The tipping point between caution & optimism has finally passed.
It is often a fine line, but sometime in the past six weeks it has gone from dark to light (well, lighter) when it comes to residential real estate across south east Queensland.
There is an eight year property cycle – yes, the text books talk about seven years – but the Australian statistics suggest it lasts about eight years. But what’s one more year between friends. Usually, it is five years of good & three years of, well…not so good.
But for more than five years, SEQ real estate has been subdued to say the least. The 2008 financial knock-down began a slump that was prolonged by deluges, cyclones & domestic political uncertainty.
But now it looks like SEQ has just started to enter its growth phase.
It is likely to be growth this time round, not GROWTH! But we are going to the black side of the ledger and finally leaving the red. About bloody time!
Sales volumes are up across SEQ for the first time in years.
When looking at detached house salesfor the last 12 months:
- Sunshine Coast 5,800 sales (up 26% on year before)
- Moreton Bay 6,650 sales (up 21%)
- Brisbane City 16,000 sales (up 14%)
- Redlands 2,600 sales (up 23%)
- Gold Coast 6,500 sales (up 22%)
- Logan 4,000 sales (up 18%)
- Ipswich 2,800 sales (up 12%)
- Lockyer Valley 526 sales (up 29%)
- Toowoomba 3,250 sales (up 25%)
When it comes to apartment sales, they are also up – 27% on the Sunshine Coast; 3% in Brisbane (apartment sales in Brisbane have been rising for two years now, with today’s volumes up 19% on 2011 figures)and up 20% on the Gold Coast on last year.
Townhouse trading is also increasing, quite quickly in fact, up 49% on the Sunshine Coast (it must be all that new Kawana infrastructure, hey Kochie!); up 20% in Moreton Bay (Caboolture; Pine Rivers & Redcliffe); up 23% in Brisbane; up 27% in Redlands; 17% on the Gold Coast & 22% in Logan. Falls in townhouse sales are still occurring in Ipswich & in Toowoomba.
End prices are also starting to rise across SEQ. Price rises always lag sale volumes.
When looking at typical detached house prices for the last 12 months:
- Sunshine Coast $453,000 (up 4% on year before)
- Moreton Bay $390,000 (up 3%)
- Brisbane City $520,000 (up 4%)
- Redlands $455,000 (up 4%)
- Gold Coast $490,000 (up 6%)
- Logan $353,000 (up 1%)
- Ipswich $298,000 (up 2%)
- Lockyer Valley $290,000 (up 4%)
- Toowoomba $327,000 (up 10%)
A similar trend can be seen for apartment & townhouse sales across the south east corner of the state.
I will outline in a future Matusik Missive, the entry-level market – up to $500,000 (oh, and how it is so easy to dismiss half a million bucks these days) – is quite strong & occupies a large part of the price bell curve. There is still a lot of property priced under $250,000 across Queensland, and even in the more populated & relatively expensive south-east.
Traditionally, south east Queensland lags the southern markets, following behind the Sydney property market by about 18 months & when their market is moving, then twelve months behind Melbourne/Victoria.
Investors (and some residents) are forced out of the southern markets.
I read on the weekend in the SMH that Sydney’s current median price is $690,000 & BIS Shrapnel are predicting it to exceed $800,000 within the next three years.
I recently suggested at a housing conference presentation that the SEQ median detached house price could reach something like $500,000 over a similar time frame (by late 2016). Many in the room smirked, some even guffawed.
Today, the middle price across SEQ is about $450,000. So about a $50,000 or a 10% gain over the next three years, doesn’t seem that unrealistic to me. (I stress this is not a forecast, just an observation!)
Anyway, that is really academic for now. In order for SEQ to experience such price growth, more jobs (and wealth) need to be created in Queensland. Whilst investors will follow potential, interstate migrants move because of work first; cheaper housing second & a distant third, because of our warmer climate.
Whilst mining is holding up somewhat better than many expected (for now) & gas, tourism (somewhat) & agribusiness is helping Queensland’s economy, new housing construction, as we pointed out last week, is the missing ingredient.
Easier housing construction means more jobs. More jobs mean more interstate migrants, which will lead to more sales & higher end prices.
The SEQ market during 2014 depends on one thing – new jobs.