The biggest hurdle for Queensland in 2009 will be to overcome unemployment concerns. The announcement by the state’s Premier, Anna Bligh that the government would form rapid response teams to fight escalating unemployment should go some way to allaying fears and assist in strengthening consumer confidence.
The Queensland government’s move to lift the stamp duty-free threshold for first home buyers to $500,000 and the 1.25 per cent fall in interest rates should also provide renewed interest in the housing market.
The federal government’s recent tripling of the First Home Owner Grant for new homes to $21,000 and doubling of the grant for existing homes is likely to encourage first home buyers back into the market, after a 13 per cent fall in lending to first home buyers in the past year.
The state’s best performers were the agricultural strongholds of Greenmount and Tully.
Median house prices for Queensland achieved price growth of up to 40 per cent in 2008.
Queensland achieved strong population growth of 2.2 per cent last year, and has a low unemploymentrate of 3.6 per cent. Strong migration and low levels of housing construction are expected to keep the state in a housing deficit, which should provide some support for housing prices. The undersupply of dwellings is expected to hit 19,000 by June 2009.
Brisbane
Brisbane’s more diversified economy makes it a lower-risk market than the state’s more resourcesbased towns.
Brisbane’s median house price was down about 1.69 per cent for the 2008 year, according to figures released in October. Overall, Brisbane’s median house price is expected to decline by 7 per cent during 2008/09. However, as confidence returns, this easing of prices and improved affordability will position Brisbane for forecast price growth of 4 per cent in 2009/10.
Strong growth in property prices is expected to emerge in 2010/11, taking the median to $439,000 (+8 per cent). By June 2010, mortgage affordability in Brisbane should be at its best level since 2003.
Brisbane’s Fortitude Valley achieved house price growth of almost 30 per cent in 2008 and Brisbane bayside suburbs also performed above average, driven by families looking for affordable waterside options within a 20 minute drive of the central business district.
The lower end of the market will outperform all other markets in Brisbane during 2009.
First home buyers are likely to become a key driver in 2009. A combination of lower house prices,increased government grants for first home buyers, stamp duty relief, and significantly lower variable housing interest rates should improve housing affordability considerably. Demand from those wanting to upgrade is also anticipated to improve, with lower borrowing costs acting as a significant incentive to upgrade.
Some prestige areas such as Ascot, Hamilton and Fig Tree Pocket achieved strong sales.
In 2009, places such as Redcliffe and the semi industrial neighbourhood of Rocklea will attract buyers this year due to the extra drawcard of a median house price of less than $400,000.
In light of more favourable affordability levels, easing economic uncertainty, and an expanding dwelling stock deficiency, turnover of property is anticipated to increase through 2009. In turn, prices are forecast to recover mildly, increasing by 4 per cent in 2009/10.
Gold Coast and Sunshine Coast
Both the Gold Coast and the Sunshine Coast are expected to follow Brisbane’s median house price trend. Despite the uncertainty brought about by the credit crisis, the fundamentals of the greater South East Queensland property market remain strong.
Fewer dwelling completions coming online in 2009/10, combined with strong relative population growth, suggests that competition among willing owner occupiers will intensify into 2009 and 2010. The Gold Coast is forecast to experience a 3 per cent increase in the median house price for 2009/10, followed by a further 8 per cent growth in 2010/11.
Upmarket properties were selling at rock bottom prices on the Gold Coast as the wealth of sellers and buyers shrinks in difficult economic times. However, the market has bottomed out and the first quarter of this year should see housing prices begin to rise.
As financing restrictions ease and economic uncertainty dissipates, it is believed that dwelling commencements, specifically apartment projects, will recover strongly during the second half of 2009.
House prices on the Sunshine Coast are forecast to follow a similar path to that of the Gold Coast.
Townsville and Cairns
Townsville and Cairns should experience only a 2-3 per cent fall in the median price. The additional First Home Owners’ Grant is expected to have a greater impact in Townsville than in Cairns, principally, because of its younger demographic profile.
However, the deterioration in relative affordability between Townsville and Brisbane is likely to mean that fewer young families will migrate north and this will reduce the level of first home buyer demand compared to the strong demand in recent years.
Charters Towers, 90 minutes from Townsville, had less than a 10 per cent softening of prices in 2008 and started the year off strongly with plenty of inquiries and sales. With gold mining, agriculture and education it enjoyed 18 per cent growth in 2008 and the outlook is for a more moderate 4 per cent increase in 2009.
The high level of commencements over the past two years has added significantly to the dwelling stock, and is estimated to ease the Far North’s dwelling stock deficiency. Nonetheless, the Cairns property market should remain tight beyond 2009. While Cairns maintains a reasonably high level of exposure to the struggling mining sector, which has been hit hard amidst the current global economic slowdown, we believe there should be enough local infrastructure investment in the pipeline to maintain solid economic conditions.
Regional – General
Areas such as Gladstone and Mackay who have benefited from the completion and expansion of nearby mines need to prepare for the possibility that continued expansion may not take place.
Mackay is fortunate that it is already gaining a reputation for its strong mix of sectors, including mining, retail trade, primary industries and tourism, providing a strong future platform. The diversification of the region’s economy will help it ride the global economic crisis and planned large scale marine and local infrastructure projects, such as the $20m Convention Centre and $500m Port of Airlie project, will provide additional economic and employment opportunities for the region.
Recent figures show that Mackay is experiencing strong economic growth, and it is coming off a peak property period. While it is one of the state’s most expensive areas to rent and buy a home, it also represents an ideal investment opportunity with a shortage of supply for both houses and units, as well as commercial properties.
Commercial and Rental
According to BIS Shrapnel, the annual rate of increases in rents to Brisbane was above 6 per cent in 2006 and 2007 and 9.3 per cent in 2008. Sizeable growth in rents for Brisbane of 18 per cent is projected over the three years to June 2011.
According to Residex, the median yield for Brisbane units was 4.64 per cent at September 30 2008.
Although still tight, the Brisbane vacancy rate eased slightly over the first half of 2008 to 2.2 per cent in both March and June quarters. Total dwelling completions experienced an upturn during 2007, which has added a solid level of new rental stock to the market.
Brisbane experienced a 44 per cent rise in median rents in the four years to June 2008. With a solid stock deficiency level expected to be maintained during the forecast period, vacancy rates will therefore continue to be tight. However, after the strong growth of recent years, the potential for stronger rises in Brisbane is more limited, and sizeable growth in rents of 18 per cent is projected over the three years to June 2011.
Indicative rental yields for Brisbane were at 4 per cent at June 2008. Forecast indicative yields are projected to rise to 4.7 per cent at June 2009, due to an expected 7 per cent fall in prices, and then are forecast to remain at that level over the next two years to June 2011.
Gold Coast investors know they can get a return from rent that’s comparable to a fixed–term deposit and they’ve got an asset that will still appreciate in value. There has been a noticeable lift in Gold Coast buyer interest in January, and that is very encouraging.
The drop in dwelling starts in 2008/09 will mean that completions remain low relative to underlying demand in 2009/10, so the rental market will remain tight. This continuing tight supply of rental property is expected to support strong rental growth through to 2010. This is likely to increase investor demand in 2009/10, as well as increase the allure of owner occupation to some renters.
The growth suburbs for Queensland for apartments at June 2008 are Ayr and Highland Park.
Hot Spots
Queensland has some of Australia’s premium beachfront locations and some of the most affordable. Halifax, 15 km from Ingham and 100km north of Townsville tops the most affordable list with a median house price of $200,000. Halifax is also considered to be one of the outperforming suburbs for the state in 2009, along with Redcliffe, Salisbury, Keperra, Coopers Plains, Zillmere, Chermside West, Rocklea, Banyo, Mount Gravatt East, Loganholme, Wooloowin, Annerley, East Brisbane, Fortitude Valley, Camp Hill, Albion, Greenslopes, Clayfield, Chermside and Moorooka.
Other most affordable suburbs for 2009 are:
• Rocky Point with a median house price of $238,130
• Burnett Heads with a median house price of $271,500
• Elliott Heads with a median house price of $285,000
• Cardwell with a median house price of $290,000
Regional hotspots in terms of suburbs likely to outperform during 2009 also include:
• Nambour, with a current median house price of $359,000. This self-contained community has two hospitals, a number of supermarkets and many other retailers and schools.
• Thuringowa Central is a recently created Townsville City which is home to a large number of businesses and has a significant supply of commercial building housing many of the region’s major businesses. It has a median house price of $342,000.
• Esk, with its timber dominated housing and a median house price of $245,000, represents a very affordable price for owners who want to live in a small regional township within close proximity to Brisbane.
• Tully, Australia’s wettest town, has a median price of $265,000, is situated close to Mission Beach, Dunk Island and the Great Barrier Reef. It represents a very affordable location, particularly, for retirees.
• Cranbrook has a median house price of $338,000, making it a much more affordable option than the nearby regional centre of Townsville.
SOURCES:
BIS Shrapnel – Residential Property Prospects 2008-11
BIS Shrapnel – December Update (Residential Property Prospects 2008-11)
Real Estate Institute of Australia (REIA) Focus Group Final Report
REIA – Media Release “Signs of Positive Activity in the First Home Owners Market,
Let’s Keep it Going (10 January 2009)
Real Estate Institute of Tasmania (REIT)
November, Tasmanian Property Market (23 December 2008)
REIT – Tasmanian first home buyers up 10 per cent in December, 2 February 2009
Real Estate Institute of Victoria (REIV) – State of the Market
RPData – Top Performing Rental Yield Areas
RP Data Media Releases – Property Hotspots for 2009 (26 December 2008)
Property Pulse – Industry Market Wrap Up
Macquarie Real Estate Economic Research
Weekend Australian Financial Review (Weekend AFR) articles over November and December 2008
Sunday Tasmanian, Boon in Burnie’s Upper Echelons (4 January 2009)
Money, Your Home – Property Outlook 2009-01-14
BRW – Top 500 Private Companies, August 28-October 1 2008
BRW – November 6-12 2008
The Australian, Darwin Goes Through the Roof as Rental Hotspot (26 January 2009)
Realestate.com.au – Rental Yield 2009 Winners
The Australian Financial Review – Special Report (January 23-26, 2009)
Real Estate Institute of South Australia Market Update – SA Property Market
Reliable in Long Term (23 January 2009)
Disclaimer: There are many uncertainties in forecasting movements in the market such as government policy changes, interest rate changes and global economies. Therefore, the forecasts in this report should be taken to be indicative of market directions. First National takes no responsibility for actions taken on the basis of this report and we encourage all vendors and buyers to conduct their own research.
Commercial Property Outlook 2009 - Queensland 
