Increased market activity suggests the worst could be over for the Queensland market
By Brisbane’s recent standards, it has been an uneventful year for natural disasters. Remember that this time in 2011, the whole state was still reeling from a battering at the hands of the elements. However, the economy has also had to face up to the recent closure of several mines in the Central Qld area, as concerns continue to mount regarding the longevity of the resources boom. Economic boosts provided by the reconstruction efforts in the wake of the 2011 floods have now levelled out and the state’s property markets are caught in a state of limbo, with growth fluctuations in some areas being countered by the large number of properties for sale in others.
Investors are taking some positives away from a flat period for median growth in Brisbane, with an increase in buyer activity propping up the market, especially closer to the CBD.
“We’re seeing some improvement in the upper-middle suburbs of Brisbane, to the north and north-west,” says Andrew Wilson, senior economist at Australian Property Monitors. “These have been recognised as good potential value opportunities, so we’re seeing some increased buying and good growth in those regions.”
However, the same value potential is not evident in some of Brisbane’s outer suburbs, according to Wilson.
“The lower-priced regions of Brisbane are still seeing very high numbers of stock on market and I think we’ll have to start seeing some of the for sale properties cleared before we see price growth emerge across the city,” he says. “We just don’t have the competition between buyers at the moment that is required to drive growth.”
Job cuts keeping confidence down
The fragile state of parts of the Brisbane market can be attributed to some extent to unpopular budget directives of the state government, according to Wilson.
“The issue affecting Brisbane now is a lack of confidence,” Wilson says. “The latest government moves, in terms of public sector job shedding are having an impact on local confidence and that’s acting as a headwind for the Brisbane market.”
It is also important to remember that the aforementioned increase in investor activity is not as significant, when compared to the low bar that was set in 2011.
“I expected to see some price growth emerge by quarter three of this year in Brisbane,” Wilson says. “I now think that at best we’ll be lucky to see a flat result over the rest of the year.”
Holiday markets return to work
Regional areas of Queensland that are traditionally known for tourism are starting to show initial signs of recovery, due in part to a slight rise in holiday unit market interest.
“Cairns is starting to reach the bottom of its price cycle,” says Wilson. “Indicators such as vacancy rates are falling a little bit and are being complemented by an increase in demand and competition for houses. It also has exposure to tourism, which is still not where it was two or three years ago and should improve.”
Like Cairns, the Sunshine Coast has suffered from excess supply since 2008 and is also starting to find a base from which to return to growth.
“Buyer activity is evident in the unit market,” Wilson says. “Particularly at the north end, up around Noosa, where investors are recognising some good value and thinking the market has been oversold and is now bottoming out.”
Meanwhile, down south, the famous Gold Coast is further along the path to recovery, due to a number of positive factors.
“A lot of work was generated there by the Brisbane reconstruction and economic activity filtered through to the Gold Coast,” Wilson says. “We are also seeing some interest in canal homes between $800,000 and $1 million at the north end of the Gold Coast, where value buyers are looking to get into the prestige property market.
“We’ve also seen international buyers quite active in the apartment market, which has helped the Gold Coast keep its head above water.”
Newman follows NSW lead
Queensland’s first home buyers are likely to be affected by Premier Campbell Newman’s decision to take the lead of his southern Liberal colleagues and replace the First Home Owner Grant with incentives for the purchase of new properties.
“New homes are usually too expensive for first-time buyers and are often located in outlying suburbs where young people do not necessarily want to live,” says Anton Kardash, CEO of the Real Estate Institute of Queensland (REIQ).
For Kardash, the proof is in an estimate by the Office of State Revenue (OSR) that during the GFC, when first home buyers were offered a boost of up to $21,000, fewer than a quarter chose to purchase a brand new property.
“While we understand the state government needs to find savings while also stimulating the economy, we don’t believe this is the way to achieve those objectives,” Kardash says, noting that the first home buyer sector has provided the Queensland market with one of its few recent positives.
He says while new buyers are still able to save money through stamp duty concessions, these alone are not enough to sustain the current proportion of first-timers.