The best and the worst found in Queensland: Terry Ryder
Queensland is a great example of how fussy investors need to be in selecting location.
The state has three of the four leading markets in regional Australia, and one of the more vibrant capital city markets, but also the greatest number of danger markets.
You could end up with a strongly-performing growth market and a basket case, depending on how well you choose your location.
Brisbane has had a fairly busy market for 18 months or so. It hasn’t produced a big price growth number, in terms of the average across the metropolitan area, in the way Sydney has, because the uplift in activity has been quite localized.
Some parts of the Greater Brisbane market, such as Logan City and the Moreton Bay Region, have seen elevated activity, but others have failed to deliver significant growth momentum, including Redland City and Ipswich City.
So you need to choosey about location.
South-east Queensland generally, with the Gold Coast and the Sunshine Coast added to Brisbane, is one of Australia’s rising markets. Both the coast markets have increasing sales activity and many suburbs are producing solid price growth. But again, you need to be careful.
The Sunshine Coast generally is buoyant but Noosa, which I have described frequently as Australian real estate’s biggest lemon, continues to struggle. And the Gold Coast may appear to be a growth market that should interest investors, but it has a poor record of growth because of bouts of oversupply – and developers are currently working hard to creating the next boom-bust scenario, which is a specialty of the Gold Coast.
Cairns joins the Sunshine Coast and the Gold Coast in providing three of the four biggest growth markets in regional Australia (the other biggest the City of Gosford). There are also signs that Townsville and the Fraser Coast are emerging. Toowoomba, one of the stars of regional Australia in recent years, remains solid - although the best time to buy there was two years ago.
But regional Queensland also has some of the worst places to buy.
In the new edition of The Price Predictor Index, six of the 12 locations which make up our National Dirty Dozen (the worst markets that must be avoided) are Queensland locations which had resources-related booms, only to have their markets undermined by developers who built too many dwellings.
They failed to take into account how many resources personnel would be staying in workers camps, rather than renting in the local towns.
In the most extreme cases, markets have been destroyed by over-building and the predominance of temporary workers camps. They include Central Queensland coal-mining towns like Moranbah and Dysart, and some of the Surat Basin towns where the coal seam gas boom produced a short boom followed by rapid decline, because 94% of resources personnel are accommodated in camps rather than rental houses.
To provide one stark example, the property market in Miles has been destroyed. There were no sales in the town in the March 2015 Quarter and only two in the December 2014 Quarter. The market no longer has sales to provide price statistics. The vacancy rate is 33%.
Before Miles disappeared off the radar screen, its median house price had dropped 27% in 12 months and it was taking six months, and discounting around 20%, to sell a house. In the past six quarters, house sales in Miles have dropped from 25 to 20 to 13 to seven to six to two to zero.
There are similar stories across regional Queensland – providing a timely reminder to investors that they need to be very careful about where they opt to buy.
TERRY RYDER is the founder of hotspotting.com.au. You can email him or follow him on Twitter.