20th March 2009
Much like other states and territories, Queensland now has a ceiling level on property prices, below which things are stable and above which the values are sinking.
It's all based on demand, where buyers backed by the first home owner grant a keen to snap up lower-priced homes. A growing number of owners of higher priced homes, especially those bought as a second property, and starting to feel the crunch of the financial crisis and face little option but to try to sell now and quickly.
That leads many experts on the Queensland market to set the bar at about $500,000. Anything below that is where the greater buying activity is.
"The top end of the markets are struggling a bit," says Cameron Kusher, analyst with RP Data. "They are taking a longer time to sell, and there are not a lot of people in that market."
Kusher says he expects those problems in the higher-end sector to continue throughout the year.
After missing out on bonuses or facing other financial worries, the wealthier owners are selling their holiday homes, mostly along the coast. That especially includes the Gold Coast, Sunshine Coast and Palm Cove, says Kusher.
Scott McGeever, president of the Real Estate Buyers Association of Australia, agrees, adding that there's few buyers willing to pay top dollar for these properties right now.
"I think it's just a matter of confidence," he says. "There's no confidence in spending at the moment."
Another sector cooling and set to struggle more is the coastal tourism regions, especially those up north around Cairns.
"A lot of the north Queensland market is heavily reliant on tourism, and you'd anticipate those numbers will go down with the global financial crisis," says Kusher. "Those are markets that are fairly exposed."
Where to buy
The Queensland market may be seeing overall median prices falter, but there are still some sectors outperforming the rest.
"At best, it's a flat market, but the lower end is definitely the most active end," says McGeever.
Boosts for first home buyers as well as lowered interest rates are certainly acting as an incentive for those with more optimism and better financial stability. And for investors, there's also some great rental yields in areas such as Brisbane.
"I think investors certainly will come back in the market in the short to median term," says McGeever. "Rents are increasing and the property prices are staying relatively flat."
As rents have gone up, that's also pushed some frustrated tenants to look to buy. McGeever says he expects that trend to continue.
"They finding it as cheap (to own) as their rental payments," he says.
While there are few promoting the financial prospects of massive coastal homes at the moment, there are many promoting well-priced suburban homes. Some are worth picking up for investors, but McGeever says there are also many that are not.
McGeever says he was recently reading about some development companies promising great returns on some properties, but he says investors should be especially cautious about such claims at the moment.
"I just think it's dangerous telling people that," he says.
McGeever suggests investors look to buy in the most built-up areas. Rather than try to find a bargain in a more remote area, he says it makes much more sense to be patient and search for a well-located property at a good price.
"When the market is down and prices are down, why wouldn't you go and buy a blue chip property, a BHP share instead of a share in a mining company that started up yesterday," he says.
Finding those areas includes looking for solid infrastructure and being still relatively close to the water. And in Brisbane, that means also staying within about a 15 km radius. McGeever foresees transportation nodes becoming of even greater importance as the Brisbane population rises.
"Public transport is going to become a major part of getting around," he says.
But ultimately, the short-term performance of the market is going to rely on the level of confidence in the market, and itself will rely on employment.
"People are wondering if they buy a house, are they going to be able to keep their job, that kind of thing," says McGeever.
He expects the overall Queensland market to remain flat until at least until next year.
Do you have more than $120k in your super fund? You could use your super to buy property - Find out how