The future of Australian property markets looks bright – especially in Queensland

The future of Australian property markets looks bright – especially in Queensland
Michael MatusikDecember 8, 2020

House prices rose by 0.8% in February and while that might not sound like much, it is the biggest monthly increase in 18 months.  Prices rose in six of our eight capitals and in almost every major regional city, highlighting the underlying strength of Australian residential property.

The future looks bright too, with auction clearance results now hovering around the low 60% mark.  Remember clearance rates over 50% means that prices should continue to grow.  In addition the amount of resale stock on the market continues to fall.  Stock levels have fallen since the beginning of the year.

Underlying demand for new property is also set to improve with a big lift in permanent settlement in Australia.  The number of people settling Down Under hit the highest levels in 3½ years in January.  Close to 14,000 people are now arriving each month, compared with the lows of 9,500 per month in late 2010.  Over the past year 146,500 people moved permanently to Australia.

To quote Craig James of CommSec “Population is power, lifting economic growth and momentum”.

More people means greater demand for homes, cars, household appliances and heaps of other stuff.

It is anticipated that just 135,000 new dwellings will be built across Australia this financial year.  This is against the 10-year average of 155,000 new homes built each year.  The slowdown is warranted given the drop in overseas migration during 2009 and 2010 and the oversupply of new housing in Victoria, South Australia and to some degree in Western Australia too.

But the recent lift in migration is expected to see new housing starts increase in coming years.  Our forecast is for 155,000 new starts across Australia during fiscal 2013 and up to 175,000 starts during 2013/14.

Queensland looks set to benefit the most.  Despite reports to the contrary, new housing is undersupplied across much of the state.   At present Queensland has a 16% market share of total residential building across Australia.  Our historic average is closer to 25%.  We forecast that new housing starts in Queensland could double (up 46%) over the next two to three years, rising to 38,000 new starts during 2014.

With close to $135 billion worth of new resource projects underway across the state, coupled with $29 billion worth of new infrastructure projects being delivered across the south-east corner of the state, the need for new housing is on the increase.  And much of this new supply – close to 70% – will be needed in the triangle between Noosa, Coolangatta and out to Toowoomba.

Michael Matusik is the director of independent property advisory Matusik Property Insights. Matusik has helped over 500 new residential developments come to fruition and writes the weekly  Matusik's MissiveThe Matusik Missive is free, however, reprinting, republication or distribution of any portion of this material, or inclusion on any website, is strictly prohibited without the written permission of Matusik Property Insights and may incur a charge.

Michael Matusik

Michael Matusik is the founder of Matusik Property Insights, which has helped over 550 new residential projects come to fruition.

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