Hopeful, not hopeless
Queenslanders are nothing if not optimistic, with many industry pundits believing that the market has bottomed out – and, therefore, the only way is up.
As 2013 marches on, the Queensland property industry is hopeful that the improving market conditions that came about in the second half of 2012 will continue.
“In most areas across the state, sales numbers were up substantially during the later parts of last year. There have been more people through open homes and more buyers actually willing to buy,” says REIQ chairman Pamela Bennett.
“The Queensland market certainly appears to be on the road to recovery, helped in no small part by the necessary lowering of interest rates by the RBA to help stimulate our economy… and the return of the Principal Place of Residence (PPR) concession on stamp duty,” she says.
While this was “a hugely welcome policy turnaround, following its axing in 2011”, she comments, the return of the owner-occupier stamp duty concessions does little to encourage investors into the market.
The axing of the $7,000 first homeowners grant (FHOG) – which was succeeded by the $15,000 first homeowner construction grant (FHOCG) – has also discouraged activity at the bottom end of the market.
“The next six months is going to be a real test of the overall effectiveness of this policy change,” adds Ryan Connors, REIQ research analyst.
Experts predict growth
The good news? The Brisbane property market is forecast to grow, and quite substantially.
“Brisbane dwellings are expected to increase by around 6% per annum over the next three years,” confirms Michael Matusik, director of Matusik Property Insights.
The bad news? This price appreciation is not expected to filter out into regional communities, where various factors at play are either promoting or stalling real estate growth.
ANZ Head of Property Research, Paul Braddick, says the mining and tourism industries continue to drive regional variation in economic growth.
Locations such as Cairns, the Sunshine Coast and the Gold Coast – all traditional tourism hotspots – continue to struggle for vacation dollars, thanks to the strong US dollar, while in contrast, many mining towns are delivering strong yields of 10%-plus.
“The outlook for the Queensland property market and economy appears vulnerable, with softness in labour-intensive sectors of the state economy driving sharp increases in the Queensland unemployment rate in the second half of 2012,” Braddick says.
Queensland’s unemployment rate is the second-highest in the nation at 6.2%, followed only by Tasmania at 7.3%.
Mining woes – or are they?
When it comes Queensland’s resources industry, news headlines tend to scream one of two opposing, yet equally strong messages: “The mining boom is over!” or “The mining boom is well and truly underway”. Who says what, depends on who is being interviewed and what vested interests are at play, but the truth of the situation actually lies somewhere in the middle.
On one hand, Queensland-based mining companies are expecting to add around 500 employees to their operations in the next 12 months, but will also shed 1,000 jobs, resulting in a net loss of roughly 500 positions, reports the Queensland Resources Council.
Meanwhile, Rio Tinto chief executive Tom Albanese confirms that the mining giant needs to cut more costs amid volatile global markets, with coal operations in NSW and Queensland in the firing line.
“In response to lower coal prices, a high Australian dollar and high input costs impacting the industry in Australia, Rio Tinto is actively reducing controllable costs in this business,” Albanese says.
It’s not the most promising sentiment, but it doesn’t exactly sound the death knell for the mining sector just yet: to keep things in perspective, note that in the company’s fourth-quarter 2012 production report, Albanese commented that markets remained volatile but that the business, which analysts expect to report profit of about $US9 billion this year, was continuing to perform well.
There is also the matter of the potential profits up for grabs in the state’s far north. After lifting the state’s decades-long uranium ban late last year, Queensland Premier, Campbell Newman has his sights set on exploiting the state’s rich uranium deposits, said to be worth upwards of $10bn. To this end he has been attending site visits in Mt Isa, far north Queensland, with the Uranium Implementation Committee.
“Uranium mining and export is already providing jobs, royalties and crucial regional development in other parts of Australia, and it’s time Queenslanders shared in these benefits too, he says.
Home to more than 6,000 locals, West End is a trendy, inner city suburb of Brisbane that has shown consistent growth over the long term, in spite of market fluctuations.
The central neighbourhood is within walking distance of the CBD, across the Victoria Bridge, and with its vintage clothing boutiques, coffee houses and cigar bars, it’s considered the bohemian heart of Brisbane.
“It’s a cosmopolitan area offering a variety of cafes, bars, boutiques and restaurants, plus it’s close to the CBD and public transport provides great access to schools and the local universities,” says Angela Stevens, owner of City Sales and Rentals, West End.
“The suburb boasts a high student and academic population, due to its proximity to the University of Queensland, Griffith University Southbank and Nathan campuses and QUT, but it’s home to a mix of young professionals and families,” Stevens says.
“West End is well known for having a relaxed feel and offering something for everyone, and as such it provides some well rounded investment opportunities,” she explains.
“You can’t go wrong as the suburb offers all of the infrastructure that people require, and it’s a great option, both for investors who are chasing capital growth and a strong rental yield.”
The suburb was affected by the 2010-2011 floods, which Stevens admits has turned some buyers off.