The long road to recovery
Confidence is trickling back into the Sunshine State as a number of its key industries bounce back
It has been a symbolic time for Queensland. More than a year past the anniversary of the floods that devastated much of the state over late 2010 and early 2011, the property market hints at a reasonably strong recovery this year as the tourism and mining industries switch to a higher gear.
REIQ president Pamela Bennett expects a gradual increase in activity to come in the first half of this year, with sales volumes, real estate business and buyer interest escalating as the year gets underway.
“There’s a feeling of cautious optimism in Queensland. Those who had been sitting back waiting for the right time to invest in property have seen a recovery from last year’s natural disasters and are coming back into the market. First homebuyers are also coming back in, encouraged by the December interest rate cut – but it’s a controlled increase.”
Bennett adds that the state property market as a whole is still far from booming. While the current return to the market has been encouraging, she believes this resurgence is being lead by pockets of activity spread across Queensland.
The most obvious performers are areas impacted by the resources boom, particularly Mackay, Gladstone and Rockhampton. In these areas investors are experiencing good returns on sales and rentals, spurred by strong economic activity and demand from the fly-in, fly-out crowd.
Bennett says that this will only escalate since a large portion of mines are only now getting back to capacity because of the amount of repair work they required after the floods.
Finding the green shoots
Areas that offer great lifestyle choices, while still being close to employment opportunities, are also fairing well. A good example is inner Brisbane suburb and riverside location New Farm where median house prices increased 41% over the last three years, according to RP Data November figures.
Suburbs where urban renewal is underway have been sought after as well, and Bennett says that it is here that most buyers are prepared to meet the market.
Better tourism numbers over the summer holiday period also saw key indicators improve dramatically over last year’s figures in the Gold Coast, Sunshine Coast and Cairns.
According to Century 21 chairman Charles Tarbey, however, one of the most interesting things to watch in the Queensland market will be how Brisbane values perform in light of a growing undersupply in dwellings. SQM Research figures show that Brisbane’s rental vacancy rate dropped from just under 4% in August 2009 to 1.9% in 2011. This rental squeeze could be one of several factors that could kickstart buyer activity.
Tarbey says that another factor that could drive up buyer activity is increasing rents. “Tenants are now getting to the point where their rental payments are starting to get close to equalling the mortgage repayments.”
Building boost extended
Further good news, this time for investors looking at newly built houses or soon to be completed developments, was the announcement in January of a three–month extension to the Queensland Building Boost Grant.
The boost offers a $10,000 grant to buyers of newly built homes in Queensland priced at less than $600,000. The boost was due to expire at the end of January 2012, but following an increase in applications and an improvement in building approvals by the state, the Queensland treasury decided to extend the scheme to the end of April. The idea is to add further support to the building industry.
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