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%
How much does it cost to buy property at Australia’s best beaches?
Winter is coming, the property market is cooling and hot summer days spent at the beach are becoming a distant memory.
But dreams of a sea change could still keep you warm for months to come and looking to one of Australia’s coastal markets now could have you sitting beachside by summer.
The location of that home and beach will depend on your budget. Here’s what it now costs to buy in some of Australia’s top beach locations.
If you’ve got serious cash to splash, then real estate by Sydney’s Bondi Beach — arguably Australia’s most famous strip of coast — could be within your reach.
With a median house price of $2.675 million and a median unit price of $1.2 million, buying into the beachside suburb does not come cheaply, but it’s more affordable than Sydney’s other top beach contender – Manly.
While house prices in the northern beaches gem dropped 11.5 per cent in the year to March, according to Domain data, the median house price still sits at $2.955 million. Meanwhile, the median unit price dropped 3.7 per cent to $1.315 million.
If Sydney’s not your cup of tea, you can cast your gaze west, far west to the other side of the country, where you’ll find the turquoise water and white sand of Perth’s Cottesloe Beach.
Despite Perth’s market downturn – house prices are down 14 per cent and units down 16.6 per cent from the 2014 peak – Cotto will still set you back a pretty penny, with a $2,147,500 median house price. Units are more affordable with a median of $780,000.
Northern NSW and south-east Queensland offer up the top rated beaches in Australia for those looking to spend about $1.5 million or less.
Byron Bay, Noosa and Surfers Paradise have long been favoured spots for holidaymakers and are increasingly attracting people looking to make their favourite vacation spot their hometown.
While about half the out-of-towners snapping up real estate in popular Byron Bay were once only looking for a holiday home, that’s no longer the case, said Ian Daniels of McGrath Byron Bay
“Half the houses were holiday houses before, now you can see how many more people are living here,” Mr Daniels said.
Byron Bay has the highest median house price of the three at $1,562,500. It’s followed by Surfers Paradise and Noosa Heads, with respective medians of $1.55 million and $1.145 million. Meanwhile, the median unit price is $850,000 in Byron Bay, $890,000 in Noosa Heads and $380,000 in Surfers Paradise.
Mr Daniels said there had been “no let up” during cooler winter months in recent years, but noted buyer demand could be a little weaker this year due to the broader property market downturn.
While there tended to be less stock in winter, Mr Daniels said, it could be a great time for both vendors and buyers to be on the market because there was less competition.
The Sunshine Coast and Gold Coast are again the best beachside bet for buyers in this price range, with Burleigh Heads and Mooloolaba offering house prices of $865,000 and $837,500. Unit medians sit at $535,000 and $424,750.
While investor activity has dropped off, Josh Willatt of Ray White Robina said, there is still good demand from locals and buyers looking to make a sea change.
“We’re still seeing buyers come up here in droves from Sydney and Melbourne … and we also see good inquiry from Brisbane, ” Mr Willatt said, adding they were drawn to the area for its great beaches, strong village atmosphere, restaurants and cafes.
Mr Willatt said the Gold Coast and south-east Queensland was still extremely affordable for what it offered. He noted buyers had more choice in late winter and spring as more stock hit the market, but that there was still a steady stream of buyers over the cooler months as the market was less seasonal than others.
$500,000 or less
Buyers who want to purchase near a well-known beach for less than $500,000 should cast the net wide, looking to Broome, Darwin and Victoria’s Phillip Island. However, swimming year round won’t be an option, due to cold temperatures in some cases and box jellyfish in others.
For $494,500 you can buy a house by Cable Beach in Broome, or an apartment for a little under $300,000.
Apartments near the famous Mindil Beach Sunset Markets in Darwin have a median of about $380,000 as do units in the suburb of Cowes, near Kitty Miller Bay on Phillip Island.
Michael McLeod of First National Phillip Island said those looking to buy on the island might be best doing so in winter.
“[Island living] is not all glamour, there is rain,” Mr McLeod said. “We’re still quite consistent in winter, [but] there’s fewer people around and [buyers] have the time to make decisions.”
“The time a property is on the market [varies greatly] … when it’s extremely busy places can be snapped up … or we have things that can take two years or a year to sell,” Mr McLeod said.
While retirees cashing out of Melbourne still make up a bulk of the population, Mr McLeod said, a growing number of younger families were moving to the area and commuting to Melbourne or working remotely.
How good an investment is south-east Queensland
Why do we believe we’ll see increasing investor interest in this market? Strong population growth, a diversified and growing economy, and substantial investment in infrastructure should combine to boost demand.
We expect that these factors will swell the number of white-collar jobs – increasing demand for office space, which in turn will push down vacancy rates and raise rental incomes. This should be good news for office property investors – especially those like Centuria Metropolitan REIT (CMA) that are already well-positioned in the market.
A significant and growing population
South East Queensland (SEQ) stretches from the Gold Coast up to the Sunshine Coast and across to Toowoomba in the west. As Australia’s third-largest population zone, the region has been growing significantly, particularly Brisbane and the Gold Coast. Interstate migration figures show a pattern of steady net migration, with Queensland the only Australian state with consistent net inflows of people from other states. In the five years prior to the 2016 Census, over 220,000 people moved to the Sunshine State – mainly to SEQ where nearly 90% of population growth occurred. This is important for property investors because of its implications for demand, but the trend is interconnected with other favourable factors.
A diversified economy poised for growth
Queensland’s economy is diversified across a range of industries including agriculture, resources, construction, tourism, manufacturing, and services. Over the past two decades, its economic growth has consistently exceeded the national average – and in our view this is likely to continue.
The resources sector is gaining momentum, and a significant pipeline of major infrastructure and development projects is helping propel economic and jobs growth, in turn increasing interstate migration and driving demand for both residential and commercial property.
Investment in infrastructure
A strong infrastructure program delivers more than business and consumer amenity – it generates jobs, drives investment, and facilitates population growth. The pipeline of infrastructure and development projects announced in the past few years is likely to have a material impact on the region – substantially improving its accessibility and amenity – most notably, Brisbane’s Queen’s Wharf precinct and the Cross River Rail.
Queen’s Wharf, touted as a “world-class entertainment precinct”, is an integrated resort development costing $3.6 billion and covering over 26 hectares with retail, dining, hotel and entertainment spaces. As Queensland’s biggest ever tourism project it will be a game-changer for Brisbane, attracting overseas as well as local visitors. Estimated to contribute $1.69 billion annually to the economy, it will employ more than 2,000 people during construction and an estimated 10,000 once operational.
The Queensland Government’s number one infrastructure project, the $5.4 billion Cross River Rail, comprises a new 10.2km rail line between Dutton Park and Bowen Hills, which includes a 5.9km tunnel under the Brisbane River and CBD. It’s the first major rail infrastructure investment in the inner city since 1986 and is set to generate urban renewal, economic development and the revitalisation of inner-city precincts.
Outlook for commercial office property investment
These factors indicate a region poised for growth – and for growing commercial property demand. CMA’s portfolio has a significant exposure to the area in general (six SEQ assets with a combined book value of over $480 million), with many of the individual assets located in those parts of Brisbane set to benefit most from these developments.
Our view is that Brisbane office markets, where five of CMA’s assets sit, are continuing to improve, with vacancies hitting a five-year low – indicating increasing tenant demand – and continued yield compression, demonstrating strong investment demand. Office sales hit the highest level in a decade during 2018 (at $2.35 billion), increasing 60% from 2017.
With the strong outlook for SEQ, we expect the region will continue to attract tenants and investors alike.
Queensland’s 100,000-property public housing shortfall revealed
Queensland has a severe shortage of social and affordable housing, an issue that is projected to get worse by 2036 according to new research.
More than 102,000 additional social houses are currently needed across the state, and 54,700 affordable houses are also needed with nearly 13 per cent of Queenslanders spending more than 30 per cent of their income on rent.
By 2036, Queensland is projected to need 254,300 more social and affordable houses – the second-highest unmet need behind NSW, the report found.
The new figures come from a UNSW City Futures Research Centre report on social housing shortfall across Australia.
Regional social housing shortfalls are higher than in Brisbane, the data shows, but Brisbane residents are slightly more likely to be spending more of their income on rent.
Housing Minister Mick de Brenni said housing affordability was a “big issue” for Queensland.
“Through the Palaszczuk government’s $1.8 billion Queensland Housing Strategy, Labor is driving key reforms and targeted investment across the housing continuum,” he said.
“The Strategy commits us to build more than 1000 affordable homes for Queenslanders, as well as a further 4522 new social homes to help ensure everyone has a safe, secure and stable place to live.”
Lead researcher Laurence Troy said 22.5 per cent of Australia’s entire housing growth must go to social housing to meet demand into the future.
“Our analysis shows that the sheer number of households in rental stress across the country means that if we’re going to meet the need, at least 12 per cent of all our housing by 2036 will need to be social and affordable housing – which is a very reasonable ambition in global terms,” Mr Troy said.
“To cover the backlog of unmet need and future need in Australia two in 10 new homes will need to be for social housing over the next 20 years, and a further one in ten for below-market affordable rental housing.”
Mr Troy said the research’s financial modelling found the “best and cheapest way” for governments to meet the need for social housing was to fund it through upfront grants and low-interest government financing.
“Delivering below market rental housing through the not-for-profit sector, as opposed to the private equity model, will save $3 billion a year by removing developer mark-ups and shareholder returns,” he said.
The financial modelling was commissioned by the NSW community housing sector.
Mr de Brenni said the state government was “listening” through its recent public consultation on rental reform and was committed to investing in affordable housing in partnership with community housing, to provide more subsidied homes for low income earners.
“We heard Queenslanders are struggling to afford rental properties in the suburbs close to where they work,” he said.
“Through our Build-to-Rent pilot project, we are seeking to work with the private sector to increase the number of long-term, affordable rental properties for low to moderate income earners, including key workers in health, early childhood and hospitality.
“Internationally, the Build-to-Rent model is delivering fantastic outcomes and facilities for tenants and we’re looking to see what the market is open to delivering here.
“The pilot, if it proceeds, will see $70 million invested towards delivery of hundreds of affordable rental properties for key workers in inner-city areas where affordability has been identified.”
Mr de Brenni said the registrations of interest for that pilot had seen strong market interest, and the department was considering the responses before calling for expressions of interest.
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