The Sunshine State embraces change
With new economic drivers and a new government, Queensland is starting to look like a different state. So how will the property market respond in the next 12 months?
The Sunshine State is in somewhat of a transition at the moment. For one, its mining sector
is dwindling, while recent drops in the exchange rate are being warmly welcomed by the more optimistic tourism industry.
Indeed, major tourist centres in the southeast are increasingly showing signs of life, with property prices reacting accordingly. According to the Real Estate Institute of Queensland, two of the state’s strongest performers have been the Gold and Sunshine Coasts, with their median house values
up 5.3% and 7.2% respectively over the past 12 months.
“Southeast Queensland and Cairns real estate had a strong 2014 and the State’s major tourism centres are also starting to hit their straps,” says Antonia Mercorella, CEO of REIQ.
“These improving conditions in the southeast generally kick-start growth in regional Queensland and we expect 2015 will be no different.”
Secondly, there has been a change in state government with Campbell Newman’s Liberal National Party making way for the Labor Party, led by Annastacia Palaszczuk. However, it’s still too early to see what impact Labor will have on property-related legislation and new infrastructure.
Despite the near-term political uncertainty, Linda Phillips of Propell is upbeat about the prospects for the state.
“We expect conditions to improve during the year. Inbound population growth continues and the relatively low prices will benefit from lower interest rates. We are forecasting house price
growth of 6% during the year,” she says.
Shannon Davis of Metropole Property Strategists also believes that the Brisbane property market’s solid performance in the back half of 2014 doesn’t look like slowing down soon.
“I think this growth may continue in the near to medium term,” says Davis. “Interest rate cuts would drive investors to property and shares, and Brisbane is showing value presently. I would expect a better year than 2014. I expect around 7–9% growth.”
And with the currency dropping, Australian property is 20–30% cheaper than 12 months ago for many overseas investors, who could also help push up capital growth, says Davis.
Areas poised for growth
Inner city areas and south-east inner Brisbane suburbs are set to see strong growth in the order of 10% over the current year, according to Phillips. This will be offset by weaker growth in the outer north and south, and south-west stretching to Ipswich
. “Growth in Brisbane is a balancing act between the relatively low prices and healthy inbound population growth, versus employment prospects and weak mining sector growth,” explains Phillips.
“Ipswich and further west are directly impacted by the resources sector, where commodity industry growth is struggling, but the agricultural sector is growing.”
Investors urged to remain cautious
Despite the positive prognosis for the Brisbane property market this year, it still deserves some caution because there will be a lot of new supply coming into certain areas.
Experts warn specifically of poorly designed investor product that will be coming onto the market in massive quantities in some parts of Brisbane’s inner ring suburbs.
This is especially evident in Brisbane’s northern corridor, says Tim Lawless, Head of Research at CoreLogic RP Data. “We haven’t seen much new supply prior to this cycle so there is a bit of catch-up happening in that area, and of course the area is zoned for higher densities now – it’s partly a renewal strategy of Brisbane,” says Lawless.
However, vacancy rates in the area are still quite low at the moment which shows that the market is still relatively healthy from both an investment demand and a rental demand, says Lawless.
SUBURB TO WATCH
Arana Hills: Everything you need within walking distance
With everything from good quality shopping centres and restaurants, to schools and medical centres, homes in Arana Hills are selling in bucket loads. All within walking distance, the easy access of such amenities has led houses to sell after an average of just 33 days on the market.
Just 12km north-west of Brisbane’s CBD, residents of Arana Hills are well serviced by public buses and Grovely train station less than 1km away.
Zak Smith of LJ Hooker says Arana Hills is popular with investors as well as young couples and first homebuyers. “I’ve sold bucket loads in there of late . . . it’s just one of those suburbs that’s probably missed the boat a little bit, and there are some really good buys around.’’
In his view, the infrastructure of the area is key to its growing popularity. ”You’ve got schools, you’ve got transport. Everything’s there.’’
Popular areas in the suburb include those nearby Alan Court which delivers tranquil properties located in native Australian bush, and Minto Crescent which showcases unrivalled views of the city.
Arana Hills provides a diverse range of high and low end property, both new and old. This has led to many investors considering a renovation strategy as an option to increase capital. “You have your high end of the market, but the bottom end of the market is still there to allow the first homebuyers and investors to get in, do a bit of renovation and take advantage of the location,” Smith says.