The best of times and the worst of times simultaneously for Queensland property market

The best of times and the worst of times simultaneously for Queensland property market
Alistair WalshDecember 8, 2020

Queensland has simultaneously reached both the bottom and the top of the property market, according to managing director of National Property Research, Matthew Gross.

His two-way bet stems from his view of the two-speed economy in Queensland.

“Many of Queensland’s regional centres have experienced demand at record levels, most fuelled by investors that have chased the next big thing. Some will have done very well, many may be okay but unfortunately, those late to the scene are probably doing the equivalent of sticking their fingers in a dyke trying to stop the flow of leak,” Gross says in his latest newsletter.

“South-east Queensland, on the other hand, has had some of the most diabolical trading conditions in memory. Now this is where I stick my neck out… I believe the worst may well be behind us. This doesn’t mean that the recovery is going to be quick or uniform. It will be like dropping a stone in a bucket and watching the ripples move out.”

The improvement is partly being driven by increasing levels of migration, Gross says, but also by limited building approvals.

“Whilst this is not good for the construction industry in the short term, it is setting up the preconditions for a shortfall in the residential sector. Rental pressure remains firm in many locations, this is likely to increase over the next couple of years,” Gross says.

The bankruptcy rate has dropped to pre-2005 conditions, and the Reserve Bank is in a stimulatory frame of mind, with a possible extra 50 basis points in cuts to come, Gross says.

He says that the conditions for recovery are there, but not every region will experience the return.

“Areas like the western corridor that have significant supply are likely to experience a more modest improvement in the next two years, though the rail and improved amenity continue to make this a region with sound prospects into the future,” Gross says.

“The inner suburbs of Brisbane are experiencing higher demand. The Sunshine Coast and Gold Coast are starting to pick up, but this is often on the back of mortgagee sales which have set back new projects at least two years. As this stock is finally absorbed into the market, developers will again start to build again”

National Property Research is a Brisbane-based research firm established in 1999. Gross is a former state research manager for Stockland.

Alistair Walsh

Deutsche Welle online reporter

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