As Queensland digs itself out of the doldrums, experts are predicting sunny outlook for the state
Brisbane's property market was relatively flat during the November quarter. Median house values rose by just 0.87% to $459,500 according to Residex. Over the year, it rose by 2.67%, one of the worst performing markets in Australia. The unit market performed slightly better at 5.38% growth during the same period.
While this is a poor showing compared to the other capital cities, there are now more signs that activity is picking up.
A report compiled by Landmark White showed the inner ring home market has seen a considerable uplift in the last six months. The LMW Residential report that monitors values within the inner ring of capital cities found that there has been a strong growth in the index between May 2009 to the high in November - an increase in 8.32% during the period.
"The rate of growth recorded recently is similar to the levels seen in 2007 only sits 2.78 points away from the peak in the market back in early 2008," says Mike Henderson, director with LMW Residential.
"Local agents report strong levels of activity in the inner city over the last three months with the recent surge in values especially in the sub $1 million price brackets. There is currently an under supply of available stock especially at the bottom end of the market, however, activity has now increased significantly in the $1 million to $2 million price range, after a distinct lack of sales in this price category in the first half of the year. Above $2 million, activity remain slow however, there are more sales being transacted."
Aaron Maskrey, research director with PRDnationwide is also upbeat about the current state of the housing market in Queensland. "We're already in recovery mode," he says. "We've already seen jump in activity. Prices in many suburbs that fell during 2009 have now plateued and some of them have actually bounced back. As confidence comes back into the market, we'll see median price levels increase across the board."
Strengths and weaknesses
Paul Braddick, head of property and financial system research, ANZ says the Queensland economy slowed markedly in the past year led by a hiatus in the mining boom and a sharp decline in dwelling investment. To make matters worse, a marked deterioration in the state finances saw Queensland join Tasmania losing its AAA credit rating, he notes in his report. "The labour market has also softened with the unemployment rate at 6.2% in November, up from 3.8% a year earlier," he says.
Dwelling approvals bottomed in the June 2009 half year at 11,888 for Queensland which represents approximately one half of the underlying demand according to Bill Morris, author of the Midwood Queensland Investment Report.
"Approvals are forecast to slightly improve in the December half year, but are still at their lowest levels since 2001," he says. "In 2010, it is expected that dwelling approvals will lift in Queensland but the strength of this lift will depend on the supply side obstacles that Queensland faces, as well as the amount of credit available to developers."
On the bright side, population growth remains robust in the state. While gains in net interstate migration have fallen, overall population growth remains strong at 2.6% or 112,900 people over the year to June 2009.
Morris estimates Queensland's population (residents and visitors) to be approximately 4,417,200 in November 2009 and 4,550,000 in 2011.
"Although Queensland houses only 20% of Australia's population, it absorbed 26% of this latest increase. Two-thirds of Queensland's growth always settles in the southeast corner. This means it would have grown by an extra 75,000 people in the year to June 2009, and will hit the three million mark by mid-2010. This recent boom in demand for accommodation is completely at odds with the low supply of new homes. At the 2006 census rate of 2.38 persons per dwelling, an extra 440,000 people will need 185,000 new dwellings annually. The HIA recently estimated only 142,000 will be built in FY 2010, rising to 166,00 in FY.As a result, housing will become even less affordable as prices skyrocket under the pressure of this unsatisfied demand," says Bill Morris of Midwood Queensland Investment Report.
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