CHANGE was the name of the game in 2015 as the Sunshine Coast property market went from indifference to buoyant activity.
Much of the momentum that had built up toward the end of 2014 was not realised in the early part of this year.
National Property Research director Matthew Gross attributed much of this malaise to the fatigue and uncertainty the population was feeling from failed Federal budgets and political uncertainty.
This was due mainly to the changes of leadership in the Federal and State Governments since the GFC.
But the ascent of Malcolm Turnbull to Prime Minister and the business-as-usual approach of Annastacia Palaszczuk as Queensland Premier seemed to bring new-found confidence.
While Sydney and Melbourne property markets have been recording double digit lifts in house prices, it hasn’t been the same for the rest of Australia.
BT Financial Group chief economist Dr Chris Caton called for laser surgery to be performed on the Sydney and Melbourne markets to limit the risks of a housing bubble. At the same time he warned that regional Australia needed CPR to encourage growth on the back of the switch away from mining construction to production and the associated down
swing in property in those areas.
Yet the south-east Queensland property market is seeing value rewarded with strong, sustained growth that is expected to continue into 2016-17.
Interest rates dropped to a record low of 2% and Coast real estate agencies saw higher than expected prices being achieved for house sales.
While 2014 was dominated by the sub-$500,000 market, as buyers hunted for value and yield from an extremely tight rental market, the early part of 2015 saw the top end re-emerge, particularly in Noosa.
Ken Guy Buderim principal Danny Redman said the increased level of interest in the property market was highly predictable.
“Two years out we thought properties would return to value at this time,” he said, “but the confidence wasn’t coming from locals.
“They are seeing it now, they are realising it will be hard to find value in replacement as there will not be the stock levels they are used to.
“They have got some reference points now, the signal is supply may not match demand so it can only get better.”
The second half of 2015 has been extremely buoyant with numbers of sales increasing dramatically and days on the market decreasing.
Changes in the Sunshine Coast infrastructure are the main drivers of the economy, particularly the $1.8 billion Sunshine Coast University Hospital at Birtinya and the surrounding health hub.
Then there is the education and research hub at Sippy Downs with the University of the Sunshine Coast expanding, along with private and state schools and colleges.
The Maroochydore Principal Activity Centre is becoming a reality with development taking place on the fringes.
Infrastructure on the near-60ha greenacre site in the heart of Maroochydore is expected to start early in 2016 with the first lots set to be released soon after.
Aura, Stockland’s new residential community at Caloundra South, will be home to 50,000 people, while Palmview will see another 17,000 people being housed to the south of Sippy Downs.
The expansion of the Sunshine Coast Airport to include a second runway will boost the Sunshine Coast’s tourism sector that is already showing a 9.2% increase in visitors to June 30.
This is in response to the lower Australian dollar and the work of Visit Sunshine Coast, not only throughout Australia but in Europe and the UK.
Flights from Auckland have resumed and Qantas has re-introduced direct flights to Sydney.
Auctions were strong through the year as buyers and sellers struggled to put a true value on property.
Sunshine Coast Daily auction writer Sue Custance said competitive interest and bidding became the rule rather than the exception.
Ray White Caloundra co-principal Andrew Garland said the return of the top end of the market was not so much a surprise as a pleasant development.
He said the $3 million-plus market had struggled post GFC but recent beachfront sales included $4.25 million and $3.5 million at Dicky Beach and Shelly Beach.
In the hinterland, Mike Burns of Elders Palmwoods and Woombye said the buyer pool for acreage buyers has dropped back as people look to downsize.
“It’s a buoyant market but people are conscious of val
ue,” he said.
“Sellers think activity means price rises but it will be a long time before we see the heady heights of 2007-08.”
Commercial property has been reinvigorated in line with the changes the Sunshine Coast market is undergoing but also riding on the success of the Sydney and Melbourne markets.
National as well as international companies are setting out to establish themselves in prime locations, around the Maroochydore CBD, at the Kawana Health Hub and at the Sippy Downs education precinct.
At the same time existing businesses are looking to expand or re-position themselves in prime tourist areas such as Noosa’s Hastings Street, The Esplanade at Cotton Tree and at Mooloolaba, as well as Caloundra’s key precincts.
Two of the biggest moves were Bunnings and Officeworks relocating to Dalton Drive in Maroochydore, opposite the new Suncentral Principal Activity Centre that is expected to see initial works early in 2016 and the first lots released to market.
Experts warn of ‘debt bomb’ as housing downturn worsens
That’s according to the sobering 60 Minutes segment Bricks and Slaughter which aired last night, revealing the country’s property downturn was just the tip of the iceberg.
According to reporter Tom Steinfort, the current slump is actually “more like falling off a cliff”, with a number of real estate and finance experts claiming houses could plummet in value by up to 40 per cent in the next 12 months.
If that happens, it would also cause an economic “catastrophe”.
Mr Steinfort spoke with data scientist Martin North from Digital Finance Analytics, who said Australia was uniquely vulnerable when it came to an economic crash tied to a property downturn.
“At the worst end of the spectrum, if everything turns against us we could see property prices 40-45 per cent down from their peaks, which is a huge deal,” he said.
“That’s higher than any other country in the Western world by a long way.
“There’s probably no country in the world more susceptible to the ramifications of a housing crash than Australia. We are uniquely exposed at the moment.”
Mr North said Australia was now in the same position as the US was back in 2006 and 2007 — a position which triggered an economic collapse.
“As a society, and as a government, and as a regulatory system, we’re all banking on the home price engine that just goes on giving and giving and giving. It’s not going to,” he said.
“We’ve got a debt bomb, we’ve got a debt crisis and at some point it’s going to explode in our face.”
He said foreclosures had also risen by 600 per cent in the region.
“The mortgage stress is definitely being felt especially in this area,” he said.
60 Minutes also spoke with several Aussie homeowners who gave harrowing details of the stress they faced trying to pay off their mortgages, including having their power turned off and being “hounded’ by their banks.
What does a million dollars buy in Aussie capital cities?
Market analyst Louis Christopher of SQM Research said the market had been “clearly overvalued”, labelling the downturn as the “correction we had to have” — at least in Sydney and Melbourne.
“On our numbers, Sydney was effectively over 40 per cent overvalued. And Melbourne was overvalued by about the same amount,” he said.
But property investor Bushy Martin said the blame lay squarely at the feet of buyers who “mortgaged themselves up to their eyeballs” in a bid to snap up dream homes before being able to afford them.
However, the segment has also sparked backlash online, with some claiming the situation had been exaggerated.
One Reddit user branded the report as an example of “alarmist journalism and scare tactics”, while another said it was “dramatic and cringe-worthy”.
Others also criticised the segment for making it seem like all homeowners would be affected, when the downturn was actually mainly focused in the NSW and Victorian capitals.
And some said it was unfair to blame the banks for the situation, and that homeowners needed to take responsibility for their own decisions.
That was in response to comments made by one homeowner on the program, who said the bank had “suddenly switched the mortgage to interest and principal”, raising his repayments by 57 per cent.
“The interest only part annoyed me the most. The bank didn’t ‘suddenly change’ your repayment from (interest only) to (Principal and interest) your IO term expired. You a) knew this would happen and b) assumed the bank would renew it when it expired. I hope this speculator gets burnt first,” one Reddit user said.
Related article: Experts warn of ‘debt bomb’ as housing downturn worsens
Australia’s best place to invest is here in Queensland
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%
Queensland is the next property hotspot, experts say
As New South Wales and Victoria continue to experience weakness. Queensland is expected to take the lead, a National Australia Bank (NAB) poll of property professionals revealed.
According to the survey, industry experts project house prices in Queensland to increase by 0.7% next year and 1.3% in two years.
Some areas seen to perform strongly over the next year include Brisbane, Cairns, the Gold Coast, and the Sunshine Coast. Out of the suburbs, Coomera and New Farm are expected to realize robust gains.
Meanwhile, Queensland’s rental market is also poised to enjoy an upward boost, growing by 1.3% next year and 1.9% in two years. This is despite the stricter rules on housing investment.
The respondents of the survey also expect Queensland to retain foreign buyer interest. In fact, the share of foreign sales hit a four-year high of 22.8% over the previous quarter.
The results of the survey go against NAB’s own projection of the market. For instance, the bank expects house prices to remain flat in Brisbane over the next three years. Unit prices, on the other hand, is seen to fall by 4.5% over the next year.
NAB chief economist Alan Oster said Brisbane’s housing market seemed to be going sideways and its unit market still creates concern.
“It hasn’t peaked yet, so that’s good. We’re seeing quite strong economic activity in Queensland, so that always helps,” Oster said, as quoted by The Courier-Mail.
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