Brisbane on the road to recovery?
Queensland's struggling property market is finally starting to show signs that a belated recovery is getting underway. Robert Carry reports.
First homebuyer incentives helped shore up a Brisbane market that had trailed Australia's other capitals throughout much of 2009, but it finally looks like sustained growth may be returning.
While the strong surge in prices seen elsewhere has so far been absent in Queensland, the sunshine state has at least managed to stave off further price declines.
"Currently the Queensland property market can be identified as one that is in recovery," said PRDnationwide research analyst Aaron Maskrey. "First homebuyer numbers have gradually declined in Queensland, but investors have started to re-enter the market."
However, Brisbane's property market has not yet returned to pre-downturn buoyancy which Dave Maher, business analyst with LJ Hooker, attributes to several factors. "Queensland has two competing forces at work", he explains. "On one hand we have a state economy that has suffered during the global financial crisis due to a heavy reliance on resources and tourism.
"On the other hand Queensland has low interest rates, rapid population growth and a shortage of housing stock. These forces have been locked in an arm wrestle for the last 12 months and have resulted in a some what subdued property market showing minimal growth."
Turning the corner
However, Maskrey believes the city has at least touched bottom. "Very few areas have recorded positive capital growth, but most have stopped the slide down," he points out.
Maher also believes Brisbane may be turning the corner. "As confidence grows we expect to see investors and up-graders return," he says. "Just because the recovery in Queensland has lagged that of New South Wales and Victoria doesn't mean we will not see fantastic growth in 2010."
A recent report from QBE suggests Brisbane will see a dwelling stock deficiency of 33,000 homes by June 2010. Maher believes that this, coupled with high demand from an ever growing population, will put upward pressure on property prices.
Units outstrip houses on rental returns
Rental returns in most areas have been average been set at a reasonably stable 5-6%, but there are still areas that are punching above their weight in the yield stakes.
"Surprisingly, in terms of annual yield, it has been units that have provided a better return than houses," says Maskrey. An example of which is the suburb of Bundall where units are achieving a yield of 8.8% as opposed to 4% for houses.
The lower segment of the market has been Queensland best performer - buoyed initially by first homebuyers but now also attracting investors. "More recently, the middle segment of the market has progressed with families now having the confidence of looking to upgrade," says Maskrey.
For the state's higher end however, times are still hard. Maskrey adds, "It is quite clear that the Gold Coast, Sunshine Coast and higher priced areas in Brisbane have been suffering for some time. Median house prices have dropped in some cases as much as 40%."
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