Let the good times roll
Forecasts for Queensland continue to be optimistic, and this means Brisbane is not the only market in the Sunshine State that investors might want to keep an eye on
Rolling waves of upbeat forecasts continue to break on the sandy shores of the Queensland property market. Even as ‘bubble’ warnings swirl around other state markets, experts agree that the tides are calmer when it comes to the Sunshine State.
This state of affairs is enticing many a savvy investor to dip their toes into those warm waters. And, with the Real Estate Institute of Queensland’s (REIQ’s) Market Monitor
for the June 2014 quarter reporting an increase in sales activity for all property types across the state, who could blame them?
REIQ acting CEO Antonia Mercorella says that, while there was a rise in sales of houses, units, townhouses and vacant land, the state’s total house sales were up across all price points during that period.
“The Brisbane LGA led the charge with an increase of 19%, closely followed by Logan, which was up 18%. These unusually robust winter sales look set to be replicated in a number of markets throughout the state amid increasing demand, sales volumes and prices.”
However, the increase in activity was predominantly recorded in Queensland’s southeastern corner. This indicates that certain markets within the broader state market are poised to perform better than others.
One such market is Ipswich, which sits in Queensland’s southeast, 40km from Brisbane. Once a large city in its own right, these days it has been absorbed into the larger Brisbane metropolitan area.
According to a new report by property analyst Michael Matusik, the Ipswich market has entered the recovery phase of its cycle, and is a market to watch as sales volumes, prices, rents, rental yields and new dwelling starts are all rising.
Matusik believes it has the potential to be the Parramatta
of Southeast Queensland. This is due to its large tracts of relatively cheap residential and industrial land, high levels of public and private infrastructure spending, and a proactive local council and state government.
Strong population growth is on the cards, with the latest state government projections anticipating it will grow to over 450,000 within the next 25 years. This will impact on sales volumes, housing starts, job creation and the rental market.
The Matusik report notes that, with an already tight vacancy rate, rents should continue to rise, but only for affordable property that caters to the emerging demographics. Therefore dual-income housing, followed by small-lot detached housing and then townhouses are the best choices for investors.
Another Southeast Queensland market it might pay for investors to keep an eye on is the Gold Coast. While it hasn’t been viewed positively for some years, recently the outlook has started to change.
Tony Holland, from Colliers International, says it is currently the most undervalued property market in Australia. “It is well positioned to enter a long-awaited growth phase following on from the strong demand and price growth in the Sydney, Melbourne and Brisbane markets.”
Major infrastructure and development projects are driving the Gold Coast market and contributing the increasing activity. Projects include:
• construction of the Commonwealth Games 2018 infrastructure
• a $300m redevelopment of the Pacific Fair Shopping Centre
• a Chinese-investment-driven $300m joint venture to develop the iconic beachfront Jewel project site
• plans for a $345m hotel tower at Jupiter’s Casino
• the planned redevelopment of Wavebreak Island
However, some commentators recommend watching this market closely, due to a potential risk of oversupply.
Toowoomba sits to the west of Brisbane and is one of the Queensland markets that commentators keep talking about.
Long known as the service centre for the Surat Basin, but with a well-diversified economy of its own, it is now set to become a freight and logistics hub as well. This is thanks to the new Brisbane West Wellcamp Airport development, the new Toowoomba Second Range Crossing, and the planned Inland Rail project.
Already blessed with low unemployment, this market will see job opportunities increase as a result of these projects, along with the $350m retail centre development in the CBD and upgrades to medical facilities, including Toowoomba Hospital.
The REIQ’s Mercorella says it is already one the state’s key regional markets and is experiencing solid growth. “Toowoomba continues to perform strongly, with sales activity up 5% for the June quarter on the back of a thriving local economy and strong buyer activity.”
Further, Toowoomba offers affordable prices, strong rental returns and a tight vacancy rate, all of which should also be appealing to investors.
SUBURB TO WATCH
Boondall: Underrated suburb gets noticed
After a lengthy period flying under the radar, Boondall is now regarded as an up-and-coming suburb to watch. Sitting approximately 13km from the Brisbane CBD but close to Nudgee Beach, it is known for its combination of affordability and lifestyle attractions.
Steve Grimbas, from Place Nundah, says it is also blessed with proximity to Nudgee College. The school’s reputation sees many people moving into the area. For this reason, families make up a particularly large percentage of Boondall’s households.
The typical property in the suburb is a three- to four-bedroom high-set home on a 600sqm block, Grimbas says. But the 1990s College Green development primarily comprises three-to four-bedroom low-set brick homes on 400sqm blocks.
“The College Green properties attract an enormous amount of interest from older residents needing to move out of their high-set homes, along with first home buyers and investors.”
Grimbas adds that, currently, there are few townhouses and units in Boondall, but this is likely to change given the new city plan. “But, depending on your need, it does cover most levels of the buying spectrum, although properties under the $500,000 mark are always in high demand.”
The suburb’s best streets are Garozzo Street, Leona Street and Gildor Street. Locally, they are affectionately referred to as “Boondall Heights”. The worst street is considered to be Sandgate Road.
Grimbas tips prices to continue to grow in value, especially as Boondall has been a consistent performer for many years.