Queensland is emerging the hot state and I am not reefing to the temperature. More than half of all respondents to an Australian Property Investor Survey indicated the Sunshine State was where their next investment would be. We talk to the author of that study and managing director of MRD Partners, Nick Lockhart, who says “The Brisbane market has moved from recovery to growth but has not yet entered a ‘boom’ market, so there is plenty of opportunity.”
Kevin: There is an interesting study that was released during the week by MRD Partners that revealed that more than half of all respondents to their Australian property investor survey indicated that the Sunshine Coast was going to be where their next investment would be. Joining me is the author of that study and managing director of MRD Partners. I’m talking to Nick Lockhart.
Nick, thank you. Did that really surprise you?
Nick: It did, actually. What surprised me was that over half of the respondents said they intended to buy an investment property in the next 12 months. The fact that over 50% said Queensland was their preferred market didn’t surprise me.
Kevin: If Queensland did so well, how did the other states fare, Nick?
Nick: New South Wales, Victoria, and Western Australia were about a quarter of that of Queensland. South Australia was one-sixth. There was 32 times more popularity for Queensland than Tasmania, and the Northern Territory lost by 48 to 1.
Kevin: There has been a lot of speculation over the last 18 months about southeast Queensland in particular as being a place to invest. The Queensland market doesn’t have those big peaks and troughs that we see in the other states. Do you think that’s what it’s all about, Nick?
Nick: I think it’s long overdue for an upturn. It’s the only capital city that hasn’t had a decent upswing since the GFC. All other markets seemed to bounce back pretty quickly. In 2010, it looked as though the Queensland market was going to bounce back, but then, of course, in January 2011, we had the floods, and I think that put a damper on things.
It really is long overdue, and the price difference between a median house in Brisbane versus Melbourne and Sydney is just ridiculous. It is so great that it’s just become a target for people.
Kevin: Would you say the results of this survey are indicating that there could be a boom on the way for Queensland?
Nick: I get nervous using the “boom” word. We’re certainly seeing recovery here, and I think we’re moving into the beginning of what I would call a growth phase. Boom is what follows. With low inflation, with things the way they are, with the Chinese now directing their attention to Queensland, it is very, very possible we’ll move into a boom. There are a lot of factors at play at the moment, a lot of changes to lending rules, a lot of focus on the investment market. The government may make some changes to dampen the demand.
Kevin: We are seeing a lot of downturn in WA. Is that being reflected in consumer confidence? Is that what you’re hearing?
Nick: WA is a funny market in the sense that it’s very parochial, though the respondents to my survey who said that WA was their preferred market to invest in were made up of 83% of West Australians. With the downturn in mining and there are a lot of people moving back out of that state, people who have come from the East Coast who have gone over there, I think there is a lack of confidence. Western Australia is very heavily dependent upon the mining industry.
Kevin: What would be your advice for investors? What should they be focused on in this market?
Nick: My personal take is that we should look for emerging markets.
Kevin: What do you mean by an emerging market?
Nick: A market that is coming off the bottom, off a slump. I’ve just been in Sydney catching up with clients and the pace of the market moving down there is just ridiculous. It is a seller’s market. Ironically, it’s a seller’s market because there are so many buyers around. Buyers should be looking for buyer’s markets, and obviously, southeast Queensland, Brisbane, Gold Coast, and Sunshine Coast are definitely buyer’s markets at the moment.
Kevin: Of those people you surveyed, do they have a preference for houses or units?
Nick: There is definitely a preference for land. Almost 63% of respondents said that they preferred house and land as opposed to townhouses, which was just under 16%, and apartments were pretty similar at 14%.
Kevin: I was pleased, too, to see the results of the survey dispelled one of those myths that we hear about all the time, and that is that property investors are rich.
Nick: Absolutely. It was interesting asking that question. Almost 62% of people identified themselves as being middle-income households. Then there were 32% who identified themselves as being low-income households. Those who said they were high-income households made up less than 6.5%.
Kevin: A very interesting study. Nick, I appreciate your time in sharing that with us today. I’ve been talking to Nick Lockhart from MRD Partners.
Nick, thanks for your time.
Nick: Thanks, Kevin. You have a great day.