{"id":7795,"date":"2016-04-28T01:00:40","date_gmt":"2016-04-27T15:00:40","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=7795"},"modified":"2016-04-28T01:00:40","modified_gmt":"2016-04-27T15:00:40","slug":"is-melbourne-the-top-aussie-market-lessons-from-wa-qld-results-are-overshadowed","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/is-melbourne-the-top-aussie-market-lessons-from-wa-qld-results-are-overshadowed\/","title":{"rendered":"Is Melbourne the top Aussie market? + Lessons from WA + Qld results are overshadowed"},"content":{"rendered":"

 
\nAs you will hear today, there is no one property market in Australia and that is being highlighted as we continue to look at the various markets that make up the country.\u00a0 That in fact is the first point Michael Yardney<\/strong> <\/a>makes when we ask him about Victoria.\u00a0 Interesting to note that while we all talk about the big gains out of Sydney, you might be surprised to hear what Michael says about the performance of the Melbourne market.
\nNext we go to Western Australia where Damien Collins<\/strong> says the market there continues to suffer from the downturn in mining and the over building for first home buyers.\u00a0 Lots of lessons coming from that part of the country.
\nWe visit beautiful pristine Tasmania with its unofficial Ambassador John Lindeman.<\/strong>\u00a0 John passionately believes in the apple isle and it appears from the figures he shares with us that he is not the only one.
\nCameron Kusher<\/strong> from Core Logic RP Data gives us the national overview this week and he points to a slowing in the rate of national capital growth and says that while more people are bringing their properties onto the market they are not selling and that is resulting in more choice for buyers.
\nOne of the big improvers tipped for this year is Queensland and Shannon Davis<\/strong> gives us his view on the outlook there.\u00a0 He points out that while the Queensland market overall has had a solid year, it is sometimes compared to Sydney and Melbourne, where the growth has been spectacular and the improvement is discounted.
\n\u00a0Bernard Hickey<\/strong> joins us for the first look at the New Zealand market which is going gangbusters and he explains why that is the case.
\n 
\nTranscripts:<\/strong>
\nMichael Yardney <\/a>–\u00a0<\/strong>
\nKevin:<\/b>\u00a0 First up on the show, let\u2019s have a look at one of the bigger markets around Australia. Sydney and Melbourne, of course, have been recognized as the two big winners going forward, and we\u2019ll have a look at the Victorian market now. Joining me to have an overview of that, Michael Yardney<\/a> from Metropole Property Strategists<\/a>.
\nMichael, I know you work all over Australia, but for the sake of this chat, can we talk purely about the Victorian market?
\nMichael:<\/b>\u00a0 Of course, we can, Kevin.
\nKevin:<\/b>\u00a0 What is your overview of Victoria, and how the property market is faring there?
\nMichael:<\/b>\u00a0 Let\u2019s be clear. There is not one Victorian property market. When people talk about Victoria, they generally mean Melbourne. Even within Melbourne, it\u2019s very much a fragmented market. But Melbourne has won the two-horse race between Sydney and Melbourne over the last couple of years with now last year, the last 12 months, having a 9.8% overall capital growth, which means certain areas have done particularly nicely and others haven\u2019t as strong.
\nLooking even over the last ten years, the average dwelling price has changed 6.9% in Melbourne, which is the highest growth over the last decade compared to Sydney, which only grew at 5.9%, Darwin 5.6%, and the overall state capitals at 5.4%, so Melbourne has been the clear winner.
\nKevin:<\/b>\u00a0 What\u2019s impacting the market there right now, both positively and negatively?
\nMichael:<\/b>\u00a0 The big thing that has impacted the Melbourne property market that has kept it growing is our economy and jobs creation. Kevin, we didn\u2019t have the ups and downs of the other states, so we didn\u2019t get the mining boom and mining bust mentality. What we did do was slowly but surely, change from a manufacturing state to a services industry state with finance, health, and IT jobs, which were good-paying jobs.
\nPeople came for the jobs. Wages growth in the service industries allowed people to be able to spend more, they had high disposable income, and they wanted to live in the city, and more of them are coming here, so strong population growth and strong jobs growth pushing up values. Then it led investors to hop onto the bandwagon of capital growth, as well, so it was a multitude of factors.
\nKevin:<\/b>\u00a0 How would you describe investor sentiment in that area now, Michael?
\nMichael:<\/b>\u00a0 Interestingly, at our offices at Metropole, we\u2019re seeing more investors wanting to invest in Melbourne than we have for a long, long time. At the end of last year, they were a little bit cautious, a bit nervous with the scares about APRA. Earlier this year, there were some concerns about negative gearing. I think they\u2019re recognizing that we are not going to grow as well in the next couple of years as we did the last couple of years, but still, there is good certain long-term growth if you buy the right property \u2013 strong investor sentiment, Kevin.
\nKevin:<\/b>\u00a0 What are the areas that you\u2019d avoid, and why?
\nMichael:<\/b>\u00a0 The big areas to avoid are the inner city and off-the-plan property markets. We\u2019re building too many. Over the last few years, we\u2019ve built three times the average number of properties we\u2019ve built in the past, and it\u2019s been fueled by investors speculating \u2013 not really investing \u2013 hoping that property values would go up, and therefore, buying off-the-plan and overseas investors.
\nBut now there is about 14% of all of the properties of the CBD sitting vacant, a very significant proportion of all of the properties being underpinned by investors, not owner-occupiers, and they\u2019re sometimes a bit fickle. Values are dropping. Rents are not going up. There will be maybe a decade when there will be no capital growth or rental growth. I\u2019d be avoiding those areas.
\nThe other areas I\u2019d avoid are the newer states. We\u2019re building a few too many houses for first-home buyers, and some investors are being lured to buy in these outer suburbs. They won\u2019t get capital growth there, either.
\nKevin:<\/b>\u00a0 Going back on something you just said, that figure you said about the number of apartments that are sitting vacant, what was that number again?
\nMichael:<\/b>\u00a0 According to BIS Shrapnel, 14% of properties in Melbourne\u2019s CBD are sitting vacant, and most of those are not on the rental pool. In other words, the rental vacancy rate is only 3.5%. It\u2019s just overseas investors have locked them up, not turned on the lights or electricity, and are leaving it there \u2013 land-banking, so to speak.
\nKevin:<\/b>\u00a0 Wow. That\u2019s a major concern.
\nMichael:<\/b>\u00a0 It could be, but remember, their motives are different to yours and mine as investors. What they\u2019re doing is just putting their money somewhere secure. I believe their mentality is \u201cThis is a new apartment.\u201d They like the concept of new. Keeping it new and pristine, in their mind, adds value, keeps its value. I\u2019m not sure that\u2019s true, though.
\nKevin:<\/b>\u00a0 Yes, it\u2019s going to skew the vacancy figures, because we\u2019re looking at a balanced market being around 6%, but if you put that pool in there, you\u2019d go well above 6%, wouldn\u2019t you?
\nMichael:<\/b>\u00a0 Sure, but they\u2019re actually not in the letting pool. They\u2019re just lock and leave. People are leaving them alone.
\nHaving said that, the vacancy rate in the CBD and inner-city areas is high. In general, in Melbourne, the vacancy rate has been comfortable. What we\u2019re noticing is there are lots more people turning up to open for inspections.
\nRent growth has been very poor, but with the current vacancy rate according to SQM Research at around 2%, it\u2019s actually suggesting that we\u2019re going to lead into a period of higher rental growth as there are more people starting to look for properties and not as many around. But that\u2019s overall in Melbourne; there are some pockets, as I\u2019ve already said, that I\u2019d definitely be steering clear of because the vacancy rates are much too high.
\nKevin:<\/b>\u00a0 Looking ahead \u2013 and I want a very quick answer, if I may \u2013 without notice, rate out of ten, ten being the highest, one being the lowest, how would you rate Melbourne\u2019s future growth potential?
\nMichael:<\/b>\u00a0 In 2016, it\u2019s going to be number one in that it will be the fastest growing capital city market with an overall capital growth probably in the order of 5%, maybe even 6%. It\u2019s not staggering, but it\u2019s definitely going to end the year better than it started.
\nKevin:<\/b>\u00a0 Always good talking to you, Michael Yardney<\/a> from Metropole Property Strategists<\/a>. There\u2019s your outlook for the Victorian market.
\nThanks, Michael.
\nMichael:<\/b>\u00a0 My pleasure, Kevin.
\n 
\nDamien Collins:<\/strong>
\nKevin:<\/b>\u00a0 One of the markets in Australia that is suffering a little bit is Western Australia. Let\u2019s take a visit there now with Damien Collins from Momentum Wealth and find out exactly what is happening.
\nDamien, thanks for joining us in the show.
\nDamien:<\/b>\u00a0 Pleasure, Kevin.
\nKevin:<\/b>\u00a0 Now, we have heard that your state, South Australia, and Northern Territory are not faring all that well, but tell us about Western Australia.
\nDamien:<\/b>\u00a0 Kevin, we\u2019re still suffering from the downturn in the mining sector and also the over-building that happened with the first-home owners grant. As everyone would know, obviously, the mining sector has had a downturn, and that certainly affected job security and the wages paid, so people are less confident, and that\u2019s flowing through into real estate transactions.
\nThe other big thing has been the first-home-owners grant, a lot of people went and built, so that\u2019s [0:51 inaudible]<\/b> tenants and so our vacancy rate has gone up to about 6%, so rents have come back because of that. Coupled with the other factor that the interstate and overseas migration has slowed down quite a bit.
\nLook, we\u2019re definitely in an oversupplied territory, not substantially. We\u2019re at about 15,000 properties for sale; a balanced market is about 13,000. The rental vacancy rate is 6%, but having said that, 94% of properties are leased.
\nOverall, the Pearth market is a bit soft, but what we\u2019ve noticed in the last couple of months is that it seems to be bottoming out, if it hasn\u2019t bottomed already, so expect we won\u2019t see any runaway market this year, but certainly we\u2019re at the bottom or close to it anyway.
\nKevin:<\/b>\u00a0 What\u2019s the sentiment amongst investors right now?
\nDamien:<\/b>\u00a0 Still very cautious. Certainly, we have seen some east-coast investors come into our market and have appointed us as buyers agents, so they\u2019re, I guess, seeing from a bit further away, seeing the longer-term prospects, not looking at just what\u2019s happening short term in the market. But local investors are still cautious. There is activity but the headline in the press is the high vacancy rate, rent reductions, etc. Confidence is pretty low, so investors are quite thin on the ground overall generally.
\nKevin:<\/b>\u00a0 What about developers? Are they pretty nervous about the market?
\nDamien:<\/b>\u00a0 Developers are bringing stock to market. Again, with the lack of confidence, they\u2019re finding that people aren\u2019t easily committing to off-the-plan purchases because, again, people think prices may not be much more when they settle in two years. Developers are struggling, and anyone bringing the properties to market at the moment is having a hard time getting them away.
\nSome projects are going better than others, but there\u2019s still activity for development sites. We do buy development sites for clients, and we find that we are often competing because people are looking at projects they buy now and they wouldn\u2019t bring them to market for at least 12 months and the likelihood is in 12 months when they are to market, with all of the approvals and everything else in place, that the market will be a little bit better.
\nKevin:<\/b>\u00a0 What sort of projects are popular or most popular? What size of development are you looking at?
\nDamien:<\/b>\u00a0 Generally, the most popular ones are more the boutique level, so anywhere from your 10- to 40-apartment in the suburban areas, in the areas near the amenities, so near the train stations, the caf\u00e9 districts, in close within that sort of 10 K radius of the city, and where there\u2019s not a lot of other competition and where it blends in well with its surroundings. That\u2019s what people are looking to buy, and certainly, from a rental proposition point of view, they\u2019re the ones that people like to get.
\nNow, we certainly do have a lot of development in around the CBD area, but as you\u2019ve seen with Brisbane at the moment, as we\u2019ve seen in the past in Melbourne, at the moment, and particularly around that Docklands\/Southbank area, it is a lot riskier because of the big risk of significant oversupply when there\u2019s lots of 30-story buildings going up. So generally, most investors who are savvy are targeting the more boutique projects where they\u2019re keeping away from the big areas of oversupply.
\nKevin:<\/b>\u00a0 Damien, where\u2019s the best buying right now in the capital, in Perth itself?
\nDamien:<\/b>\u00a0 A couple of areas that we like, Kevin, are around South Lake, which is on the south side of the river. It\u2019s near Bibra Lake. It\u2019s an area that\u2019s about 18 K south, but it is near the freeway and the train line. It\u2019s generally been considering a lower socioeconomic area. The prices are in the $400,000s for a house, but it\u2019s an area that\u2019s getting rezoning happening that we\u2019re seeing in the market, people looking to redevelop in the area.
\nAnd as Perth grows\u2026 Perth is likely to grow from 2 million now to anywhere between 4 million and 5 million over the next 35 years, so areas like with the amenity there will rejuvenate. It won\u2019t go to a premium suburb, but we expect it\u2019ll move from that lower socioeconomic into something more middle class, and that re-rating we expect would see some good, solid long-term capital growth in an area like that.
\nWe certainly still are buying in Forrestfield with the train line. The market there has come back a little bit, but certainly the longer-term prospects, once that train station\u2019s in place and that whole catchment area in the foothills and into the hills now has a train line, that\u2019ll certainly increase the value of properties around that. We\u2019ve seen in Melbourne and Sydney that properties close to train stations do increase in value quite substantially.
\nKevin:<\/b>\u00a0 Before I let you go, Damien, what about the regions?
\nDamien:<\/b>\u00a0 We\u2019re seeing, Kevin, the Pilbara and the mining towns up north suffering significantly. Prices are down nearly 50% in Karratha, 30% in Port Hedland, and rents are down more than half. It\u2019s pretty tough up there. In the southwest, the market\u2019s doing okay in Bunbury\/Busselton areas, but certainly most people focus in WA on the mining areas, and they\u2019ve come back a long way, but it\u2019s going to be a long time, I think, before they recover.
\nKevin:<\/b>\u00a0 Wonderful insight there, Damien. Damien Collins from Momentum Wealth in Western Australia. That\u2019s the wrap on WA.
\nDamien, thanks for your time.
\nDamien:<\/b>\u00a0 Thanks, Kevin.
\n 
\nJohn Lindeman:<\/strong>
\nKevin:<\/b>\u00a0 I\u2019m pretty excited about talking to John Lindeman because John is going to give us a bit of an overview on the Tasmanian market. The reason I\u2019m excited \u2013 apart from John\u2019s a lovely guy and I like talking to him \u2013 is the Tasmanian market looks like it might be turning. There might be some good signs on the horizon.
\nG\u2019day, John.
\nJohn:<\/b>\u00a0 Hi there, Kevin, and hello, everyone.
\nKevin:\u00a0 <\/b>Nice to be talking again, John. Now, I know you spend a bit of time in Tasmania and you know that market quite well. Tell me what\u2019s happening.
\nJohn:<\/b>\u00a0 Well, you wouldn\u2019t think much was because Tassie <\/b>contains only 2% of our entire population and only contributes 1% of the gross domestic product, so it\u2019s not really significant in terms of that. But what I did realize when I looked at the history of the housing market is quite an interesting phenomenon that has occurred in the past, and that is that the last time we had a big boom in Sydney and Melbourne in 2000 to 2003, when it stopped, suddenly in one year, Hobart\u2019s house prices shot up by 50% in just the one year. That was in 2004-2005. This is using official ABS data.
\nWhen I looked at the cause of that, it was mainly investors from the mainland looking at opportunities to invest in Tasmania. At that time, Hobart\u2019s house prices were about a third of that of Sydney\u2019s and that\u2019s exactly what it is right now. I think that all the conditions are right for if the growth slows down in Sydney and Melbourne, it might kick off in Hobart especially.
\nKevin:<\/b>\u00a0 Yes, it\u2019s well poised. It\u2019s nice and close to the mainland, nice and close to both Sydney and Melbourne, as well. Here are some people who are almost putting them in parallel with Brisbane \u2013 Hobart and Brisbane \u2013 as the two big improvers this year, John.
\nJohn:<\/b>\u00a0 That\u2019s right. In particular, Hobart. I wouldn\u2019t say that so much for the rest of the state because they have a lot of economic issues there, but certainly Hobart. It\u2019s a very cosmopolitan city. It\u2019s only a fraction the size of the mainland cities, but it has everything and it\u2019s a market that has a lot of potential.
\nKevin:<\/b>\u00a0 Okay. Let\u2019s continue to talk about Hobart, then, because that seems to be the area that has the most promise. What are the good areas, and what are the areas maybe to avoid in Hobart?
\nJohn:<\/b>\u00a0 Hobart has a large percentage of ex-housing commission stock, and these tend to provide very high rental yields. It\u2019s very low price. You can buy in the outer suburbs, Bridgewater and Rokeby and those sorts of places. You can get properties under $200,000 that are producing great returns of around $250 a week.
\nKevin:<\/b>\u00a0 Wow.
\nJohn:<\/b>\u00a0 So if you\u2019re after cash flow, these are really good areas, but then if you go to the higher priced areas, that\u2019s where I think the growth is likely to kick in. The more well-established inner urban areas, there\u2019s a lot of growth potential there.
\nKevin:<\/b>\u00a0 Give me an idea on price range when you\u2019re talking about the upper price range in Hobart. What is it, John?
\nJohn:<\/b>\u00a0 Well it\u2019s a lot less than what it is in the mainland cities.
\nKevin:<\/b>\u00a0 Yes.
\nJohn:<\/b>\u00a0 The median in Hobart\u2019s about $370,000. When you compare that to $1 million in Sydney, you can see the difference. If you buy a property for $1 million in Hobart, you\u2019re buying a property that\u2019s on the waterfront, excellent views, close to the CBD, and Sandy Point, those sorts of places, which is about as high as you can get in the Hobart market.
\nKevin:<\/b>\u00a0 I was in Hobart I November last year, actually. It\u2019s a beautiful spot to drive around. And it\u2019s not hard to get around, either, John, is it? I found that very, very easy.
\nJohn:<\/b>\u00a0 Yes. Well, the population of Hobart is only 200,000 people, which is double the size of Darwin, so it\u2019s not a big city, but because it\u2019s a state capital, it has all the infrastructure \u2013 the government administration, all the shopping, everything is there, so it has everything you need.
\nKevin:<\/b>\u00a0 Just talking about infrastructure, are there any major projects on the horizon that are probably going to auger well for the future of Hobart?
\nJohn:<\/b>\u00a0 Not really. I wouldn\u2019t say there\u2019s a lot of infrastructure development going on in Tassie at all. It doesn\u2019t need a lot. When they build roads and bridges, they don\u2019t need to do a lot of work, and there\u2019s really no need for anything \u2013 no major projects that I\u2019m aware of going on or planned.
\nKevin:<\/b>\u00a0 John, great talking to you. John Lindeman is from Property Power Partners giving us that overview on Tasmania.
\nJohn, thank you for your time.
\nJohn:<\/b>\u00a0 That\u2019s a pleasure. As I said, it\u2019s a friendly place, a lot of it\u2019s clean, green, and pristine, and I think there\u2019s a good chance that we could find a big leap in prices in the way that we saw ten years ago.
\nKevin:<\/b>\u00a0 Good people visit there, too, John, don\u2019t they? Like you.
\nJohn:<\/b>\u00a0 I wish there were more of them coming, but of course, tourism is the future of Tassie. It has a lot of potential for investors right now.
\nKevin:<\/b>\u00a0 Good, John. Thank you very much for your time.
\nJohn:<\/b>\u00a0 That\u2019s a pleasure. Thanks, Kevin. Bye, everyone.
\n 
\nCameron Kusher:<\/strong>
\nKevin:<\/b>\u00a0 At this point in the show, I want to take a break from doing it state by state. We want to take an overview of the entire country, and to do that, no one better than Cameron Kusher from CoreLogic RP Data.
\nCameron, thanks for your time this morning.
\nCameron:<\/b>\u00a0 Thanks for having me, Kevin.
\nKevin:<\/b>\u00a0 It\u2019s a pleasure. Now, Cameron, let\u2019s have a look at the Australian market firstly and then maybe break it down by some highlights and some lowlights in each of the states, if we could.
\nCameron:<\/b>\u00a0 Nationally, what we\u2019re seeing is that the rate of capital growth in the market is slowing. We saw in March, a 0.2% increase in combined capital city home values, so they\u2019re still increasing, but the actual rate at which they\u2019re increasing is slowing. In February, for example, we saw a 0.9% increase. Over the first quarter of 2016, values are 1.6% higher.
\nNow to put that in a bit of perspective, they fell by 1.4% over the final quarter of last year, but in the same quarter in 2015, the first quarter of last year, growth was 3%. So a pickup from where at the end of last year but still softer conditions than what we were seeing 12 months ago, and that\u2019s really reflected in the fact that over the past year, values have increased by 6.4%, which is their slowest annual rate of growth in 31 months.
\nKevin:<\/b>\u00a0 Of course, this is on the back of a spectacular period of time out of Sydney, as well. How much has that influenced the market, Cameron?
\nCameron:<\/b>\u00a0 Sydney and Melbourne \u2013 being the two biggest cities \u2013 have a big influence on the overall results. The index is weighted, so the slowing that we are seeing in both Sydney and Melbourne clearly has an impact.
\nI said that nationally we saw the slowest rate of growth in 31 months. In Sydney, it was actually the slowest rate of growth for that city in 32 months, and there are clear signs that the rate of growth in Sydney is decelerating. After peaking at about 18.5% annually in July of last year, it slowed to 7.4% annual growth.
\nKevin:<\/b>\u00a0 Cameron, there\u2019s been considerable talk about an oversupply, particularly in Brisbane and Melbourne. Is that, in fact, happening?
\nCameron:<\/b>\u00a0 Definitely. If we have a look at how much stock there is to come online over the next 24 months, it\u2019s absolutely massive in Melbourne and Brisbane, particularly in inner city areas. It\u2019s definitely concerning how much new stock is coming online.
\nIf we actually look at Melbourne, for example, over the past 12 months, dwellings \u2013 so combined houses and units \u2013 have increased by 9.8% in value. But if we break that out by houses and units, you can see a massive discrepancy between the two. House values have increased by 10.7% over that period of time compared to just a 2.5% increase in unit values. And it\u2019s a similar story in Brisbane: 4.9% growth for houses over the year compared to just 0.5% for units.
\nYou can really see now that the difference in performance is widening and I think that\u2019s reflective of this huge amount of new unit stock we\u2019ve got, which has already come online but is certainly also coming online over the next few years in Melbourne and Brisbane.
\nKevin:<\/b>\u00a0 What sort of an impact will that have on the established market? Are we seeing an influx of listings coming in from established properties in those markets?
\nCameron:<\/b>\u00a0 If we have a look at listings both in Melbourne and Brisbane, new listings are higher than they were a year ago and total listings are generally a little bit lower. There seems to be a level of confidence in the Melbourne and Brisbane markets at the moment with vendors more prepared to bring stock onto the market, but isn\u2019t necessarily turning into a faster rate of sale from the data we\u2019re looking at. In fact, Brisbane\u2019s time on market is similar to what it was 12 months ago and Melbourne\u2019s is actually slightly higher.
\nIt\u2019s going to be interesting to see, but in terms of the established unit market, obviously, the huge amount of new unit stock coming online will also have an impact on the established unit market, as well, because, obviously, it\u2019s more competition for buyers and a lot of units are obviously rented, as well. From a rental perspective, people have a lot more because there\u2019s so much investor-owned unit stock now being built.
\nKevin:<\/b>\u00a0 Yes. It\u2019s the key point \u2013 isn\u2019t it \u2013 the days on market. It becomes a real tipping point when you see too much stock coming on the market. Therefore, a bit of an oversupply in stock generally, not just new off-the-plan stock.
\nIs there a point in time, Cameron, that you\u2019ve been able to establish where you can determine with the balance between days on market and the amount of stock that\u2019s available, is there a point where it moves from a seller\u2019s market to a buyer\u2019s market?
\nCameron:<\/b>\u00a0 There\u2019s no exact science to it, but if you have look over the last couple of years, Sydney\u2019s time on market got as low as 25 days, Melbourne\u2019s got as low as 30 days. They\u2019re now starting to creep a little bit higher. Whereas at the moment, markets like Brisbane and Adelaide, you\u2019re seeing a time on market figure of around 45 to 50 days.
\nI would suggest that the tipping point is probably somewhere around 40 days, but it also might vary a little bit city to city, depending on overall conditions and how quickly people are to make their decision.
\nBut certainly, I think in Sydney and Melbourne, overall the market is still favoring the seller, but it is swinging back towards a buyers\u2019 market, particularly in Sydney at the moment.
\nKevin:<\/b>\u00a0 Cameron, great talking to you as always. Thank you very much for your time. Cameron Kusher there from CoreLogic RP Data.
\nThanks, mate. Talk to you again soon.
\nCameron:<\/b>\u00a0 Thanks very much.
\n 
\nShannon Davis:<\/strong>
\nKevin:<\/b>\u00a0 It\u2019s fitting as we head towards the end of the show and this great wrap that we\u2019ve done all around Australia that we would focus very much on the Queensland state, one of the states predicted to be one of the big winners. It has underperformed in recent times, and it\u2019s certainly not up to the expectation of a lot of people. But joining me to have a look at the Queensland market, Shannon Davis from Metropole Properties in Brisbane.
\nShannon, before start, congratulations; the other side of your business, Image Property Management, just took a couple of major awards last night, as well.
\nShannon<\/b>:<\/b>\u00a0 Thanks, Kevin. It\u2019s been a lot of work down to the team, but it\u2019s good to get some recognition.
\nKevin:<\/b>\u00a0 Large Agency of the Year and BDM, Business Development Management of the Year \u2013 accolades well deserved, Shannon, so congratulations to you and the team there at Image.
\nShannon<\/b>:<\/b>\u00a0 Thanks a lot, Kevin.
\nKevin:<\/b>\u00a0 Let\u2019s have a look at the Brisbane market. What is the sentiment? What are you hearing about Brisbane?
\nShannon<\/b>:<\/b>\u00a0 The sentiment is a little bit fragile and perhaps lacking urgency. I think we\u2019re expected to do well this year and probably be the leading, or if not leading, the second leading capital city around Australia. But just because we haven\u2019t had the robust growth of the southern states, sometimes any negative news can have more of an impact in the Queensland market.
\nKevin:<\/b>\u00a0 The growth has been fairly well up to Brisbane\u2019s standard, and the median price still just under $500,000. But still, we\u2019ve had an almost 5% increase in the last 12 months, which is not too bad.
\nShannon:<\/b>\u00a0 It\u2019s not too bad considering we\u2019re in a pretty low-inflation environment and interest rates are quite low and money in the bank isn\u2019t doing that much, either. Amongst those scenarios, it\u2019s not a bad result.
\nKevin:<\/b>\u00a0 Where are the suburbs that you\u2019d be looking out for? Where is the best buying right now in Brisbane?
\nShannon<\/b>:<\/b>\u00a0 The middle ring suburbs probably have a little bit more value. The houses, especially on the south side, are really in high demand at the moment. That\u2019s probably the hottest part of the market, I think. You have areas like Tarragindi, Holland Park West and Holland Park, and Annerley, and you\u2019re still getting lots of numbers to open homes, multiple offers, and spirited bidding.
\nKevin:<\/b>\u00a0 What is the price range in, say, Tarragindi and Annerley, two of the well-known suburbs?
\nShannon:<\/b>\u00a0 It\u2019s going really quickly through the $600,000s, mid to high, and even touching $700,000. All of that seems to have happened just in the last three or four months.
\nKevin:<\/b>\u00a0 The returns in those areas for investors?
\nShannon<\/b>:<\/b>\u00a0 They can bank on about a 4% yield for houses. With that level of capital growth, it\u2019s not a bad investment.
\nKevin:<\/b>\u00a0 Those suburbs you mentioned on the south side, what\u2019s driving that growth?
\nShannon:<\/b>\u00a0 There are a lot of owner-occupiers, people who are confident of their position and jobs. They\u2019re looking to upgrade, and other investors wanting to get some land with their investment are looking that way, as well.
\nKevin:<\/b>\u00a0 What other areas would you say to avoid in the Brisbane market?
\nShannon<\/b>:<\/b>\u00a0 There is apartment oversupply in some inner ring suburbs. More than that, there is a pipeline of apartments coming, which is probably more ominous. But the supply is going to have to wait for the demand to catch up. There is going to be a lag period there. I think they\u2019re not going to lay empty because there are so many amenities in the inner city lifestyle, but it\u2019s taking a while to catch up.
\nKevin:<\/b>\u00a0 We are hearing about an oversupply or a looming oversupply of apartments, and you touched there on the CBD and those near-CBD suburbs. What are you hearing from developers? What are they saying? Are they tending to stand back a bit?
\nShannon:<\/b>\u00a0 I\u2019ve heard that some projects are being, perhaps, delayed, not being commenced. The DAs are there, but not all are shovel-ready just as we speak, so maybe a little bit of hesitancy there.
\nKevin:<\/b>\u00a0 What\u2019s impacting the markets in Queensland at present? We\u2019ll take a broader view, excluding North Queensland because we\u2019ve already covered that. But take a broader view of the South East corner of Queensland. What are the positive and negative influences on the market right now?
\nShannon:<\/b>\u00a0 Our transition out of the mining-type boom has been better than expected, I think. There are a lot of jobs being created in South East Queensland, largely down to the construction industry, and also tourism is seeing a big, robust injection. The weak dollar is really helping our economy. I think on the positive side, the South East corner s producing a lot of jobs and it has a good effect for investment.
\nNegatively, though, that sentiment can be fragile. It\u2019s an election year, as you know, so sometimes that has an effect on big-ticket items. Also, APRA changes, which were meant to take the heat out of Sydney and Melbourne, affect Queensland borrowers because we probably haven\u2019t had the same amount of equity growth, so we may start doing lower LBRs, only 90% lending, if we haven\u2019t had the same growth, that has another knock-on effect to Queensland investors.
\nKevin:<\/b>\u00a0 Shannon Davis from Metropole Properties in Brisbane, thanks for that overview on the Queensland market, and congratulations, once again, on taking out those two awards, Large Agency of the Year and BDM of the Year, for the LPMA Awards. What does that stand for, by the way?
\nShannon:<\/b>\u00a0 Leading Property Managers Australia.
\nKevin:<\/b>\u00a0 Shannon\u2019s other business, of course, is Image Property Management.
\nWell done, Shannon. We\u2019ll talk to you again soon. Thanks, mate.
\nShannon:<\/b>\u00a0 Thanks, Kevin.
\n 
\n 
\n 
\n 
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

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