Queensland's big beachside high-rise precincts continue to struggle

The need to “dig deep” isn’t just something footy players seek to do in the final quarter of a game – it’s an important mindset for property investors.

Among the many problems on the property playing field is the constant reporting of generalised data. A single figure can describe the entire market in a city of millions.

Unless consumers are willing to delve a little deeper, they will miss the myriad different stories lurking beneath the veneer of that single growth figure.

Some of those stories are strong growth scenarios that investors might want to know about. Equally there are danger signals alerting the switched-on practitioner to traps they should avoid.

There are dozens of examples in the latest quarterly edition of Market Monitor published by the Real Estate Institute of Queensland, with a particular focus on Brisbane and the Gold Coast, two places that are attracting plenty of attention from investors nationwide.

The annual growth in the median house price for the Brisbane City LGA is a moderate 5 percent. I’ve heard talking head TV personalities quote numbers like that and tell people that not much is happening in that market and investors should look elsewhere.

The dig-deeper philosophy would alert the more alert to places that are doing significantly better than the average. Brisbane City is a very big municipality, way bigger than equivalent LGAs in Sydney and Melbourne, and covers a large chunk of metropolitan Brisbane. 

There are around 130 suburbs in the Brisbane City LGA and that 5 percent annual growth figure does a thoroughly inadequate job of describing the state of play in its various markets.

Within that sprawling municipality Banyo, Carina Heights, Robertson, Wilston, Yeerongpilly and Seven Hills all have something in common – they’ve recorded growth above 15 percent in their median house prices in 12 months (although the 23-25 percent growth for Robertson and Yeerongpilly may be misleading because of small sales samples). 

Others with double-digit annual growth include Bulimba, Calamvale, Carindale, Clayfield, Coorparoo, Everton Park, Graceville, Greenslopes, Grange, Hemmant, Highgate Hill, Holland Park West, Inala, Jindalee, Lutwyche, Macgregor, Mackenzie, Manly, Mansfield, New Farm, Norman Park, Sunnybank Hills, Wishart and Wooloowin. 

They cover widespread price ranges, from Inala (median $350,000) to New Farm ($1.5 million).

There are numerous positive growth stories there that investors might want to know about - but are unlikely to discover if their idea of research is skimming the daily newspaper. 

There are some well-hidden negative news items as well. Some of the leadership in the REIQ are in denial about Brisbane’s inner-city apartment over-supply. If you read the executive summary, this is what you would find: “The unit market in the Brisbane CBD has continued to face the question of oversupply and so far the data does not support that verdict.”

But the small print data in the report portrays a quite different picture.

The vacancy rate for inner-city apartments is close to 4 percent (and figures from other sources suggest it is considerably higher). It will rise when new high-rise projects are completed.

While Brisbane City’s median house price is up 5 percent in annual terms, there is no change is the median unit price. And several individual inner-city markets have recorded a decline in the past year, including the CBD (down 1.5 percent), East Brisbane (down 4.1 percent), Bowen Hills (down 7.8 percent), New Farm (down 3.8 percent), West End (down 1.6 percent) and Fortitude Valley (down 5.9 percent).

Median prices can be unreliable and misleading, especially for unit markets, but there’s a fairly distinct pattern there.

An analysis of the Brisbane unit market by Urbis indicates that sales levels have fallen for three consecutive quarters and sale prices have been “steadily decreasing” since the end of last year.

Few of these inner-city apartment markets have recorded any rental growth in the past 12 months and several have delivered falling rents. In the Brisbane CBD the median unit rent has dropped from $600 per week to $570, while New Farm/Teneriffe is down from $510 to $500 and Kangaroo Point has dropped from $495 to $475.

The median rents for the Fortitude Valley and South Brisbane precincts are unchanged.

There are similarly divergent stories to be discovered within the many different markets collectively known as the Gold Coast.

Market Monitor says the median house price is up 6.7 percent in 12 months, but there are plenty of suburbs with growth above 10%. A small number – including Broadbeach Waters, Hope Island and Reedy Creek – are credited with growth in the 16-20 percent range, while the most expensive housing market on the Gold Coast, Mermaid Beach, has allegedly increased 30 percent in 12 months.

The single generalised figure for the Gold Coast apartment market portrays a 3.3 percent rise in the median price, but numerous individual markets have done much better. Hope Island median unit price is apparently up 20 percent in 12 months.

But the big beachside high-rise precincts continue to struggle. Surfers Paradise has recorded a small annual rise in its median price, but it remains 4% lower than five years ago. The Mermaid Beach median unit price is down 1.4 percent in 12 months and 4.1 percent lower than five years ago. Broadbeach is up marginally in 12 months but 13 percent lower than in 2011.

Against that trend, both Main Beach and Southport have recorded meaningful annual rises in their median unit prices and are a little ahead of the price levels of five years ago.

The contrasting situations seen in different sub-markets entail an important lesson for property investors. Ignore the shallow one-figure-for-each-city nonsense published by mainstream media and dig deeper to find the information you need to know to buy wisely and safely.

Terry Ryder is the founder of hotspotting.com.au. You can email him or follow him on Twitter.