McGrath, chairman of the Real Estate Institute of Queensland (REIQ). "First and foremost is the affordability of these regional areas, in comparison to the southeast corner. Investors are looking at return and they’re finding this in regional areas."

In the March quarter, Residex reported capital growth in Brisbane at 1.93%. The median property price was $370,500, up from $358,500 in the last quarter. In country Queensland, houses increased in value by 2% to an average of $333,000 – however, several regional areas experienced higher capital growth rates of 5% and 6% for the quarter.

This growth is being driven by the resources and mining sector, McGrath says, as the large mining companies use the major coastal cities as ports to ferry people back and forth. The high incomes that are being generated in regional areas, particularly from the mining and construction sectors, are also partly responsible. "[This] has given many people a high disposable income, which gives them an opportunity to invest in their local area," McGrath says.

As one of the nations fastest-growing states – the Australian Bureau of Statistics (ABS) reported that the estimated residential population of Queensland increased by 76,400 in the year to June 2006, passing the four million milestone to reach 4.05 million people. Development is moving ahead to support the forecasted population growth across the sunshine state. According to the state government's South East Queensland Regional Plan, 575,000 new homes will be built throughout Queensland in the next 20 years.

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