Any Queensland property market recovery likely to be gradual

The Queensland property market is set to improve in the second half of 2012, with signs it may already be on the upswing in many areas, but any recovery is expected to be gradual, according to the First National Real Estate 2012 Property Market Outlook Mid-Year Update. 

The Update, released this week, is based on a survey of the 400+ member network, and provides an insight on what member agents expect the market to do, drawing on their experience at a grass roots level. 

The change of government in Queensland is expected to build on the growing sense of optimism seen in the first half of the year. 

The main reasons for the positive predictions are interest rate reductions, the market having bottomed out and improved affordability. 

The key challenges facing the state’s property market are vendors adjusting their price expectations to meet market demand and consumer nervousness, along with rising costs of living, which are particularly relevant for the areas of Atherton Tablelands, Gold Coast, Sunshine Coast, Wide Bay Burnett, Darling Downs and Brisbane. 

Economic uncertainty, both for the state and overseas, coupled with the high Australian dollar, will serve to curtail confidence from a market and business and consumer perspective. 

While stamp duty reductions and lower interest rates have generated better buying and economic conditions, improving market confidence, the market itself is still relatively nervous, which is dampening what would have been an even greater market improvement. 

The Update says the strongest growth will come from the investor sector, followed by upgraders, then first-home buyers and lastly retirees. 

Investor activity in Queensland will be driven by greater returns on investment dollars and improved affordability with lower prices and reducing interest rates. 

Property prices should stabilise, with house prices faring a little better than apartments/strata and land prices, especially in the Darling Downs and Sunshine Coast regions, and some parts of Brisbane. 

The rental market in Queensland is expected to remain relatively strong overall, although this will depend on the region. 

Even with the improved market conditions, affordability remains an issue for many renters, especially in the area of Moreton, the Sunshine Coast and some parts of Brisbane. 

Interest rates are expected to reduce further, adding to improving affordability levels, stabilising prices, strengthening buyer confidence and stimulating activity in the slow property market. 

Rising unemployment and increasing living expenses, including the introduction of the carbon tax, are expected to put pressure on mortgage holders, with 57% of Queensland members expecting increased mortgage defaults in their region. 

The commercial property market is displaying signs of recovery, especially the Gold Coast’s office and industrial markets, where investors are locking in strong returns. 

The commercial property market in Queensland has moderated in recent times, with property prices remaining stable, and this is expected to continue for the coming six months. 

Construction for the 2018 Commonwealth Games, the election of Campbell Newman and the Gold Coast rapid transit project have delivered a life in confidence in the region. 

The strength of the mining and resources sectors is propping up the rural property markets in the state, where investors are expected to capitalise on strong rental markets. 

Activity in rural property markets will be driven by the key significant factor of commodity prices and value of the Australian dollar as it impacts on the state’s export potential.

Mike Gray is chairman of First National Real Estate Queensland.