Sunshine State economy still suffering
While economic problems cripple the property market, some areas continue to outperform the average
Although Queensland started 2016 on a high note, sentiments regarding the state’s growth potential have soured.
According to the ANZ Property Council Survey results, published in July, capital growth expectations for Queensland’s residential property market have dropped significantly. Business confidence in the local government also fell.
Herron Todd White researchers confirm that there continues to be little faith in Brisbane’s fiscal growth potential, as the effects of the mining bust are still being felt. Unemployment rates are still high, and the overall employment market remains flat.
“The situation is unlikely to improve until mining activity picks up, providing further evidence that property investment on a trend can be very risky,” says Andrew Trim, managing director of Johnson Real Estate.
Regional areas are no exception, with major regional centres such as Townsville
experiencing a decline in rents, buyer activity and prices due to the closure of the local nickel refinery.
Affordability with accessibility
Despite its economic woes, the Queensland property market still reported growth throughout the first half of 2016. Median house prices have risen steadily since 2015, with strong population growth a primary driver. High levels of interstate migration are behind this: Queensland recorded the second-highest number of inflowing migrants in the past year.
Moreover, the high prices of homes in Sydney and Melbourne are driving buyers and investors to consider the more affordable options in Brisbane, as reflected in the number of new listings, which have increased by over 10%. Brisbane is also one of only two capitals to report annual median rental growth for both houses and units.
Herron Todd White’s Month in Review
for July 2016 highlights that suburbs within 15km of the CBD remain good investment options, since properties are comparatively affordable, while being only a short commute away from the city.
For instance, the suburb of Algester has recently attracted interest following price rises in neighbouring Sunnybank Hills in the past 12 months. Redland Bay is also looking at good medium-term growth, and southern suburbs such as Marsden and Woodridge offer value properties in the $300,000 range. Investors favour such homes because of the strong rental returns of around 5% to 6%, CoreLogic reports.
Steady growth in regional areas
Elsewhere in the state, the different property markets are moving at various speeds.
Toowoomba’s property market is softening, although suburbs like East Toowoomba and Middle Ridge, which are dominated by owner-occupiers, are expected to remain stable. Suburbs situated close to beaches in the Central Gold Coast and the Sunshine Coast are seeing an influx of new stock. All of this new supply may have an impact on vacancy rates and returns over the next 12 months, although the completion of infrastructure projects such as the Sunshine Coast University Hospital in 2017 should keep these coastal markets in reasonably good shape.
Confidence in Ipswich
has also increased, with prices stabilising and even rising, according to Trim.
“This popularity, particularly with investors, is on the back of strong infrastructure investment, good affordability, combined with excellent rental yields and low vacancy rates,” he says.
“As price growth starts to stabilise in the Brisbane CBD, the outer regions of the city will experience further sustainable growth. With vacancy rates low and healthy rental yields, investing in these regions is set to be a good long-term investment.”
SUBURB TO WATCH
Algester: Spotlight shines on this outlying suburb
On the outskirts of Brisbane, Algester is a central suburb within easy reach of the city, airport and coast. Although the suburb is only a few kilometres further from the city than its north-eastern neighbour Sunnybank Hills, Algester’s property prices are significantly lower.
Locals enjoy the quiet neighbourhood and its easy access to public transport and numerous amenities. The suburb is served by a supermarket, shops, cafes, a medical centre and a chemist. Nearby suburbs also offer many other shopping, schooling and dining options. There are several parks in Algester, and the local primary school is a convenient option for families with young kids.
In addition, buses take commuters straight to the city at regular intervals, or for those who prefer to drive, it’s a half-hour away on the M3. The Gold Coast is also just an hour’s drive away on the M1.