01 Apr Queensland Property Market Update – March 2015
In today’s show, together with Shannon Davis from Metropole Property, we look at the property market in Queensland. We talk about Brisbane, Sunshine Coast and Gold Coast.
Kevin: In this break in the show, we’re going to look at a couple of the really big markets around Australia – “they” being New South Wales and Queensland. In a moment, I’ll be talking to George Raptis, who will look at the New South Wales market, more specifically, Sydney.
Most people seem to be talking about Sydney when we talk about the health of the market. But another equally as important market is Queensland, and so far we’ve looked at WA and South Australia. We’ve also looked at Victoria and Tasmania.
Joining me now to have a look at the Sunshine State, none other than Shannon Davis from Metropole Properties in that state. Shannon, thanks for your time.
Shannon: G’day, Kevin.
Kevin: What is the news from the Sunshine State? How is the market looking?
Shannon: It’s been a very busy start to the year. I think mostly there’s lots of out-of-area interest, but I think upgraders are really driving the market. I think there’s been a lot of people taking advantage of low interest rates and wanting to make that upgrade to maybe a bigger home or something more special that they’re after.
They’ve been quite active, and we’ve unfortunately been up against owner-occupiers who are just wanting to pay whatever it takes to get the property, so it’s been hard work for buyer’s agents at this stage.
Kevin: Upgraders: are these people in the local market or are these people coming from other parts of Australia?
Shannon: There has been local interest, but also buyer’s agents and out-of-area investors have been very prevalent. They’ve been looking at properties that we’re interested in. A lot of people flying in sort of thing and making offers and with a relatively short due diligence. It’s just showing you the sign of where the market is in its cycle.
Kevin: It’s a pretty hot market. Are you getting a lot of competitive offers?
Shannon: Yes, definitely. It’s something that we’ve been up against. As agents you can see… We had recently 45 people on a deceased estate property that we were after on the first open. From there, there were subsequently 10 offers. That’s a sign of what type of market we’re in. It’s definitely a seller’s market.
Kevin: It’s very important, then, to keep your head firmly on your shoulders and make sure you don’t get carried away. I guess in this kind of climate you could pay too much?
Shannon: Yes, definitely. I think we generalize too much. “The market is hot, everything is hot.” In Queensland and Brisbane specifically, there are some pockets where there’s an oversupply of apartments at the moment, quite high vacancy rates, and you don’t want to be buying into those areas.
It might look like it’s an area on the move because there are lots of cranes and lots of building activity, but what that can mean is supply is increasing at a rate that demand can’t keep up with, and you might be buying an inferior investment grade property.
Kevin: On that point, what are some of those areas that you should watch out for?
Shannon: I think the postcode of 4007 at the moment has some oversupply issues in the Hamilton region.
Kevin: Hamilton. We’re talking about that Prestige area, are we?
Shannon: That’s right. There are lots of apartments there, and that’s got a quite high vacancy rate. There are also lots of apartments being built in around that Bowen Hills and Newstead apartment. Hub suburbs like Mount Gravatt and Chermside, again, have big supply issues at the moment. I think all those areas will be good in the medium and long term, but in the short term, you’ll probably expect some soft rents and soft capital gains.
Kevin: We spoke to Michael Yardney earlier on the show. One of the things he said was to make sure that you’re not buying off the plan. Would you share that view?
Shannon: Definitely. People are attracted to a small deposit now and being completed later, but like buying a brand new car, there’s a big premium paid and often a lot of middlemen commission to project marketers, which if anyone has a change of circumstance, they have to sell quite quickly, can set a really bad precedent for the building. It’s not the best form of investing.
Kevin: If I came to you with $500,000, the question we’re asking everyone today in the show, where would you suggest I buy and what should I be looking at? Is it a house, a unit?
Shannon: With $500,000 I would probably go for a townhouse in around that 6 to 8K ring. You get three bedrooms, two bathrooms, and one car park configuration, but I think it’s a good option for upsizes from apartments, downsizes from houses. I’d look for low-maintenance style living, a good courtyard, and ease of transport and employment hubs, as well. Look for the CBD, airport, hospitals, universities. All those are good for employment hubs and make sure that your property is always in demand.
Kevin: Okay. Ruling out some of those ones you mentioned earlier, some of those areas where there are a lot of cranes right now. Certainly they come within that 6 kilometer radius, but just be careful of those and particularly the new ones?
Shannon: Yes, definitely. I think sometimes people can be sold on “this is a really fast-growing area,” and that is good for developers and builders and construction workers, but not necessarily good for the end investor. It’s sometimes easy to be caught up in that hype.
Kevin: It is indeed. Shannon Davis from Metropole Properties in Brisbane taking a look there at the Queensland market. Just before I leave you, about 30 seconds if you could, Sunshine Coast and Gold Coast, what are you hearing about those two markets?
Shannon: They’re holiday destinations, and they will do better in a rising market as will most areas in Australia, but because of the level of discretionary property up there – meaning not a necessity, it’s a holiday home – they can be quite elastic. They do well in good areas, and I expect them to do well now, but in a financial contraction or correction, you can see those areas more exposed.
Kevin: So go to those areas if you’re specifically looking for a holiday home?
Shannon: Yes, or lifestyle reasons or something like that, but if it’s for investment, a lot better investments than holiday homes or apartments.
Kevin: You would be looking more at the Brisbane market?
Shannon: Yes. Somewhere where people don’t have to drive more than half an hour for work. That’s a good rule of thumb that you’ll have lots of tenants moving into your property.
Kevin: Always good talking to you. Shannon Davis from Metropole Properties. Thanks for your time, mate.