Despite population growth and some strong sections of employment, Queensland has been hit by a continuing force of property value losses.
Property values have continued a downward slope in Queensland. House and unit values are both down for the year, quarter and month from March, according to Residex.
But for a savvy investor keen to pick up a bargain, the drops can also mean there are more opportunities to find a property that has fallen in sale price, and with little competition on the buying end.
"There's a lot of good buys because prices have dropped disproportionately to the market value," says David Airey, president of the Real Estate Institute of Australia. That's especially true in properties with an ocean view, including Queensland, he says. Namely, the Gold Coast region has been the hardest hit, says Airey.
Bill Morris, author of the Midwood Queensland Investment Report, agrees that prices are down, saying they've have dropped 16% on the Gold Coast, 12% on the Sunshine Coast, and 10% in Brisbane since the benchmark peak in December 2007. More specifically, in those regions, it's the highest priced properties that are pulling the overall median prices down most. "Certainly high priced apartments have fallen in excess of 20% to 25% since the peak," says Morris.
But he says investors should keep such drops in a larger perspective. "Those drops are really not such a big deal when it's considered prices rose 120% in the previous five years," he says.
The price decreases are a result of a slip in sales volume, which in itself relates to more conservative lending as well as an inability for other potential buyers to sell their existing home at a desirable price and thus to move up to another, says Airey.
That trend could change in Queensland soon, however. Morris predicts a recovery as near as next year. "I see it possibly bottoming out by the end of the year, and perhaps starting to rise again in 2010," he says. "Interest rates are going to come back further, possibly down to 1% by then, and the banks are going to start to have to relax their lending regulations in order to gain more market share."
Morris says valuations have also been harsh on Queensland owners, but he sees that improving by the end of the year as well. "Once the valuation profession in particular recognizes that prices have bottomed, they won't be so harsh in their valuations," he says.
And despite any gloomy price outlooks, the population growth should still be a major factor in Queensland. According to RP Data, the state had the highest population growth last year in Australia, at 105,134.
Going forward, Morris says the best performing properties will be in the hubs of employment. A good deal doesn't just mean a low price, but also good value into the future, he says. "There will be some very good investment deals around," says Morris. "I wouldn't necessarily say along the coast, but where you see high employment."
Places around the Brisbane airport and port have seen a "huge growth in employment happening," says Morris. Just north of Brisbane in Caboolture is another hot spot, he says. "If you can borrow money, then it's a good investment," says Morris.
Townsville should also remain strong, due to its armed forces base. Cairns, however, has struggled as its reliance on the tourism industry has opened it up to the global economic concerns.
The Real Estate Institute of Queensland reports Forest Lake was the hottest seller for houses in the state in 2008. "Forest Lake provides ample opportunities for people to buy new, or nearly new, contemporary homes with all the latest appliances, close to amenities and at mid-range prices," says REIQ Chairman Peter McGrath.
It's still all about location in Queensland, says McGrath. "In each major region of Queensland, buyers are looking for the best possible position - within a budget," he says.
"The most popular suburbs usually provide plenty of affordable or mid-range properties and are close to amenities such as shopping centres, entertainment precincts or schools."
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