Brisbane recovers well from the post-mining boom
Dwelling prices shot up by 4.1% in Brisbane over the 12 months to October 2016, CoreLogic data indicates.
Cameron Kusher, CoreLogic’s head of research, attributes this increased value to the popularity of detached houses, which has made up for the weakness of the unit market. This gentle but steady rate of growth is a good reflection of Brisbane’s process of recovery following the nation’s shift away from the mining industry.
Nonetheless, the hike in house prices has resulted in lower rental yields, with the average return for houses slipping from 4.3% in 2015 to 4.1% in November 2016. And despite a drop in prices, investors may be looking to stay away from Brisbane’s apartments, as returns fell by 0.1% in November 2016 compared to the previous year. Average time on market also increased to 57 days from 43 during the same period.
Outside Brisbane, suburbs on the coast of Queensland are performing favourably. Across Australia’s regional areas, the Hunter and Gold Coast regions were the most active in the auction market as of the third week of November 2016. The Sunshine Coast also surpassed Brisbane in terms of auction clearance rates.
Sunshine Coast shifts its focus to tourism
The Sunshine Coast may have been strengthened by proposals to enhance its appeal as a destination spot. SANAD Capital recently submitted a plan to develop an adventure and active lifestyle park that includes the country’s pioneer human-powered monorail bike trail, bungee jumping, kayaking and other sports facilities. The venue is also set to have large outdoor spaces to hold events and concerts.
“The Sunshine Coast is undoubtedly one of Australia’s most beautiful regions, with amazing beaches, stunning sunlight and picturesque hinterland. [This park] will drive tourism and growth because people will visit from afar and realise how beautiful the region is and want to stay and return,” says Bradley Sutherland, CEO of SANAD Capital.
Highlighting tourism is a wise move, considering how important it is for the mining states to catch up with Australia’s departure from a resources-based economy. Tourism is one of the industries that is gaining ground in recent years, and this initiative is indicative of Queensland’s flexibility with regard to industry movements.
“Queensland has experienced the worst of the mining investment declines, and its more diversified economy will begin to improve from here, although the looming residential downturn will keep growth constrained,” adds Richard Robinson, senior economist at BIS Shrapnel.
The worst has passed for Queensland
Queensland can finally start putting its troubled days behind it, with both government spending and residential construction increasing over 2017. These two factors are expected to be significant drivers of economic growth.
Citing the state’s eye on resource exports and tourism, Robinson says “Queensland’s diversified economy – particularly its strength in the tradeables sectors – will be a key factor in its recovery, but the sharp slowing in population growth, from the boom time 2.6% to 1.3% now, will act as a constraint”.
Nonetheless, public investment is expected to rebound over the 2017/18 period following a recent slump, and triggered by the construction of education, social, telecommunication and institutional infrastructure. While the state government is still picking itself back up financially, the property market has assisted in the recovery through its growth and with increases in stamp duty.
Moreover, Robinson predicts that residential investments will continue to rise, although it will be gradual. But the wealth of construction relative to existing demand is a looming threat.
“With the level of dwelling building now well above demand, an oversupply will manifest over 2016/2017, driving a sharp downturn in 2017/2018,” Robinson states.
SUBURB TO WATCH
Nerang: Generous yields in Gold Coast suburb
Regarded as one of the remnants of the townships that once characterised the Gold Coast’s rural hinterland, the suburb of Nerang is a growing suburb with long-term potential. It offers remarkable returns that can reach over 6%.
This suburb sits right on the Nerang River and is considered a transportation hub in the region. It houses several shopping centres, making it a centre of amenities as well. Nerang Station is a stop on the new Gold Coast railway line.
Moreover, the Pacific Highway runs through the area, improving its accessibility. The focus on the development of its commercial scene will certainly help Nerang to sustain growth as Queensland continues its recovery from the mining industry decline. Properties here are quite affordable, which could inspire demand. In addition, the suburb is located near the water, upping its value as a recreational site.