Sunshine & A Silver Lining

The Age

Wednesday March 28, 2001

The GST-induced slowdown has helped ensure the oversupply in the Queensland residential market during the 1990s has been absorbed.

"Every cloud has a silver lining," says Michael Matusik, of Matusik Property Insights (MPI), Queensland's leading property consultant and market analyst.

"I believe the Queensland market has troughed and is about to enter an upswing," Mr Matusik says.

In Queensland's south east - Brisbane - and the Sunshine Coast and Gold Coast (see page 42) - property is looking healthy after the oversupply of the 1990s. Brisbane continues to have the highest population growth in Australia, and this year, the Brisbane area has already recorded 47 per cent of all growth in Queensland.

According to MPI, house prices in the Queensland capital have risen 7.5 per cent per year since 1995-96 and last year rose 11.2 per cent. In that time, apartments increased by 6.1 per cent per year and 11.9 per cent last year.

"Falling interest rates will benefit the Queensland housing market," Mr Matusik says.

MPI figures show that for every 1 per cent fall in interest rates, new residential homes and established residential sales increase about 10 per cent.

What should you know when investing in the Brisbane residential market?

MPI lists the following:

* Prices peak about three years after Sydney (mid-1997) and 18 months after Melbourne (last year).

* It's a cyclical market with steep peaks and flat troughs.

* There is little growth outside the market peaks.

* Once it enters an upturn, the market rapidly recovers, with percentage growth on par with Sydney.

* There was limited price growth during the 1990s due to oversupply and, more recently, lower interstate migration.

Although prices in Brisbane are set to rise, Mr Matusik believes the inner-city circle may have passed its peak for this cycle.

"Buying close to a railway station within a middle-ring suburb (3-7km radius from the GPO) offers a lower entry point than buying closer to the CBD," he says.

These areas "are not yet overcrowded with investors and at present offer more potential for price growth than inner Brisbane or the bayside".

The five suburbs he nominates are:

* Windsor, median house price $174,000, 4.7 per cent p.a. growth since 1996;

* Wilston, median $235,000, 6.2 per cent p.a. growth since 1996;

* Newmarket, median $195,000, 4.8 per cent p.a. growth since 1996;

* Alderly, median $177,500, 3.7 per cent p.a. growth since 1996;

* Enoggera, median $141,000, 2.5 per cent p.a. growth since 1996.

PRD Realty's director of research Adam Gray says the average house price in the inner city - deemed to be about 5km from the city central - had grown almost 6 per cent a year since '92.

Suburbs in the city's middle rim, about 5-10km from the CBD, and bayside suburbs had also grown by 3.2 per cent, 2 per cent and 2.8 per cent p.a. respectively.

"From our research, we were not surprised to find that Brisbane's top 10 ranked suburbs over the past five years have been dominated by those within the inner city," Mr Gray says.

He sees the current hot spots as the following suburbs (ranked in order):

1. New Farm/Newstead, 2. West End,

3. Kangaroo Point, 4. Spring Hill,

5. Stones Corner/Woolloongabba,

6. Yeronga,

7. Ascot/Hamilton,

8. Windsor/Wilston,

9. Wynnum/Manly,

10. Bulimba/Hawthorne.

Mr Gray's predictions for Brisbane is that the inner-city hot spots listed will continue to outperform other areas within Brisbane.

He contributes these findings to several factors, including a trend in the Western world to move closer to the city, and the focus from the Brisbane City Council on its inner city and continuing infrastructure projects.

What's hot on the Gold Coast

Beachside locations continue to tempt investors and offer favorable returns, provided you know where to look. While the past five years on the Gold Coast have experienced a slowdown in population growth, it remains one of the fastest-growing regions in Australia.

The hot spots are Main Beach - said to owe its creation to Melburnians; Surfers Paradise/Broadbeach; Labrador; Burleigh Heads; Hope Island - a major residential development between Brisbane and the Gold Coast; and Miami. Among these areas are some of the best beaches and lifestyle choices in the country.

There were several reasons for the drop-off in recent times, according to PRD Realty's research manager, Nick McGuire.

"Generally, the Gold Coast's residential market was oversupplied in the mid-1990s, but since then, a slowdown in construction, reduced levels of resale stock and steadily increasing demand for residential property, have reduced the oversupply and transformed the market," he says.

"We feel this market, especially the residential area, is presently in a position to experience a period of strong price growth again.

"The forecast for the coast shows a significant increase in population growth fuelled by

a dramatic turnaround in interstate migration."

Mr McGuire says infrastructure spending should also play an important role in the Gold Coast's growth over the next five years. This, combined with an undervalued residential property market and a turnaround in interstate migration, is expected to become the catalyst for an increase in Gold Coast property.

Meanwhile, there is already a strong demand for prestigious apartment living. Sales for the Mirvac Group's $120 million Liberty on Tedder residential development at Main Beach on the Gold Coast have soared, totalling nearly $22 million between December and the end of February.

Mirvac CEO Chris Freeman says: "Our buyers have come from the Gold Coast, throughout Queensland, Sydney, Melbourne, the USA, Korea, Singapore, Malaysia and New Zealand."

Investors soak up the sun

Few other coastal regions have sustained their position as easily as the Sunshine Coast. That's not surprising. Beguiling beaches, sunshine, saltwater creeks and easy access to the Pacific Ocean have made it a paradise for holiday-makers and enticing for investors.

While the investment options are wide and varied - from exclusive mansions in Noosa to middle-of-the-road homes in Maroochydore - apartment-style investment, which caters to the constant flow of visitors, has been a favorite.

Russ Allison, principal of Warren Evan Noosa, says the top end of the market has been fairly buoyant for some time: "Prime building allotments, with ocean frontage and ocean views sell particularly well. Prices have continued to escalate from halfway through last year.

"In Noosa, it's not unusual for it to double in five years. Fairshore apartments in Hastings Street is a prime example.

"Noosa shows very strong capital growth, not high rental returns."

And, according to PRD Realty, buyers who invested in the Sunshine Coast 5-10 years ago, are now reaping the rewards. In some instances, tripling their money!

PRD Realty's research manager, Nick McGuire, says five key areas on the Sunshine Coast are considered to be the best choice, often returning up to 16 per cent in capital growth.

"Included in what we identify as the hot spot patch are some obvious, and new locations, including Noosa Heads, Minyama Waters and Sunshine Beach, followed closely by Noosaville and Peregian Beach," he says.

"With a further boom expected over the next five years, the areas to watch will be the central to southern end of the Sunshine Coast, including Marcoola, Mooloolaba and Caloundra, where value for money is unrivalled."

Although the residential mix in those areas consists of detached houses, townhouses and units, the most popular choice for investors to date has been for well appointed, large units with water views, priced from $200,000-$400,000.

3/4 Fraser Terrace, Highgate Hill

mPGSPECS

Agent's quote $410,000

Bedrooms 2

Features Large, north-facing deck overlooking Brisbane River, close to the CBD

and restaurants, gourmet kitchen, double garage, security system

House area About

18 squares

How old About 1 year

Private sale

Telephone (07) 3846 1925

(Nanette Blunt)

One in a three-apartment block, with river views out front and a giant Queensland fig out the back, and described by its owner as "a fabulous spot". Just 3km from the CBD and close to the trendy West End restaurant district and Queensland University, the apartment has two bedrooms, the master with ensuite, and two bathrooms. There's also a gourmet kitchen with European, stainless steel appliances and granite benchtops, and the large deck with a northerly aspect. The body corporate fees are $300 a quarter.

8 Carnousite Place, Cairndale

mPGSPECS

Agent's quote $448,000

Bedrooms 4 plus study

Features Entertainment area with bar, in-ground pool, master bedroom with large ensuite, spa and walk-in-robe, granite kitchen benchtops

House area About

39 squares

How old About 6 years old

Private sale

Agent Remax

Telephone (07) 3843 1355

Ideal for those wanting to entertain and enjoy Queensland's warmer weather, this home is designed to combine the best of indoor and outdoor living.

The formal lounge/dining area, kitchen and family room all face north over the entertainment area, which has a bar and in-ground pool. There are four bedrooms - the

master with a parents' retreat and large ensuite with spa and walk-in-robe - two more bathrooms and a study. Located 15km from the CBD, the 970-square-metre block is extremely private.