Seekers of affordable homes looking at Queensland as their target market can potentially snatch properties that have the potential for long-term capital gains.
According to InvestorKit’s latest whitepaper, among 20 Queensland SA3 regions where many suburbs have median prices below $500,000, four regions possess the ingredients for long-term growth.
InvestorKit head of research Arjun Paliwal said aside from affordable prices, these regions have the potential for further capital growth, healthy rental yields and expected rental growth in the short term due to the high pressure in their sale and rental markets.
“These locations also stand out because of internal migration towards affordability and lifestyle alongside their thriving local economies due to industry diversification and infrastructure investments,” he said.
The four Queensland regions below achieved the highest Market Performance Scores based on supply, growth cycle, price pressure, rental pressure, and rental yield. Higher scores correlate to a strong economy and indicate good timing to invest in the location.
Bundaberg
Market Performing Score: 4.2
Median House Price: $445,000
Bundaberg showed a 23.6% growth in house prices over the past 12 months, bucking the overall downturn in the southern regions.
Over the past 10 years, Bundaberg’s house prices have increased by as much as 50.8%.
Mr Paliwal said the region stood as one of the top 10 performers in 2022 during a time when interest rate rises clouded the market sentiment.
“There is more room for growth, as the 10-year average is still under 25-year averages for annual growth,” he said.
Vacancy rates in Bundaberg are at 0.6%, which, at that level, already increased as more supply came onto the market.
Thus, investors who own a rental property in this region can expect rental yields of about 5.3%, given the tight conditions.
Rockhampton
Market Performing Score: 4.8
Median House Price: $385,000
Rockhampton, a major inland city in Central Queensland, has been steadily recovering since 2020. Over the last 12 months, house prices in this region increased 5.5%.
The region’s rental market has been under pressure over the recent years, with the average number of rental listings recently decreasing by 3.8% while vacancy rates are still below 1%.
Over the decade, rents in Rockhampton have grown 25%, which indicates a strong future upside in the area for both price and rental growth.
Townsville
Market Performing Score: 5.0
Median House Price: $400,000
Achieving the highest score is Townsville, which was a standout over the past 12 months with its 9.6% house price growth.
Looking at decade-average growth, median prices in Townsville only recorded an 8.7% gain, which is far below its long-term average growth.
Over to its rental market, its vacancy rates still sit below 1% despite the slight increase in listings over the past year.
Investors in Townsville can expect yields of around 5%, given the strong growth in median rents over the past 15 months.
“What can’t be underestimated here is the sheer level of shift in the city’s local economies — from one of the worst in 2016 to now one of the nation’s best in unemployment levels, spending and more,” Mr Paliwal said.
“Prices and rents in our opinion remain heavily undervalued here, irrespective of what one may think of with outgoings, weather and more.”
Cairns South
Market Performing Score: 4.7
Median House Price: $482,000
Housing Woree, White Rock, Mount Sheridan and Bayview Heights, Cairns South still offer room for growth despite the 12.2% growth in house prices over the past year and the 47.7% gain in the past decade.
Vacancy rates in Cairns South are also at crisis levels, sitting at 0.4%.
The upwards pressure in rents in Cairns South led to a 5% yield, which is good news for those looking to invest in the area.
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