Investors are targeting Brisbane in increasing numbers, in search of yields and affordability.
The Brisbane market is showing signs of increased activity, notes Century 21 Queensland state services manager Anita Creevey, and it’s investors who are leading the charge.
“We’re getting a lot more investors buying in the high rent areas. We’re being told that the whole 10km radius is where the market is happening at the moment,” she says. “People can afford to buy investment units, and they’re getting good yields for them.”
Real Estate Institute of Queensland managing director Dan Molloy points out, however, that investor numbers are still down on historical averages, which is bringing down vacancy rates.
“This means that there is not the usual number of investment properties being added to the rental pool, which is putting a strain on supply,” he says.
REIQ figures reveal that the Brisbane Statistical Division saw a quarterly drop of 0.3% in its vacancy rate to hit 2.4%, with the inner ring (0-5km) proving to be the tightest market at 1.4%. In Brisbane’s commuter belt, Logan city’s vacancy rate dropped from 2.7% to 1.8%, while Redland City dropped from 3.9% to 2.3%.
Competition among tenants will continue to be fierce during the first months of the year, says Hot Property Specialists buyer’s agent Zoran Solano.
“Traditionally January/February and June/July are the peak times to advertise property for rent,” he says.
“When we’re purchasing for investors, if we can manage it, we want the property to come up for rent at that time to give our clients the opportunity to get the best rent.”
But while investor numbers may not be what they once were, Solano notes that demand is hotting up for well-priced properties that suit the local demographic.
“One typical example of increased buyer activity in the market is that I had my first multiple-offer situation in over two years about three weeks ago. On that particular occasion there were three buyers – myself and two others,” he says.
“So that shows that there is competition out there in the market,” he adds. “But stuff that’s overpriced or isn’t the best quality is still sitting on the market, stagnant at the moment.”
He nominates Windsor as an under-rated suburb to watch, thanks to its proximity to the city and the Newmarket shopping centre, “and the public transport infrastructure that’s going on in the north-side there,” says Solano. “There’s been some activity in that area as well – that multiple-offer situation was in Windsor – so that’s a pocket that’s been quite interesting.”
Nundah and Wavell Heights also hit Solano’s radar as areas where competition is hotting up for well-priced properties – especially among upgraders looking for a good sized 600–800m2 block.
“Those two adjoining suburbs are also benefiting from the northern busway, and they’re going to be benefiting from the Nundah Village upgrades as well,” he says. “There are going to be a lot more shopping and leisure activites in that area.”
A good year?
Looking ahead, Creevey believes that 2012 should see the Brisbane market show some real signs of improvement.
“With interest rates coming down and prices being very affordable, people are going to gain confidence, and we’re going to see sales activity pick back up. We’re seeing it now in our website enquiry hits, and the phones are ringing again in our offices,” she says.
Solano agrees, noting that – should interest rates remain stable, or fall further still – buyers will start to come out of the woodwork in far greater numbers.
“I think we’ve got to the point where a lot of people have been sitting on their hands for quite a while now, and 2012 will be the year they will make their move,” he says.
Out of control
Regionally, Creevey notes that the Gladstone property market continues to be “out of control”, with both capital growth and rents heading north thanks to the area’s booming resources industry.
“Emerald seems to be getting good results at this stage as well,” she adds. “But Gladstone seems to be the one in Queensland where the market’s really picking up.”
Solano adds that given the increasing cost of renting a property in Gladstone, an increasing number of tenants are heading south to Bundaberg in search of more affordable, yet still commutable, living options.
“Right now, Bundaberg is a pretty popular spot for investors,” he says. “We’re seeing a lot of the ripple effect from the mining boom and mining activity around that area. But obviously Bundaberg has its own economy and isn’t solely reliant on mining.”
“We’re finding good value in $250,000–$300,000, two-bedroom, one or two-bathroom, fully-renovated homes. And they’re renting really well. We bought a property for $245,000 and it rented for $290 a week within three days, so there’s strong rental demand up there,” he adds.
Toowoomba, too, is worth a look-in for property investors who don’t mind waiting for six to 12 months for rents to ramp up.
“Right now I think people aren’t quite ready to commute all the way from Toowoomba, but it’s a major hub for repair work, machinery and distribution of goods. So I think as time goes on it’s going to be a bit more of a rural hub for people out in the Surat Basin,” Solano says.