Yields vary from 5% to 8% in Rockhampton: HTW
Investors have been a significant influence in the Rockhampton region historically, in particular in the entry level market sector, according to valuation firm Herron Todd White's latest report.
The November HTW review suggests investors in this region vary from both mum and dad investors to interstate investors who have often seen value in our affordability and during peak market conditions, were not fazed by purchasing properties sight unseen.
"The investor market in Rockhampton has typically always been entry level price points however in recent years, there has been an influx of investment in new homes specifically targeted to non local investment providing a basic 4-bedroom, 2-bathroom home in the mid $300,000s."
As in most markets, investors in our local market focus on rental return and potential for capital growth, the HTW report says.
"In a town of our size, transport infrastructure and proximity to major facilities is still a consideration, however not as important as it is in the major capital cities.
"Expected yields vary depending on the property type, but broadly speaking, between 5% and 8% can be anticipated.
"Investment in the unit market has a smaller influence in the market overall, yet between 6% and 7% gross yields are still attainable."
The month in review goes on to state that Rockhampton has seen significant development in the short term and holiday accommodation sector in the past five years and supply is now becoming tighter, yet this is a relatively new market sector in which resales are largely untested.
"Multi unit dwellings have always been a sound option for investors due to the lower risk of vacancy, however given the affordability of the Rockhampton region as a whole, rental returns for aged dwellings are also attractive.
"Smaller sub markets in our local area such as Gracemere and the Capricorn Coast are experiencing similar conditions to varying degrees, with Gracemere being the first sub market in the Rockhampton region to reflect a downturn as a direct result of investor withdrawal."
The HTW report suggested that the downturn has been exaggerated by the significant number of non local investors paying highly inflated prices for house and land packages about three or four years ago on the basis of unsustainable rental guarantees which are now expired.
"This market was significantly developed, in particular in Gracemere between 2011 and 2014, off the back of the resources boom in mining towns within easy commuting distance of Rockhampton, including Gladstone.
"Once demand appeared to have reached its peak and the Gladstone market started to show signs of easing, developers of these housing projects quickly withdrew from the local market, particularly in Gracemere, and are no longer active in the area."
Significant declines in values have been experienced in those resales that have occurred, according to the month in review.
"Locally we have been experiencing a downturn in investor activity to date in 2015, however market indicators show this is more as a result of lower confidence and job security rather than the changes to the APRA lending criteria for investors, which appears to be targeting the more heated markets of Melbourne and Sydney.
"Ideally, with the implementation of these new guidelines, interstate investors may start to return to our local market as a 20% deposit on a $200,000 to $300,000 house may be more attainable for investors than a 20% deposit on a $700,000 plus property."
