Interstate investors and owner occupiers are flocking to north Queensland’s regional property market in droves, hoping to cash in on affordable housing in limited supply and offering very high rental yields.
It’s a story on repeat from Cairns and Rockhampton, to Mackay, where local agents talk of an unexpected boom.
It is also reflected in even the smallest coastal communities like Yeppoon, where the median house price is currently $590,000, which is a growth of 12.4 per cent in the past year.
Sandra Macklin, Principal, Mackay City Property told API Magazine that stock there is in very short supply, but once listed, properties sell, on average, within 14 days, and often much quicker.
“Our market is outnumbered by owner occupier buyers, but investors have certainly made a come-back, particularly in the last nine months but first homeowners are still very strong in our market,” he said.
For Mat O’Brien, Sales and Marketing Consultant, Ray White Rockhampton, the market is not behaving as he expected in the face of an economic downturn.
“It’s still absolutely nuts because it’s a supply and demand thing, as the building industry is so tight and building prices have gone through the roof, people are not transacting as often, so people who were upgrading are now stuck and not coming to market
“That makes it really tight but there’s just huge buyer demand and we’ve got lots of people moving into our area as well,” he told API Magazine.
In the far northern city of Cairns, David Forrest, Managing Director, First National Real Estate Cairns Central, said the unit market is more buoyant than it’s been in the last few years.
“There’s interest from owner occupiers and investors in units and more often we’re talking two-bedroom units, while in houses we’re probably looking in the middle market, somewhere around the $450,000 to $550,000, from an investment perspective; your real bread and butter family type home and while people are trying to buy on the beaches, that’s probably out of the range, however, if you are looking for that then that’ll be around Bentley Park and Edmonton.”
Rockhampton
Located an hour and 20 minutes by plane from Brisbane, Rockhampton is attracting high investor attention from interstate, predominantly New South Wales and Victoria.
“I’ve also run into quite a few people from Tasmania, and they’re not just enquiring, they’re actually coming through open homes so they’re here, on the ground, and I know of a few people who just flown up for the weekend to see properties too,” Mr O’Brien said.
Although low stock has seen a drop in sales volumes by 8.6 per cent, CoreLogic’s August Regional Market Report, shows Rockhampton’s median house price is $377,673, which is a 6.6 per cent increase in the past 12 months, with average days on the market in the past three months at 36.
“Initially, I thought surely we’d see something change but very rarely do we have people coming to the market because they’ve been impacted by interest rates,” Mr O’Brien said.
The listing trend with Ray White Rockhampton is currently ‘offers over’ which he says typically attracts an extra $40,000-$50,000 over the listed price and cites one example of a property that could not be sold in 2020 at $449,000.
“We listed it a few weeks ago for offers above $499,000, and it went for $551,500, and that’s typical, and it also suggests it was bought to live in, as houses over $400,000 typically are here, but it’s on the lower end of the market where there’s a lot of investors from down south – a lot,” he said.
The Real Estate Institute of Queensland lists Rockhampton’s rental vacancy rate at 0.9 per cent in June 2023, while Canstar’s Best Affordable Suburbs Report includes the Rockhampton suburb of Berserker, in regional Queensland’s top 10, with a median house price of $265,000, a rental vacancy rate of 0.7 per cent and rental yields above 8 per cent.
Mackay
Canstar’s report also includes the northern beaches Mackay suburb of Bucasia in the top 10, with a median house price in the $400,000s, which represents growth of 10 per cent over the past year, offering rental yields above 6 per cent in a vacancy rate market below 1 per cent.
CoreLogic’s August Regional Market Update found Mackay-Isaac-Whitsunday to also be in the top seven regional Queensland areas for capital growth, demonstrating 1.2 per cent in the past quarter, compared to Central Queensland (2.7 per cent) and Cairns (0.5 per cent).
“It’s a great time to be an investor.
“Vacancy rates are at 0.6 per cent and held under 1 per cent for the last three years, and they’re like the mining boom of 2012 so property owners are achieving good prices for their homes in very short time frames, but the biggest issue for an investor is not being able to buy enough investment properties,” Ms Macklin explained.
Annual residential sales to May this year in the Mackay-Isaac-Whitsundays region totaled 4,846, down 15 per cent compared to one year ago but still 35.9 per cent above the five-year average.
“The stock shortage doesn’t help first homeowners either and this is across all buying ranges because we just don’t have enough stock, so first homeowners are still in the market but they have to act quickly.
“This is often difficult with your first house because it’s normal to be cautious with such a big purchase and by the time some first home buyers have thought about all the pros and cons of the property is usually sold to someone who acts faster,” Ms Macklin explained.
She said a good home in a popular suburb would be in the $350,000-$450,000 bracket and the executive market is also doing well.
Cairns
Aspirational buyers are looking to Cairns beach suburbs, buying with the view of moving here for retirement while investors are seeing the value in the market too, Mr Forrest said.
“The holiday market up here is quite strong, so some of the yields can be quite good and you’re probably looking around 5 to 6 per cent, with standout suburbs for investment in the $450,000 and upward pricing zone, being in the middle market Bentley Park and Mount Sheridan at the moment, and we seem to be attracting attention from buyers agents from down south too, for those specific suburbs.”
House sales in the Cairns region were down 27 per cent in the year to May 2023, with 6,829 sales recorded in that period, which is 26 per cent lower than May 2022, but remains 7.1 per cent above the five-year average.
“Our biggest issue here is stock on the market – we’ve got very, very low stock and I think we’re about 60 per cent down according to REA figures.
“It is a very, very significant reduction in numbers and I am getting more and more owners ringing up concerned about state and federal changes that are not investment friendly,” he said.
“I look at some of the things that are written about vindictive notices to quit and all that sort of thing, but I’ve been in real estate since 1980 and if there’s been anything like that, I’ve never seen it, It’s really a beat up.
“I’ve just spoken to a landlord who through Covid looked after their tenant and this is the sort of thing that you get from the mum and dad investors; they don’t want to be unfair, but all the proposed changes are just making it less attractive at a time when landlords are paying more than ever.
“Their insurance, maintenance costs have gone through the roof – most of the mum and dad owners we speak too, we advise them what the market is doing and they say they’d rather be fair, let’s just go halfway.
“That’s not an uncommon conversation.”