Prospects pick up for Hervey Bay as properties under $300,000 begin to sell and rental vacancies tighten

People are doing more than just looking for whales at Hervey Bay, they’re buying houses as well.

Sales picked up for the third consecutive six month period to September 2012 in the Fraser Coast coastal town, about three hours north of Brisbane,  according to a new research report from PRDnationwide.

Activity is expected to rise again in 2013 although house prices won’t start to rise until excess apartment stock priced under $300,000 is sold.

PRDnationwide researcher, Rob Matta, says a price point analysis undertaken for the Hervey Bay house market indicates 49% of sales recorded for the September 2012 period were below $300,000, compared to 29% in September 2010 period.

“Increased activity in the sub $250,000 price range substantiates a notable change in buyer preferences, with many owner occupiers and investors exploiting opportunities to buy well and add value to somewhat tired properties,” says Matta.

“Houses within this price range have traditionally been overlooked by buyers, resulting in lengthy stints on the market. Current on-the-market evidence confirms that these properties have become the fastest to move throughout 2012, as buyers respond to diminishing stock levels at the lower end.”

According to Matta, the absorption of limited stock under $250,000 will eventually stabilise the median house price from further softening in 2013, as buyers shift back to higher price brackets and mortgagee sales become less prevalent.

“The increase in sales activity and firming of median price for the suburb of Pialba over the September 2012 period is further evidence of buyer’s increased appetite for affordable housing in what has become a competitive market.”

The heavily tourism-dependent town has, like other Queensland coastal markets suffered from the effects of the post-GFC fallout including the high-Australian dollar which has seen more Australians take overseas trips than travel domestically in the last five years.

Matta says the Hervey Bay Area unit market continues to demonstrate a sound level of sales, having recorded 97 settled transactions during the September 2012 period, a marginal difference from the previous March period.

“With the current oversupply of apartment stock in the market, it is expected that prices may experience further corrections throughout 2013, with sales volumes likely to maintain resilience at best,” he said.

“With that being said, there has been a greater level of interest for duplexes and smaller unit complexes which could experience modest growth over the year and compensate for weaker apartment sales.”

However, demand for more expensive apartments remains weak with “notably less enquiry for units in the higher end of the market compared to two years ago”.

Matta says the availability of stock on the market providing would-be buyers with many options and enhanced bargaining power.

A similar assessment of the Hervey Bay market is made by Herron Todd White (HTW) in its February month-in-review report.

HTW expects that over the next twelve months the Fraser Coast residential property market is “expected to experience a stabilisation period where prices will remain steady, however further retraction may still take place for higher end stock (above $450,000).

“Demand for property below $350,000 will continue to provide a large percentage of sales with affordability being a key factor in this price range.

“It is anticipated that the unit market will continue to flounder over the next year, with only minimal demand in this sector.

“Rental accommodation is expected to remain tight, with low vacancy levels particularly for dwellings close to schools and the beach," says HTW.

The regional market is also benefiting from infrastructure investment with the commencement of construction of the new $87.5 million private hospital in Urraween, which HTW says will generate around 300 construction jobs and a similar number of healthcare positions.

The $28 million Splash Bay water park has recently been approved by the local council and is due to be completed by Christmas 2013.

Hervey Bay, principal of PRDnationwide Hervey Bay, Jim McKay, Hervey Bay says higher rents are enticing investors back as well while owner-occupiers are attracted by the affordable prices and lifestyle.

“Our lifestyle here is casual and just great. The locals are friendly and come from all over the place, so there’s a great mix of backgrounds. Look out across the Esplanade at the beach and the crystal clear water and that’s the reason people just don’t want to leave,” he said.

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