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Property investors should be considering the Sunshine Coast: Hotspotting’s Terry Ryder

Property investors should be considering the Sunshine Coast Hotspotting's Terry Ryder

EXPERT OBSERVER

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.

 

 

 

Source: www.propertyobserver.com.au

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Brisbane

Brisbane Property Prices to Defy the Critics and Strengthen in 2020

Brisbane Property Prices to Defy the Critics and Strengthen in 2020.

How is the market going?

Brisbane Property Prices to Defy the Critics and Strengthen in 2020

It is probably the question I am asked most, sometimes many times each day.

Specifically referring to the Brisbane market, as I have been buying for our clients here for over a decade and investing for myself for close to two decades.

In my position, there is one thing I can offer that the media and many theorists cannot – an on the ground perspective.

And I can assure you, what is making headlines in the media currently, is not playing out at ground level – in the right locations.

Let me explain what I mean when I say the “right locations” or talk about “Brisbane” in general.

Brisbane

When I say Brisbane, I am talking about select suburbs within 10km from the Brisbane CBD.

Suburbs where there is significantly higher demand due to employment, public transport, superior schooling and education, along with greenspace and lifestyle precincts.

And on the flip side, there is very, very tight supply, with next to no new land available anywhere.

Interestingly, unlike our bigger City cousins, you can expect a vastly different environment buying just 15km or 20km out.

I am constantly amazed when interstate buyers and the FIFO buyers’ agents target fringe suburbs in highly inferior locations, expecting a similar result to a Sydney or Melbourne.

To highlight this point, REA produce a great graphic comparing the level of demand for a Suburb vs. the Average for QLD.

I have chosen two suburbs in Brisbane, being Camp Hill (approx. 5km from the CBD) and Mansfield (approx. 10km from the CBD).

The levels of demand currently in these locations are quite extraordinary and close to three times the average for QLD.

Here is what I am seeing and expecting to happen in these superior locations…

Brisbane Property Prices to Defy the Critics and Strengthen in 2020 (12)

It is a vastly different story when you start moving further out where I selected three suburbs that I know our competitors are quite fond of, Zillmere (15km), Redcliffe (25km) and Pimpama (50km).

These suburbs are well below the averages and do not meet all the strict investment criteria we look for in investment grade suburbs.

These are the suburbs at risk moving forward as job security is inferior and people are living week to week.

Brisbane Property Prices to Defy the Critics and Strengthen in 2020 (2)

The Current Market

The latest numbers from Corelogic show our capital cities remaining relatively unchanged, specifically over the last quarter to 19th June 2020.

Brisbane Property Prices to Defy the Critics and Strengthen in 2020 (3)

If anything, Brisbane has held up slightly better than Sydney and Melbourne, likely due to more modest growth over the last 12 months.

I would suggest that this would be easy to explain in the sense that yes there are less buyers in the market due to COVID-19, but there is also less sellers.

Stock levels are well down on this time over the last 4 years.

Brisbane Property Prices to Defy the Critics and Strengthen in 2020 (4)

It appears buyer and seller numbers may have effectively cancelled each other out and there remains a form of equilibrium as we round out the financial year.

Another very interesting set of numbers recently, has been a change in the number of searches online for property.

Sure, with more people at home scrolling through real estate you could expect that, but almost a 45% increase on the same time last year represents a clear trend – upward!

Brisbane Property Prices to Defy the Critics and Strengthen in 2020 (5)

This trend is also playing out on ground level with many local agents reporting much stronger numbers through open homes here in Brisbane.

I know we have also missed out on the odd property due to the odd home buyer willing to pay that little bit over where we see value.

So, there is still buyer emotion in the market and no sign of a bargain as many had predicted.

Another strong set of numbers in recent weeks have been the rise in Auction clearance rates for Brisbane.

Brisbane Property Prices to Defy the Critics and Strengthen in 2020 (6)

These numbers are published by Domain each week and usually hover consistently between 20% – 40% on an average weekend in Brisbane.

They are now up around 50% – 60% plus and well above this time last year in a pre COVID-19 market.

More Headwinds

There is no doubt that there are several strong headwinds still in our faces, particularly once we hit September.

Brisbane Property Prices to Defy the Critics and Strengthen in 2020 (7)

It may see the end of the Job Keeper and Job Seeker payments and more people will very likely face the unemployment line.

Unemployment is tipped to hit more than 10% over the next few months.

We also face a great deal less immigration and overseas visitors during this time.

Many are also predicting the end of the honeymoon from banks for mortgage and investment loan payments may also create serious issues.

And the list could go on and on…

I have no doubt there will be impacts on the overall property market, but here is why I am optimistic about…

Investment Grade Locations in Brisbane

Starting on a Macro Level, with the Federal and State Government incentives.

The current Job Seeker / Keeper payments are support mechanisms, the stimulus is starting to arrive and in almost all previous downturns housing is a target.

Brisbane Property Prices to Defy the Critics and Strengthen in 2020 (8)

From First Home Buyer Grants, to Construction incentives and even talks about abolishing stamp duty has been on the cards.

Whatever may happen moving forward, all forms of Government will make this a priority as they always have.

In the next few months there is no doubt that the unemployment rate will rise and so too will mortgage stress.

It will happen in all suburbs, but significantly less in these superior locations, close to employment hubs where the types of jobs have been less effected.

In superior suburbs there tends to be dramatically less unemployment and less mortgage stress, on the other hand as you may further away from major employment hubs, unemployment and mortgage stress rises.

Now you can see that even if Demand dropped in suburbs like Camp Hill and Mansfield by up to 30% or 40% there is enough to keep demand quite high, while the other suburbs may have some serious issues.

Jobs to the Rescue

I have written previously about the current transformation of Brisbane, with more than 50,000 jobs expected between the CBD and Airport.

This will be the saviour for Brisbane over the medium term.

I often here that an outer suburb has a new rail line, or university or hospital that will create a few hundred jobs.

This is barely a drop in the ocean compared to the next few years in Brisbane.

Brisbane Property Prices to Defy the Critics and Strengthen in 2020 (9)

In Conclusion

With less buyers and less sellers in the market currently, property prices have remained stagnant.

However there are some serious headwinds on the horizon in the form of unemployment and other challenges for buisnesses and employees as the mortgage free period comes to an end around the same time

I have no doubt that that there will be some serious issues for certain types of property in the wrong location.

The dramatic forecasts may well yet prove correct, but I remain very opimistic about the Brisbane market over this period.

In superior locations, more people are lucky enough to have not been efffected as much by the current financial environment and will likely get through the next hurdle relatively unscathed.

They are predminanlty home buyers – driven by cheap interest rates and combined with solid employment grounding are taking a longer term approach.

Brisbane Property Prices to Defy the Critics and Strengthen in 2020 (10)

They have the ability to buy in superior locations close to work and ammenities as demand continues to remain high.

For others looking for employment, there is a jobs boom starting to ramp up across the Brisbane CBD and out to the Airport.

So demand for housing will continue to remain high within that 10km ring.

If you are looking to invest and are looking for direction, certainty and a level of perspective around the Brisbane market, get in contact today.

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

Brisbane Property Prices to Defy the Critics and Strengthen in 2020 (11)

If you’re wondering what will happen to property in 2020–2021 you are not alone.

You can trust the team at Metropole to provide you with directionguidance and results.

In challenging times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.

If you’re looking at buying your next home or investment property here’s 4 ways we can help you:

  1. Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now!
  2. Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property.
  3. Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice.

Property Management – Our stress free property management services help you maximise your property returns.

 

 

 

 

This article is republished from propertyupdate.com.au under a Creative Commons license. Read the original article.

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Brisbane

HomeCo bucks trend of negative property valuations

HomeCo bucks trend of negative property valuations

Freshly listed landlord HomeCo is bucking the real estate sector’s trend of downward property revaluations, boosting the value of its large-format malls by 5.2 per cent.

While many of its listed real estate trust peers with a retail focus have seen sharp falls in the value across their portfolios from the COVID-19 crisis, HomeCo, run by executive chairman David Di Pilla, said preliminary and unaudited valuations had its portfolio rise 5.2 per cent, giving its malls a combined value above $1 billion.

“Our portfolio has been carefully constructed and our assets have thrived and done well through the last few months,” Mr Di Pilla said.

Despite the uncertainty of the pandemic lockdown, foot traffic in HomeCo’s centre rose 9 and 17 per cent in May and June.

“We didn’t have the dip that the traditional malls had in foot traffic. Retailers have remained open and as a result we’ve been trading well,” he said.

HomeCo listed on the Australian exchange in October last year and controls a string of convenience-focused malls developed from former Masters stores.

About half of the group’s portfolio was assessed by external valuers with the rest being scrutinised in-house.

Mr Di Pilla attributed the positive result to rents being set at the bottom of the rental curve at the firm’s initial public offering, which gave the business good growth in assets over time.

Diversified developer Stockland on Monday reported a valuation decline of 6 per cent across its portfolio. Earlier this month GPT reported an 8.8 per cent decline and mall landlord Vicinity Centres said it expects a hit to values of between 11 and 13 per cent.

HomeCo’s development pipeline also contributed to stronger capitalisation rates for its properties.

But while the pandemic didn’t tarnish values, it has affected income − with the landlord saying in May its final 2020 distribution will be half of its pre-coronavirus forecast, at a minimum of 0.05¢ per security.

The fund manager is also in expansion mode. It has purchased the Parafield Retail Complex in Adelaide for $25 million from one of its foundational investors to add to its portfolio.

The mall is 35 per cent leased to Wesfarmers-related retailers and counts Super Retail Group among other tenants.

The deal will generate an ungeared cash yield of 7.5 per cent in the first year, Mr Di Pilla said. That follows the purchase of another mall in regional Ballarat in Victoria earlier this year.

Meanwhile, neighbourhood-focused landlord SCA Property Group has reported a cash rent shortfall of $22 million between March and June 19, 2020 across its centres.

A portion of the shortfall was from government-mandated waivers or deferrals to tenants as a result of the pandemic, SCA said.

This, combined with a capital raising of $279 million undertaken in April, will drive down its full-year distribution to 12.5¢ per security from its previous guidance of 15.1¢.

 

 

 

This article is republished from www.brisbanetimes.com.au under a Creative Commons license. Read the original article.

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Brisbane

Brisbane real estate a mix of growth, consistent, plateauing and declining suburbs: Hotspotting’s Terry Ryder

Brisbane real estate a mix of growth, consistent, plateauing and declining suburbs Hotspotting’s Terry Ryder

Brisbane shows how complex markets can be and illustrates the folly of generalisation.

My winter survey of sales activity and prices reveals that the number of rising markets across the Brisbane metro area is matched by the number of declining/danger areas – and in between are the majority of suburbs which are consistency or plateau markets.

Brisbane’s data shows the impact of the Covid-19 shutdown while also displaying a good level of resilience. The number of suburbs with rising sales activity (28) is lower than the Autumn 2020 survey (37), but better than at the same time last year (24).

There continues to be a high level of consistency markets (50 suburbs, down slightly from 56 in the previous survey). The existence of 28 growth suburbs and 50 consistency suburbs shows a solid degree of resistance to the virus crisis period. But also significant is the 113 plateau markets (suburbs where sales activity has dropped below the previous levels), the highest in three years.

Brisbane also has 21 suburbs ranked as declining markets, slightly fewer than in the previous quarterly survey (23) and substantially lower than six months ago (32). There are also seven danger markets, ones where sales activity and prices are down and vacancies are uncomfortably high.

The Brisbane market was poised for a long overdue boom before Covid-19 struck. As we wrote in the previous edition: “Every statistic that matters depicts uplift in the Brisbane market and prices are expected to rise in 2020. Many commentators have forecast a Brisbane boom in recent years, though many were simply assuming that the Queensland capital would follow the lead of Melbourne and Sydney. Brisbane, however, has lacked the core growth drivers that boosted markets in the two biggest cities.

“But, increasingly, growth parameters are lining up for Brisbane. Population data is favourable, the affordability comparison is helpful, surveyed investors say they are targeting Brisbane – and the major piece of the puzzle previously missing, infrastructure spending, is starting to happen.”

Because of those factors, we believe Brisbane will return to strength quickly in the recovery-from-corona phase.

As we often find with these surveys, there is particular strength in the northern suburbs of Brisbane – the Brisbane North precinct and the Moreton Bay LGA jointly account for half of the 28 suburbs ranked as rising markets. The southside has many of the struggling markets and Brisbane’s inner-city provides all of the danger markets.

In our analysis we divide the sprawling Brisbane City LGA into five precincts (inner, north, south, east and west) while the more distant parts of the metro area are covered by the LGAs of Ipswich, Logan, Redland and Moreton Bay – a total of nine precincts. 

The Brisbane North precinct and its neighbour Moreton Bay Region are the standouts, as they have been in our surveys in the past.

The Moreton Bay Region LGA has regularly been the best-performing Brisbane market, boosted by affordability, good infrastructure and proximity to employment nodes (including a new university campus). And its status has been enhanced in this survey, with the number of rising suburbs increasing from eight to nine. This LGA also has 10 suburbs ranked as consistency markets, which overall creates a strong result for this precinct in a virus-impacted market.

Leading suburbs include Petrie (quarterly sales of 43-47-53-69-66), Strathpine (65-79-81-83) and Banksia Beach (46-54-67-68-70).

Brisbane North has 5 suburbs classified as rising markets, 9 ranked as consistency markets and none ranked as declining or danger markets. There are two particular clusters with strongly-performing suburbs: the inner north (which includes suburbs like Newmarket, Windsor, Stafford and Kedron), and the north-east precinct (which includes Nudgee, Nundah, Northgate and Wavell Heights). 

Ashgrove, with quarterly sales of 54-57-60-71-74, is typical of the suburbs with rising trajectories. Zillmere (42-47-49-56-62-64) is another of the growth markets.

The other standout market to emerge in this survey is the Brisbane-east precinct, which has five growth suburbs, seven consistency markets and no locations ranked as declining or danger markets. Leading locations include Wynnum West (54-67-74-80) and Murarrie (22-28-29-35-47-51).

The Brisbane-inner precinct is a confusion of suburbs with contrasting rankings: the 22 ranked suburbs include 2 rising, 17 plateau, 1 consistency, 2 declining and 7 danger. The danger markets (Albion, Bowen Hills, Fortitude Valley, Kelvin Grove, South Brisbane, West End and Woolloongabba) are those where sales activity has dropped markedly, prices are down and vacancy rates are high – particularly with a recent virus-related surge in empty apartments in the inner-city areas.

Logan City in the far south of the Brisbane metro area continues to struggle. It has 12 suburbs with declining sales activity. But there are also signs of life, with two rising suburbs and five consistency suburbs.

Brisbane is split almost 50-50 between markets where prices are up in annual terms and those where prices have fallen in the past 12 months: 52% of apartment markets have recorded annual growth and 44% of house markets have risen, providing an overall result of 46% growth markets and 54% with falling prices.

In most cases, whether rising or falling, the change has been minor (less than 5% in the past year).

Leading suburbs for growth in their median house prices include Coorparoo (16%), Morningside (13%), St Lucia (15%) and Windsor (22%), but the market leader is Fig Tree Pocket, where the median price has increased 32% to $1.18 million. 

Among the unit markets, the best for annual growth in median prices have been Bulimba (23%, Mango Hill (13%), Alderley (12% and Annerley (11%).

 

 

 

 

This article is republished from www.propertyobserver.com.au under a Creative Commons license. Read the original article.

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