I believe real estate markets are driven more by local factors than national ones. While many commentators are placing great significance on interest rate reductions as a prime driver of real estate markets, I’m much more interested in what’s going on the coalface of local economies.
And, in those terms, I put a high rating on the Sunshine Coast as a market that investors of all kinds should be considering. I regard the Sunshine Coast as the strongest market in Queensland at the moment and indeed one of the strongest in Australia.
I see events happening there as an economic revolution, which is shifting the Sunshine Coast from tourist destination to international city – a massive transition that’s happened in the past 2-3 years and continues to happen.
I recently completed a comprehensive 30-page report called The Sunshine Coast: Australia’s Most Compelling Growth Story, in which I note that the Sunshine Coast economy was no longer predominantly reliant on tourism because of the creation in recent years of strong health, education and technology industries – all part of an infrastructure program totalling more than $20 billion.
Economies reliant on tourism traditionally fail to deliver sustainable real estate growth. But the Sunshine Coast has diversified and strengthened and is now, I think, the nation’s most compelling growth story.
It has a $17.7 billion economy, making it one of the largest regional economies in Australia, and on infrastructure it’s outspending several of the nation’s capital cities.
The health, education and technology sectors – including the new $5 billion health precinct – are bringing new residents to the Sunshine Coast and this is providing strong impetus to the real estate market, notably at the Top End. The median house price for Noosa Heads has increased 40% in the past three years, while the median apartment price has jumped 25% in the past year.
In terms of becoming an international city, the Sunshine Coast will soon have an international airport and an international broadband network connection to Asia. Earlier this year the Sunshine Coast was named in the Top7 Intelligent Communities of 2019 by the global Intelligent Community Forum, alongside major international cities like Chicago.
Central to everything that’s happening in the region is the creation of a Sunshine Coast CBD from the ground up – a $5 billion enterprise which is now under way on a 53ha greenfield site in central Maroochydore.
The new city centre has attracted investment from local, national and international firms interested having an early presence in the growing region.
The Sunshine Coast is among the top 10 leading regions in the country for employment generation, adding more than 20,000 jobs over the past five years. The $1.8 billion Sunshine Coast University Hospital (SCUH) has created 5,000 jobs since opening in April 2017 and the new Maroochydore City Centre is forecast to provide 15,000 jobs over the lifespan of the 20-year project and inject $4.4 billion into the economy.
In addition, the Sunshine Coast International Broadband Network will deliver 800 new jobs once it’s operational next year and will deliver the fastest data connection to Asia from the east coast of Australia.
Part of the economic revolution of the Sunshine Coast in recent years has stemmed from the region’s growing reputation as an innovation and technology hub.
Demographer Bernard Salt has described the Sunshine Coast as “the entrepreneurship capital of Australia “because of the large number of knowledge-based start-ups and small businesses such as information technology, clean-tech, creative industries, aviation and education.
The population of the Sunshine Coast is forecast to reach 580,000 by 2041, an increase on the previous forecast of 558,000.
The Sunshine Coast is one of Australia’s fastest-developing economies, growing each year at rates well above national averages and is expected to expand to $33 billion by 2033.
As a consequence, our new Spring edition of The Price Predictor Index has found that the Sunshine Coast has more locations with rising sales activity than any other municipality in Australia. And that kind of outcome is likely to create sustainable long-term price growth.
Brisbane won’t be as affected by onsite auction ban as Sydney and Melbourne
Realestate.com.au chief economist Nerida Conisbee says only about 10 per cent of residential sales in Queensland utilise the auction process.
“Brisbane’s not a big auction market anyway so it won’t have the same impact we’ll see in Melbourne and Sydney,” Ms Conisbee told realestate.com.au.
Realestate.com.au has launched virtual tours of properties listed on its site to help home hunters.
“For people looking to buy, the bigger deal will be not being able to go into the home,” Ms Conisbee said.
This article is republished from www.propertyobserver.com.au under a Creative Commons license. Read the original article.
Coronavirus pandemic to slug Queensland’s property prices, industry figures say
For Queensland mortgage broker and property consultant Carolyn Walshe, it is not a matter of if, or when, the coronavirus will hit property prices, but by how much and for how long.
“You’d have to expect that they’re going to fall,” Ms Walshe said.
“The question is going to be just exactly how much — I think the smartest thing that people can do right now is just to hold back and wait and see what happens over the next few months.”
The latest figures show Queensland reached record median house prices for Brisbane, Noosa and other parts of the state in the last quarter of 2019.
Real Estate Institute of Queensland (REIQ) chief executive Antonia Mercorella agreed that COVID-19 would put a dent in that.
“Inevitably we will see the property market impacted by the coronavirus — I think it would be incredibly naive to think otherwise,” Ms Mercorella said.
“We know that a large volume of people will lose their jobs during this time.
“We know that it will completely erode confidence and those things — security and confidence — are very much key to the property market.”
Last night, Prime Minister Scott Morrison included the property sector in the latest moves to limit social interaction.
“Real estate auctions and open house inspections, in particular open house inspections — that cannot continue,” Mr Morrison said.
He said that from midnight tonight they would not be allowed.
Lenders, investors cannot foresee what’s to come
Ms Walshe, who also advised clients through the global financial crisis — suggested the forced shutdowns of parts of the economy, the restrictions on travel and the massive queues for Centrelink all added to the uncertainty.
“The list of instructions that people have to live under is breathtaking, so until we see some endpoint to all of that, it’s going to be very, very difficult to see exactly where the other side is,” Ms Walshe said.
Ms Walshe said the fact the Federal Government had moved the budget from May to October showed neither it nor investors, could foresee what was to come with any certainty.
“I don’t think anyone can have a lot of confidence at the moment until we see things that are far less alarming,” Ms Walshe said.
“Therefore, less property sales will complete until we have some confidence returned to the market and people are back at whatever semblance of normal work is.”
She said banks would be reluctant to lend, as people’s ability to repay loans also looked uncertain.
“Lenders are now going to be seriously looking at [the] possibility of there being lower numbers of borrowers who are in occupations where their income can be absolutely guaranteed,” Ms Walshe said.
Ms Mercorella said while some investors would be reluctant, others might pounce.
“We will see some investors perhaps getting cold feet and making a decision to suspend that,” Ms Mercorella said.
“But similarly, we will see some prospective investors being quite bullish about it and actually looking at this as an opportunity and probably pouncing on what’s available to try and secure a property at a better price, at a lower price.”
Renters and landlords also to come under strain
Ms Mercorella said the REIQ’s immediate concern was tenants facing eviction for not being able to make their rent.
“Around 35 per cent of the Queensland population rents,” she said.
“The vast majority of that supply comes via the private investor, so given the predicted job losses, we are concerned about the impact that will have on a tenants ability to make their rent obligations.
“We don’t want to see renters being evicted on account of non-payment.”
She said the REIQ welcomed any support governments could give to tenants.
“Equally, what we need to be cognisant of is that the vast majority of that rental supply is coming from private investors — mum and dad investors — and they will have their own obligations at the other end to the bank.” Ms Mercorella said.
“So the challenge will be how we protect tenants in this in this environment, but also supporting owners who ultimately — if they don’t meet those obligations — will end up defaulting on mortgages, and ultimately having to sell those properties and losing those properties, which will mean that we all lose.”
Ms Mercorella said there was hope the property market would recover relatively quickly.
She said the Queensland market was robust and recovered well from the global financial crisis.
“Again, we bounced back from the GFC rather well, but I but I do expect that this will be far more severe than that,” she said.
“It will also depend on how long we’re in the situation for, so it really is crystal ball gazing at this stage.”
This article is republished from www.abc.net.au under a Creative Commons license. Read the original article.
Coronavirus, a threat or opportunity for the housing market? Hotspotting’s Terry Ryder
On Tuesday (24 March) I will be hosting a lunchtime webinar in which I will discuss the impact of the coronavirus on real estate with Rich Harvey of propertybuyer.
We’ve been inundated with registrations and it will the most popular webinar ever hosted by Hotspotting. Not surprisingly, with the virus impact dominating news media, people have an urgent interest in how this will play out for real estate.
The virus impact is creating volatile share markets but I expect the outcomes for property markets to be quite positive by comparison.
At times of extreme uncertainty and volatility, Australians tend to retreat to the solidity and relative safety of bricks and mortar.
We saw that the last time there was a global crisis impacting on our economy and causing the Federal Government and the Reserve Bank to take special action – and that was in the wake of the Global Financial Crisis in 2008.
At that time we were inundated with economists and others seeking their 15 minutes of fame by forecasting a collapse in housing values. Academic Steve Keen famously predicted that our property values would drop at least 40% in 2009. If he’d been right, it would have been an unprecedented demise of house prices, not only in Australia but anywhere in the world.
And Keen was not alone. At that time, and in subsequent years, there was a seemingly never-ending line-up of doomsday forecasters for Australian real estate.
One American spruiker, seeking to drum up publicity for an Australian seminar tour, claimed that house values would drop 60% and that land values would fall 90%.
Renowned doomsday ranter Harry S Dent has claimed our property values were on the point of collapse on at least three separate visits to Australia over the past decade.
Keen, Dent and all the other forecasters have one thing in common: they were all proven spectacularly wrong, every time.
In 2009, at a time when Keen predicted a 40% drop in Australian property values, house values rose 13.6% – that’s the weighted average increase across the eight state and territory capital cities in calendar 2009, according to the Australian Bureau of Statistics.
Every capital city except Adelaide recorded a double-digit rise in house prices in 2009.
And in 2010 property values rose another 6%, according to the ABS, with all capital cities recording some level of growth, except Perth.
One of the messages we received from those times, and from other periods when share markets have over-reacted to situations in the global economy, is that the Australian property market does not follow the lead of the share market.
In fact, often it does the opposite.
One of the factors that will keep residential real estate solid amid the virus crisis is the general shortage of homes in Australia, amid times of strong demand from owner-occupier buyers, including first-home buyers.
There was relatively little construction of new dwellings in 2019. Vacancies across Australia are very low in most locations and listings of properties for sale remain well down on the levels of recent years.
One measure showing the general shortage of homes is the vacancy rate figures published each month by SQM Research.
Their latest report shows that, for the first time in many years, every one of the eight state and territory capital cities has a vacancy rate below 3%.
In recent years both Perth, Brisbane and Darwin have had quite high vacancy rates and Sydney recently also had a vacancy rate above 3%. But now Perth is down to 2%, Brisbane is 2.2% and Darwin has dropped steadily lately and is now 2.7%. Sydney’s rate has also fallen and it’s now 2.9%.
Hobart, Canberra and Adelaide all have vacancy rates around 1%, which means their rental markets are very tight. Melbourne has fallen lately and well as its vacancy rate is now just 1.9%.
So four of the capital cities are below 2% and all of them are lower than 3%.
With availability of rental properties so low, we’re seeing rents rising in most of the capital cities.
If vacancies are tight and rents are rising, prices are likely to heading north as well – and that’s certainly the case at the moment.
The price report published by CoreLogic earlier this month showed prices had risen in the previous three months pretty much everywhere in Australia – in all eight capital cities and in all seven state regional jurisdictions.
The SQM Research figures published on 17 March showed strong growth in our largest cities, with Sydney up 11%, Melbourne 9% and Brisbane around 7%.
But Hobart still leads, according to these figures, with house prices 14% higher than a year ago.
And there were also moderate rises in cities like Canberra and Adelaide.
So, overall, the data shows that our property markets are very strong – and well placed to handle whatever outcomes arise from the virus crisis.
This article is republished from www.propertyobserver.com.au under a Creative Commons license. Read the original article.
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