EXPERTS are hailing Queensland’s Sunshine Coast as the hottest place in the nation to invest in property right now.
A lack of housing, a tight rental market and a rapidly growing population mean supply is failing to keep up with demand in the region – creating perfect conditions for investors.
Leading real estate industry figure John McGrath said the Sunshine Coast presented one of the best opportunities for capital growth because of its liveability, affordability and future economic prospects.
“From an investment point of view, where in Australia right now can you invest your dollar and get better returns than the Sunshine Coast or southeast Queensland?” Mr McGrath said.
” I don’t think there is a location that’s going to offer better investment growth in the future.”
His views are echoed by prestige property agent Tom Offermann of Tom Offermann Real Estate, who claims the Sunshine Coast “is on the cusp of the highest growth period in its history”.
“This is being driven by a raft of infrastructure projects that are delivering exceptional lifestyles, which in the past required some compromises for people coming from big cities,” Mr Offermann said.
The region is in the midst of an infrastructure boom, with billions of dollars being invested in upgrading and creating new facilities.
Work is underway on a new runway at the local airport, which is set to become international by 2020, and a new hospital and health precinct has recently been established.
“These are game changers,” Mr Offermann said.
“Astute property investors who recognise what is happening, and take action to secure the best located property they can afford, will reap the rewards of their foresight.”
Local agents say the region is crying out for more investment properties to cater to the needs of the increasing population.
According to demographer Bernard Salt, the Sunshine Coast’s population of around 298,000 residents is set to rise to 550,000 in 23 years, which will require more than 100,000 new homes to be built.
The latest Real Estate Institute of Queensland figures show the rental vacancy rate on the Sunshine Coast is just 1 per cent, with Caloundra having the tightest vacancy rate in the state at just 0.5 per cent.
It’s good news for investors, who are currently achieving healthy rental returns of around 5 per cent.
In its recent report, Herron Todd White noted an increase in investor activity in the Sunshine Coast market, with the sub $350,000 unit and townhouse sector particularly popular.
“It’s not uncommon to see townhouses selling for $220,000 attracting a rental of $280 per week – over 6.5 per cent gross return,” the report said.
For investors looking to capitalise on the growth in the region, McGrath Real Estate founder John McGrath said now was the time to get into the market.
“I think there is a great opportunity, in particular right now, because we’ve seen Sydney and Melbourne have shown unprecedented growth over the last five or six years,” he said.
“Now those markets have come to a plateau and a lot of people are going to be saying; ‘Do we take our profits and reinvest them, or, in fact, do we move up north and get better value for money?’
“So, I think right now there’s a terrific window of opportunity where people can capitalise on the immense growth we’ve seen in the southern states.”
Reed & Co director Adrian Reed the increased international access the new airport would provide would likely change the profile of buyers in the Noosa region.
“We’re currently seeing an increase in Australian expats buying back into the market, but if accessibility becomes easier, we’re expecting a more aggressive upward trend in high-end premium property,” Mr Reed said.
He said that lending restrictions and the impact of the banking royal commission had had little impact on the region’s prestige market.
“The vast majority of deals I’m doing at the top end of the market are cash,” he said.
“They’re self funded retirees who’ve already sold their principal place of residence.”
Owner/builder Paul Saunderson, who is selling his home in Noosa Heads through Peter TeWhata of Tom Offermann Real Estate, said the local market was “out of control at the moment”.
“There are houses getting knocked down and new dwellings being built everywhere,” Mr Saunderson said.
He said the contemporary, four-bedroom, three-bathroom property at 20 Sanctuary Ave, Noosa Heads, which he lived in with his wife and two children, was attracting strong interest from interstate and overseas investors.
“It’s a good investment opportunity because it’s been valued as holiday letting, which is anywhere from $6000 to $10,000 a week during peak season,” Mr Saunderson said.
Jamie Smith of Century 21 On Duporth in Maroochydore said he’d never seen so much activity in the Sunshine Coast property market, with strong interest from both local and interstate investors.
Mr Smith said many investors were looking to buy in the less expensive suburbs, where new housing developments were popping up, such as Caloundra, Sippy Downs, Birtinya and Mountain Creek.
“It’s definitely unprecedented in terms of what we’re seeing on the Coast,” he said.
But Mr Smith said investors who were not already in the market needed to act fast.
“If you were here three years ago, you could have bought between $400,000 and $500,000,” he said.
“Now you’re looking at anywhere from $600,000 plus, so it’s definitely changed a little bit.”
SUNSHINE COAST SUBURBS FOR BEST CAPITAL GROWTH
Suburb Property type Median price 12 month change in price
Minyama House $1.31m 45.8%
Kenilworth House $399,000 40%
Yandina Creek House $820,000 32.3%
Beerwah Unit $375,000 25%
Mount Coolum House $676,200 23.2%
Mapleton House $543,250 21.3%
Mudjimba House $739,500 20.7%
Peregian Springs Unit $475,200 18.8%
Battery Hill House $579,500 18.4%
Montville House $707,500 17.9%
Regional Queensland now a national property market leader: Hotspotting’s Terry Ryder
Regional Queensland is becoming one of the nation’s most compelling markets. Rising numbers of locations have growth symptoms, both in terms of sales activity and price movements. Over 60% of Regional Queensland markets have median prices higher than a year ago, with apartment markets a standout.
The Sunshine Coast remains the No.1 market in the state, but other growth markets are emerging. Increasingly we are seeing recovery signs in places that were previously in downturn, including the long-suffering Gladstone market.
The one major contradiction to the overall growth scenario is the Gold Coast, which had some uplift in the lead-up to the Commonwealth Games but has faded since. In Hotspotting’s Winter survey of sales activity, we can’t find any growth momentum in Gold Coast locations – most suburbs are “plateau” markets and there is a growing number of suburbs ranked as “decline” markets.
The Sunshine Coast stands in stark contrast to the Gold Coast. The Sunshine Coast has one of the nation’s leading growth economies and its real estate market is thriving as a result.
In our previous (Autumn 2019) quarterly survey, we observed that Mackay was challenging the Sunshine Coast as the leading Regional Queensland market. That situation has re-adjusted in this latest survey, with the Sunshine Coast still entrenched as the state leader and Mackay not as prominent.
Emerging centres with improvement in their markets include Cairns, Rockhampton and the Fraser Coast, while major regional cities like Toowoomba and Townsville may be on the cusp of new growth phases.
The number of growth markets in Regional Queensland has trended higher in the past 18 months. This is despite the decline of the Gold Coast. Recovery in resources-related regional centres like Mackay, Emerald and Rockhampton is helping, while Gladstone is now showing increasing signs of improvement, with some of its suburbs rising.
Regional Queensland markets collectively have improved in the past year or so: in the past six quarterly surveys, the number of locations with growing demand has been 30, 36, 40, 45, 48 and 45. The number of growth markets had decreased sharply in the late 2017 survey but showed steady improvement in 2018 and this has continued into 2019.
The other key feature is the number of Regional Queensland markets with price growth. Hotspotting analysed price movements in 293 markets and found 179 (61%) have median prices higher than a year ago. Of the 179 growth markets, 77 have recorded median price growth of 5% or more, while another 102 markets have increased by less than 5%.
Of the higher growth markets, 21 have increased by more than 10%, headed by the Central Queensland mining-related centre of Emerald (up 27%). But the No.1 centre for house price growth is the Sunshine Coast: 10 of the 21 locations up by 10%-plus are Sunshine Coast suburbs, led by Eumundi (28%), Sunshine Beach (15%), Twin Waters (15%) and Wurtulla (15%).
Apartment markets overall are doing particularly well in Regional Queensland. Two-thirds of unit markets have median prices higher than a year ago, headed by Airlie Beach (up 31%), East Toowoomba (36%), Broadbeach Waters (25%) and Coolangatta (20%). The Sunshine Coast is prominent here as well – headed by the iconic Noosa market which is up 24%, while Noosaville has risen 15%. In the southern part of the Sunshine Coast, Golden Beach and Warana are both up 15%.
Our analysis of sales activity confirms the status of the Sunshine Coast: 10 suburbs have rising buyer demand, while another 13 have consistent sales activity.
Cairns (pictured top) has six growth suburbs and plenty of steady performers, while Mackay has five growth markets and the Fraser Coast four. Rockhampton has emerged for the first time in several years, with five of its suburbs notable for their rising buyer activity – including Norman Gardens, Berserker and Yeppoon.
There’s further evidence of revival in Gladstone, which we first noted in the two previous (Summer 2019 and Autumn 2019) quarterly surveys. But the situation remains patchy: our ranking of Gladstone suburbs include four rising, three plateau, one consistency, two decline and three danger.
We’ve been watching the Toowoomba market for growth signs, because this is one of Australia’s largest inland regional cities and it has been a growth market in the past. The early signs of uplift are now emerging, with Newtown lifting quarterly sales from 67-82-82-91-95 over the past year or so, and Centenary Heights showing 40-40-42-52-55.
Townsville has suffered setbacks from the February floods but nevertheless has growth markets and will be boosted when work starts on significant infrastructure projects.
As we reported in previous editions, the post-Games boost predicted by some has not eventuated on the Gold Coast. This market was strong from 2015 to 2017 because of the pre-Commonwealth Games construction boom.
Since then the growth has subsided and there are now 40 suburbs classified as either plateau or consistency markets – and eight decline markets.
The price outcomes are also mixed for the Gold Coast: 51 markets have median prices higher than a year ago, but there are 31 with prices lower than last year.
Brisbane to see biggest house price rise nationally by 2022
Brisbane’s median house price is predicted to jump 20 per cent by 2022, far beyond any other capital city in the same period.
The BIS Oxford Economics property forecast predicts Brisbane will see the greatest national gains in house prices, but not for another couple of years as the remaining oversupply is consumed.
The median house price is expected to increase from $552,000 to $665,000 in Brisbane.
That percentage rise is the highest predicted for the capital cities nationally, well ahead of Sydney at 6 per cent and Melbourne at 7 per cent.
“A weak Queensland economy and high level of dwelling supply have dampened price growth in Brisbane in recent years,” the report notes.
“The result is that house prices in Brisbane are relatively affordable.
“With credit conditions easing and interest rates falling, improving affordability will be a catalyst for raising price growth as stronger economic growth returns and the market moves into a rising deficiency.”
Apartment supply is still high, according to the report, and the economy remains slow keeping price rises “modest” over the next 12 months before prices are predicted to jump in 2021-22.
While houses are predicted to see a big jump, apartment and unit prices are only expected to see a 14 per cent median rise in Brisbane.
The Gold Coast and Sunshine Coast, meanwhile, are benefiting from the high migration rates with house prices remaining high.
With low vacancy rates and supply now increasing, BIS Oxford Economics predicted slower price growth of nine per cent for the Gold Coast and seven per cent for the Sunshine Coast to June 2022.
Further north, Townsville’s house prices struggled as mining investment left the region but the city can still expect a 9 per cent house price rise over the coming two years.
Report author Angie Zigomanis said nationally housing supply was high.
“Supply is running at record levels, with new dwelling completions having exceeded 200,000 in each of the past four years and expected to have peaked at a record of just under 227,000 dwellings in 2018-19,” Mr Zigomanis said.
“This compares with underlying demand for new dwellings averaging around 195,000 per annum in the same period, which in itself is a record.”
Mr Zigomanis said reductions in interest rates and lending policies becoming more relaxed were predicted to help stabilise residential markets this year and encourage price growth to start in 2020.
Investors in the box seat amid surprise surge in rental demand for Brisbane apartments
Surging tenant demand for Brisbane apartments, falling interest rates and rising rents are luring investors back to the market.
A SURPRISE surge in tenant demand for apartments combined with falling interest rates and rising rents looks set to lure property investors back to the Brisbane market after years in the doldrums.
The apartment rental squeeze is getting so tight some agents are now advising prospective tenants to submit applications before they have even inspected properties — or risk missing out.
At the same time rents are on the rise due to a combination of interstate migration, steady economic growth and a decline in new apartments coming to market.
A new report from independent consultancy Urbis has found tenant demand for new inner Brisbane apartments jumped in the first quarter of this year.
The survey revealed a vacancy rate of just 1.6 per cent across 22 apartment projects in inner Brisbane — tightening 0.6 per cent from the previous quarter.
The rebound in the rental market after years of apartment oversupply has even surprised experts, who say the level of demand is greater than expected.
Place Advisory director Lachlan Walker said it was a good time for investors to be researching the market and looking to buy.
“I’m surprised the rental market has recovered so fast, and even more surprised supply’s dried up so fast,” Mr Walker said.
“That’s the one thing that’s held Brisbane back these last three to four years — the high level of supply — but that is quickly disappearing.
“I think we’re in for a supply shortage over the next six to nine months … that’s why we’re seeing some rental growth and vacancy rates starting to drop.”
It comes at a time when borrowing money has never been cheaper, with interest rates being cut to an all-time low of 1 per cent this week.
Independent real estate group Position Property has a vacancy rate of less than 1 per cent on its 800 rental properties in the Brisbane region.
Position Property director Richard Lawrence said property managers in some areas were advising people to submit rental applications without waiting until they had seen the home.
“We are seeing a general tightening in the rental market across the board, including in locations previously reported as having excess new apartment stock available,” Mr Lawrence said.
“This is the case both in inner city locations such as South Brisbane and Newstead, and out to middle ring suburbs such as Chermside on Brisbane’s north side and Upper Mount Gravatt on the south side.”
Mr Lawrence said the situation was likely to intensify in the months ahead given the expected fall in the number of new apartment projects starting construction, leading to a reduction in availability of high quality apartments.
“Anyone currently renting should seriously consider purchasing a new apartment if they can afford it as they will likely be paying higher rents within the next 12 months,” he said.
“Similarly, local investors who may have been sitting on the sidelines can now buy with greater confidence knowing that there is an abundance of tenants available for the right property and rental yields are strengthening.”
The pipeline of new infrastructure coming to inner Brisbane, including Brisbane Metro, Queens Wharf and the proposed South Bank redevelopment, is encouraging new buyers to choose new apartments over established houses.
A new luxury apartment and townhouse development at Newstead, Newstead Series, has put up the no vacancy sign with leasing agent Jones Lang LaSalle reporting a waiting list of people seeking one and two bedroom apartments.
There is a waiting list for the luxury Newstead development, Lucent Gasworks, and in South Brisbane, the first stage of Pradella’s SkyNeedle Apartments also has a zero vacancy rate and a waiting list of prospective tenants.
“I believe we have reached a real turning point where the Brisbane property market is returning to normal supply and demand conditions,” Mr Lawrence said.
“Smart investors who purchase apartments in places where couples, young families and downsizers want to live will reap the rewards in terms of achieving higher rents, good quality tenants and low vacancy rates.
“New arrivals from interstate who might normally opt to rent for a few months to get a feel for their new city would also be well advised to consider buying instead to avoid the tougher rental market conditions ahead.”
Urbis property economics and research director Paul Riga also said interstate migration had played a part in the increase in demand for rentals.
“Anecdotal feedback from participants indicated that inquiries from interstate remained solid, and certainly up from the same time last year,” he said.
“Apartments provide these tenants the flexibility of being able to settle into employment and get to know the city and it’s different precincts.”
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