Queensland market gaining confidence
Mining towns help the sunshine state recover slowly but surely.
For a state that relies so heavily on tourist trade, the global financial crisis was always going to be a hard one for Queensland to weather. With holiday homes swamping the coastal markets and mining towns shaken up, it is no surprise the state has suffered more than others. However, as confidence creeps back and the mining industry picks up, the area is showing growth again.
According to the REIA's Market Facts survey, Queensland median prices were up 4.4% in the June quarter, with Brisbane showing an annual yield of 3.4% on three bedroom homes - beating Sydney, Melbourne and Perth.
Vacancy rates in Brisbane are still high at 3% but there is movement in the market, with houses prices and rental returns on the up.
"There have been positive signs in Queensland but it's not like it used to be - it's going to be a slow recovery," says PRDnationwide research analyst Aaron Maskrey. "The affordable end of the market is being driven by the first home owners, while the mid and top end markets are being driven by confident investors."
Fastest growing areas
Maskrey says that while demand has fallen off in many rural towns, there are a handful that are showing consistent growth. He sites Dysart and Moranbah as investor-friendly areas, where median price growth for the year to June 2009 was 29.7% and 25.7% respectively.
The towns are centered on mining - a volatile but currently, strong, industry - with both near to the planned Eagle Downs coal mine and Rio Tinto's existing Hail Creek mine. Mackay, 120km away from the mines, would also be a good market to invest in due to the high numbers of fly-in fly-out workers living there. Gladstone, at the heart of the liquefied natural gas development on the east coast, is a prime spot for mining-led investors. A severe undersupply of suitable properties and the imminent arrival of thousands of gas workers and support staff, makes the town a popular spot for investors - although the long term nature of the work means returns are of the long term nature.
Maskrey highlights the coastal regions for their investment potential. "The Sunshine and Gold Coasts were badly hit by the economic downturn, with a lot of investors pulling out and putting their homes on the market," he says. "On the flip side, the market is not so tightly held now so there is more opportunity for new investors."
The satellite town of Zillmere, 14km north of Brisbane, has proven remarkably popular this year, with median unit prices in the year to March 2009 growing 23.2%. On the railway line, with bus links and a motorway to the airport, the town is attracting first home buyers and some investors priced out of Brisbane.
Brisbane still has a long way to go before it experiences anything like to figures seen in satellite towns. Two-bedroom properties in Brisbane accrued 3.9% annual return July 2008 to June 2009 - the lowest of all states - and buyers remain nervous. "The market appears to have reached to bottom - there are small price appreciations at the bottom and mid market, while the top end is showing small signs of recovery," says Matthew Gross of National Property Research. "The significant discounts in the top end of the market have encouraged buyers who hope the properties will appreciate within the next two to five years."
Gross says investors wanting capital growth should look towards towns within 10km of Brisbane CBD, such as Chermside and Carindale. While Brisbane's property market is lagging behind other cities, value for money in the area has been underpinned by historically low mortgage rates and only small rises in unemployment - a hopeful sign that recovery will pick up in the next quarter.
In the meantime, short term gains are proving most popular in mining towns, where the economy has bounced back much quicker than the CBD. "Townsville is a particularly good investment," says Gross. "A lot of money is being pumped in to it and there are lots of fly-in fly-out workers."