Depressed sunshine state shows glimmer of hope
The political cycle at both a state and federal level is having a material impact – good and bad – on Queensland’s less than buoyant housing market.
Despite showing gradual signs of improvement following some lows after the GFC, Queensland’s property market remains in a state of flux, with consumer sentiment influenced by political timeframes.
Real Estate Institute of Queensland chief executive Anton Kardash says activity justifiably slows down during a typical five-week election so that would-be buyers can assess the likely impacts of any policy commitments before a normal level of interest resumes. Given the Federal Government’s extended electioneering period – a total of seven months from announcement to polling day on September 14 – Kardash says this is set to fuel uncertainty among an already tentative Queensland public.
“Consumer confidence is already heavily depressed, and some reportingin the media unfortunately feeds that confidence. The overriding issue [for Queensland] is depressed confidence,particularly among families, consumers, and small business. It continues to affect the market,” he says.
By contrast, the Queensland State Government has delivered a more positive narrative since Campbell Newman took over the premier’s office in March last year. According to Kardash, Newman’s Government has committed to reducing regulatory red tape that impedes the health of the property market, as well as seeking to improve the professionalism of the property industry. “They’re getting rid of some of the silly nuances of property transactions. There have been some nonsensical parts of property legislation for a long time that look set to finally be removed. Coupled with another interest rate cut, these factors should all serve to boost consumer confidence,” he says.
Regional disparities apparent
The geographical size and scale of Queensland often make it difficult to assess overall activity, with the best indicators being the collective average number of days properties have been on the market, as well as vendor discounting rates.
Benchmarking against cities such as Sydney – where houses were on the market for an average of 38 days in April – homes in Brisbane were on the market for an average of 72 days (with units recording an average of 80 days).
Vendors were also discounting properties by 7–8% on average throughout April, with increased discounting activity particularly evident in the $350,000–$500,000 price range.
“While Brisbane’s market remains tight, investors are coming back for units. A 3% vacancy rate is when it’s in balance, and in Brisbane it was 1.7% in the month leading into April,” says Kardash.
He adds that Gladstone and the Gold Coast have had a weak start to 2013, while Toowoomba is performing strongly for both buyers and sellers.
“Toowoomba is the jumping off point for the Surat Basin gas fields near the Darling Downs, so we’re seeing plenty of activity down there. Gladstone was booming for most oft he quarters of last year but hasn’tbeen as strong this year. And on the Gold Coast, investment by overseas buyers is up 33% this year already. It’s marginally increased activity but promising nonetheless to see a level of improvement.”
In Brisbane the median house price is now $442,500. This takes quarterly growth to -0.3%, mirroring flat growth over the past 12 months. Brisbane median rents over the April period sat at $370, representing a 4.3% gross rental yield.
Over the same period, Brisbane units had a median price of $369,101, taking quarterly growth to -0.2%. The weekly median rent is $350, which represents a gross rental yield of 4.9%.
Kelvin Grove units are one of the more affordable options for investors looking to get within 5km of the Brisbane CBD. The area is strategically located just north of the city and is home to a diverse mix of young professionals and students.
Kelvin Grove’s desirable location within walking distance of the CBD, along with solid public transport offerings and proximity to the Queensland University of Technology and Kelvin Grove State College, should ensure it is a solid capital growth prospect over the medium to long term.
A recent spate of building activity has seen some of the pressure ease off the Kelvin Grove rental market; however, the current vacancy rate of 2.8% is expected to go down in the coming months in light of the large pool of tenants wanting to get into the area.
Amenities in the suburb itself are on the short side, yet a large selection of restaurants, bars, cafes and nightlife are on off er in neighbouring Fortitude Valley. Kelvin Grove, in turn, has plenty of parks and open spaces and tends to have quieter streets.
Properties with some sort of river view tend to attract the most demand, although they normally have a higher price tag. Investors on the hunt for affordable opportunities can find decent offerings on side streets off Windsor Street but should avoid Kelvin Grove Road, which gets a lot of traffic.
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