Investors are taking too large a slice of the Queensland property market
Two out of five houses sold to investors last year in Queensland. Investor interest in townhouses and apartments is much higher, with seven out of 10 townhouses selling to investors and 85% of apartments being sold to non-residents.
Sales to investors are up on 2012, by about 10%. During 2014 they will get even higher.
This article outlines where most of the investment buying has been taking place across Queensland.
Houses
Most houses in Queensland - like the rest of the country - are purchased by owner-residents. Investor interest is highest in mining-related regions and in resource-based towns. Investment interest remains high in those areas, albeit at a lower level than in previous years.
Investor interest - so far this cycle - has been more limited in the south east corner of the state than in Queensland's regions. This is a trend that is somewhat consistent across townhouses and apartment sales as well.
Townhouses
More townhouses sell to investors than to owner-residents. A trend which is not only evident in off-the-plan/new townhouse sales, but also for resales too.
Owner-resident interest does increase at resale, but only if the townhouse complex has certain features. These include:
three- or four-bedroom product
ensuites
off-street parking for two cars
private courtyards
duplex arrangements
smaller complex
well located
acoustically proofed i.e. limited road traffic noise
The owner-resident interest in townhouses is highest in the south-east.
Townhouse living is becoming more popular in Brisbane and on both the Gold and Sunshine Coasts. Townhouse development is expected to increase, at the expense of new house/land, across South East Queensland in coming years/decades.
Think townhouses, more maybe, than apartments.
Apartments
There is more consistency across Queensland when it comes to apartment sales to investors. The vast majority of Queensland apartments sell to investors. The Queensland apartment market is driven by investment selling.
Reflecting the recent market downturn, investor interest in apartments was lowest on the Sunshine Coast and in Cairns and Townsville last year. In was much lower on the Gold Coast (in 2011 and 2012) than the chart below suggests. Given the rock-bottom prices being offered for Gold Coast apartments in recent years, it is little wonder that investment interest has increased.
Owner-resident interest is there for resale apartments, but not to the same extent as townhouses or detached homes.
Apartments that attract the most owner-resident resales usually are:
in small complexes
have high quality - the four Fs
in an established neighbourhood
similarly sized (within the same development)
on a unique site - view, aspect, height
Comments
For mine, too much property is still being sold to investors across many parts of Queensland.
The longer term averages are 30% for houses; 65% for townhouses and about 75% for apartments.
Yet, we will see more investment selling of Queensland property as the residential recovery gains more momentum during 2014 and 2015.
Investors should be wary of buying in a project or location which is seeing a lot of investment selling. There is only so much rental market to go around.
Investors also have a better chance of getting a better resale if the dwelling has owner-resident resale appeal.
Sadly, a lot of Queensland's new residential projects of late, don't.
Michael Matusik is the founder of Matusik Property Insights, which has helped over 550 new residential projects come to fruition.
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