QLD Excerpt from the 2011 June Market report

Mining’s the key to Queensland’s recovery
Brisbane is still counting the cost of this year’s flood damage, but resource-rich towns look set for big things.

There’s been a growing groundswell of sentiment that Brisbane’s property market is due to start making a comeback in the near future, but for the time being both buyers and sellers are coming to grips with the city’s new post-flood investment landscape.

With post-flood reconstruction now well under way, Hot Property Specialists managing director Liz Wilcox notes that it’s not just flood-affected properties that will have taken a hit in terms of values. Any property within a flood-hit postcode should expect its value to drop as a result of the stigma that’s attached to being in an area that’s susceptible to Mother Nature’s ire.

“In general, a kilometre either side of the river is where the market has definitely dropped off, with sales being few and far between,” says Wilcox. “In flood-affected postcodes, I think it will take four or five years for prices to pick up.”

And while some commentators believe that it will take a generation for this negative sentiment to turn around, WBP notes in its Property Outlook report that values picked up surprisingly quickly after the city’s last major flood in 1974.

“Reports from local real estate agents that experienced the 1974 Brisbane floods confirm that while there was a reduction in the value of flood-affected homes at the time, the fall was based on negative sentiment, which soon recovered as communities returned to normality,” says the report.

Time to buy?

Outside of those flood-affected areas, Wilcox believes that Brisbane has pretty much hit the bottom of the property cycle and that now is truly the time to buy.

“It’s an awesome time to be buying. I don’t see property prices dropping much lower over the next six months,” she says, adding that buyers who wait until Christmas could end up wearing the cost of not capitalising on the current market conditions.

In terms of where the buying activity is at the moment, Wilcox estimates that around 60% of her business currently comes in the sub- $450,000 price range in non-CBD locations. Seasoned investors, she says, are heading out of the CBD in search of the better returns that Brisbane’s more affordable properties offer when compared to pricier centrally-located real estate.

She picks out the Logan region, citing the suburbs of Meadowbrook, Loganlea and Crestmead, as an area that’s been of particular interest to investors thanks to its affordability, solid rental returns, and good infrastructure – including new bus ways and express trains to the city or the Gold Coast.

PRDnationwide research director Aaron Maskrey also highlights the lower end of the market as an area to keep an eye on, noting that this slice of the market saw a year-on-year softening in house sales of 42.9% during the six-month period to September last year.

“This contraction within the lower segment of the market can predominately be attributed to the withdrawal of the first homebuyer boost and increasing interest rates. Given the diminishing level of competition in this market, it exhibits the most favourable conditions for buyers and will provide the best returns in the future,” he says.

And when it comes to long-term potential, Herron Todd White’s Month in Review report suggests looking at second-hand units close to the CBD for their combination of affordable entry prices, good rental bases and the opportunity to add value.

“These little treasure chests are normally in a three-storey, walk-up design with a couple of bedrooms and a garage or two. This is all within an easy stroll of the really desirable stuff like shops and restaurants,” says the report, which suggests looking around the 5km mark at suburbs such as Paddington, Auchenflower, Ascot, New Farm and West End.

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Top Suburbs : marrickville , lockridge , the basin , narara , dulwich hill

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