Queensland has more locations than any other state in Australia for property investors chasing potential price growth.
The latest Hotspotting National Top Ten Best Buys for 2017 nominated four Queensland locations, Moreton, Sunshine Coast, Redcliffe and Townsville as being among the ten places nationally that were the “pick of the crop’’.
Each was selected, according to report author, Terry Ryder, because they were locations with growth drivers that would achieve capital growth above the norm in the future.
“They are places on the cusp of a phase of good capital growth,’’ he said.
“They’re locations with identifiable drivers of demand for real estate, which will place
pressure on prices and rents.
Mr Ryder was not surprised to see so many Queensland locations in his top ten.
“I think it’s an evolution of the market from the situation that predominated for the last few years when we were talking all about Sydney and then Melbourne. Sydney is very much past its peak and is winding down, Melbourne is still producing good figures but it’s past its peak as well, I think,’’ he said.
As a result people had started to look for alternatives and one of the big factors was affordability.
“There is lots of evidence of people looking toward Brisbane and south east Queensland for affordable alternatives and better rental yields. I think that’s where people are expecting is where they are going to find the growth moving forward.
Mr Ryder also included Townsville in that category.
“If you look at the current and recent number you wouldn’t buy there, buy we always look to the future and Townsville is shaping up for a very strong recovery from maybe three years where it was affected by locally felt factors – the impact of the downturn in the resources sector, the closure of Clive Palmer’s Nickel refinery and all of those things.
“But it is really starting to fight back strongly and I think 12 months from now its numbers will start to look a lot more positive. Smart investors will buy while markets are down, knowing that they will improve in the near future.’’
Mr Ryder selected the Moreton Bay region because it had affordable housing and there was $980 million in spending on new infrastructure destined for the area.
“The sales volumes in the suburbs of the Moreton Bay region show the importance of affordability in residential real estate,’’ he said.
“Four of the core suburbs of this region have each sold over 390 houses in the past 12 months. Three of the four have median house prices below $370,000. The Moreton Bay Region, which covers the Brisbane metropolitan area’s urban sprawl in the northern growth corridor heading to the Sunshine Coast, offers affordable housing as well as good rail and road links to Brisbane to the south and the Sunshine Coast (and beyond) to the north.
The Sunshine Coast was on the list for its strong population growth, billions in infrastructure development including the university hospital, light rail proposal and the airport upgrade
“Having previously been hampered by a struggling tourism economy, an over-supply of dwellings and poor affordability, the coast moved into a strong growth phase, which continued in 2015 and 2016,’’ Mr Ryder said.
“The tourism industry is stronger; the market is more balanced in terms of supply–demand; previous price decline has made property more affordable; apartments are increasing in popularity with both home-buyers and investors; and some serious infrastructure is being built in the area. ‘’
He said the Redcliffe Peninsula was still affordable for houses and units, it had big infrastructure spending, including the new Moreton Bay regional University Precinct.
Mr Ryder said it was one of the fastest developing places in Australia.
“The Peninsula offers affordable dwellings, proximity to Brisbane and the laid-back atmosphere of a bayside village,’’ he said.
Over the last 10 years, Brisbane has suffered the GFC and floods. As a result, prices are now extremely affordable for a capital city. The Brisbane market has some of the best growth prospects nationwide, so let’s explore why this market is set to take the gold medal for capital growth.
Since the GFC, net migration levels have been very poor for Queensland. However, net interstate migration to Queensland has tripled over the last three years. Interstate migration to Queensland fell to a low of 5,753 in 2014, increasing to 11,581 in 2016 and 15,716 in 2017.
The majority of these people are moving from Brisbane, the Sunshine Coast and the Gold Coast. This increase in migration levels is due to housing affordability compared to other states, improving employment markets and the lifestyle factors that come with those two factors.
There is a surge of major development and infrastructure projects currently underway in Brisbane, to the sum of $12 billion.
Examples of these major projects are:
Queens Wharf ($3 billion) – Comprising of 1,000 hotel rooms across five hotels, a residential precinct of 2,000 units, a 100-metre sky deck, 50 bars and restaurants and a pedestrian bridge connection to Southbank. This will completely reshape the Brisbane’s river CBD precinct.
Cross River Rail ($5.4 billion) – The project will deliver a 10.2-kilometre rail link from Dutton Park to Bowen Hills, with 5.9 kilometres of tunnel under the Brisbane River and CBD, connecting to both northern and southern rail networks in and out of the CBD.
Brisbane Quarter ($1 billion) – This project is a mixed-use precinct incorporating office, retail, hotel and residential uses.
Brisbane Live ($2 billion) – A new entertainment precinct located on top of the Roma Street rail interchange hub. Facilities include a $450 million, 17,000-seat arena along with multiplex cinemas, an amphitheatre and proposed commercial, residential and hotel towers.
Last year was one of the strongest years for job growth in Brisbane’s history. In the last 12 months, Brisbane’s jobs growth has increased by 7.6 per cent. As a result, unemployment has fallen across the board to 5.5 per cent.
Recent jobs growth has been driven by Queensland’s service industries. While the resources sector has cut 22,000 jobs over the past two years, four other industries each created more jobs than were lost in the resource sector over that period: health, education, professional services and accommodation and food services (which is closely related to tourism).
The median dwelling across Brisbane cost 6.3 times higher than the median household income. As a comparison, Sydneywas ranked the second worst most unaffordable market in the world. House prices are a whopping 13 times higher than the median household income.
These factors are significant for Brisbane’s capital growth prospects over the coming years. Well-located houses (not units) are expected to be some of the best preforming sub-markets in Australian real estate.
The state government’s planned property tax increases risk wiping the state off the global investment map, warns Chris Mountford,
executive director of Property Council Queensland.Kevin Farmer
THE state government’s planned property tax increases, due to come into effect on July 1, risk wiping the state off the global investment map.
As the government begins work on the State Budget, the Property Council is ramping up efforts to highlight the hidden effects of the tax hikes.
These tax hikes will increase the cost of doing business, damage Queensland’s economic competitiveness and impact on every Queenslander.
With Queensland preparing to leverage the Commonwealth Games to attract new investment opportunities, these tax increases couldn’t come at a worse time.
Election campaign costings, released in the days prior to the November 2017 state election, revealed the government’s intention to introduce new land tax thresholds for aggregated land holdings with an unimproved value above $10 million.
Individuals, companies and trusts who are within this new threshold will be subjected to a 25% increase in the rate of land tax from July 1.
The government has also committed to increasing the stamp duty surcharge on foreign buyers of residential property from 3% to 7%.
The end result of this decision will be higher business rents, higher costs for new homes and damage to Queensland’s reputation as an investment destination.
Businesses who lease premises from larger landlords can expect additional rental and occupancy costs.
New homebuyers can expect an additional $800-$1000 added to the cost of purchasing a new home.
We once were able to lure investment from interstate and overseas with attractive tax rates, but we now find ourselves uncompetitive with our southern neighbours.
The Property Council is calling for the government to abandon the tax increases and commit to review and modernise Queensland’s property tax framework.
Our current land tax thresholds haven’t been changed in a decade, leading to significant bracket creep as property values have increased dramatically.
We need a simpler, fairer and more attractive property tax system to unlock investment and create jobs.
An all-encompassing review of Queensland’s outdated thresholds and property tax rates needs to be undertaken to put Queensland back on the investment map.
Chris Mountford is executive director of Property Council Queensland.
Interstate migration to the Sunshine Coast is tipped to help drive up property prices. Picture: Lachie Millard
INTERSTATE migration is once again driving up demand for Sunshine Coast property.
New analysis of the market by RiskWise Property Research predicts solid capital growth for the region as a result.
RiskWise CEO Doron Peleg said the area had experienced “consistently strong population growth’’ in the past five years and predictions were that this would continue.
The Sunshine Coast market has been widely tipped by real estate analysts to experience a lift in prices, after a series of lean years.
The high-end Noosa market in particular has fired up again with a series of record breaking beachfront sales, but it was also the affordability of many of the Sunshine Coast suburbs that Mr Peleg said was helping attract new residents.
“The area’s affordability has been a major drawcard behind this migration, especially for large numbers of interstate purchasers who can’t afford to buy such great lifestyle properties in places like Sydney and Melbourne,” he said.
Also helping drive demand and future capital growth, according to Mr Peleg was the low number of building approvals in the region.
21-23 Webb Rd, Sunshine Beach was listed for a massive $22 Million. Picture: Paul Smith
He said there were only 3323 house building approvals in the pipeline across the entire region and that would be quickly absorbed.
There are also approvals for 2581 new units to be added in the two years.
Mr Peleg said there had already been 7.1 per cent median house price growth for houses on the Sunshine Coast and 5.4 per cent median unit price growth in the past 12 months.