Regional areas carry expectations of growth for the Sunshine State, and rental markets are tightening
Brisbane's position has weakened as growth levels slipped into the negatives over the 12 months to April 2019, according to CoreLogic’s Home Value Index.
“Queensland has promised to be the next boom city for the last five years – it hasn’t happened. It won’t this year either, and it’s unlikely to do so next year – not massively anyway,” says Results Mentoring director Brendan Kelly.
“It is not in a position for growth, as it’s not a buoyant market. The unit market in Brisbane itself is still a little oversupplied. There’s still capacity there that needs to be filled before you get massive new developments coming up, so there’s still slack to be picked up by demand.”
Brisbane “has growth and decline in equal proportions”, with the balance gradually tipping towards the red, Kelly says.
“Brisbane has broadly been in declining growth. I anticipate that that trend will continue to get into the negative territory over this year – you’re going to get about 40% decline and about 25% in growth, to see a continued trend down in values,” he says.
Nonetheless, the expectation is that the negative trend won’t last too long, and Brisbane will soon be back in neutral territory.
Gems lie beyond the metro
As has been the case for a while now, the best places to buy in Queensland have been outside the capital city, in regions like the Sunshine Coast and Gold Coast.
“Sunshine Coast and Gold Coast have had a lot more interest recently – oversupply has been sucked up; prices are starting to move in the unit market,” Kelly says.
On the rental side, vacancy rates have been dropping into a comfortable range as well, according to the Real Estate Institute of Queensland (REIQ). Gladstone saw its average rate improve from 4.2% to 3.5% for the first time since 2012; meanwhile, Townsville’s rental market tightened significantly from 4.3% to just 1.5%.
However, this move could also be a downside if rents begin to rise as a result of limited supply.
“In Queensland, 34% of us rent our home, and with continued population growth we clearly need additional supply,” REIQ CEO Antonia Mercorella points out.
“The state is stepping back from public housing in Queensland, which means the load falls to private investors.”
SUBURB TO WATCH
COOLUM BEACH: Units remain positive
With a claim to be the second-largest rock in the world, the site of Mount Coolum is not just limited to mountains; it is also a beach suburb that attracts tourists to its waves and chill atmosphere.
Coolum Beach has generally been a growth suburb, but the 12 months to April 2019 saw house prices slip by 3% to a median of $680,759. By contrast, units have sustained positivity over the past five years.
Rental properties are flourishing in this suburb as well, commanding rates averaging $490 a week for houses and $400 a week for units. Unit investors also benefi t from a strong average yield of 5.2%.
Tourism: Coolum Beach is a popular tourist destination, known for its surfing beach
Yield: Investors gain an average rental return of 5.2% on units
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