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Holidaymakers and property buyers flood Queensland since border reopening

Holidaymakers and property buyers

Queensland’s property and rental markets are set to soar from one of the biggest southern migrations in history with reports of interstate home hunters and holidaymakers heading north in their droves just days after the state border reopened.

With liveability, affordability and a balmy climate sparking the surge, property punters say the sunshine state and Brisbane, in particular, are on track for a record-breaking summer with holiday vacancy rates plummeting to zero amid a red-hot real estate market fuelled by interstate and ex-pat buyers.

Ray White New Farm principal Matt Lancashire said those hungry interstate home hunters had all but pounced on prestige homes mere hours after the border restrictions ended almost two weeks ago, revealing the strength of a new migration trend he said was only rising.

“I have got a list of 30 or 40 buyers who want to come to Brisbane … and one of the greatest things I have heard is that the first flight out of Melbourne on December 1 was a domestic (flight to Brisbane) and it was full,” Mr Lancashire said.

“I also had one guy who crossed the border on the first [of December] (he’d been waiting in Byron Bay), and I took him through six properties straight away.

Holidaymakers and property buyers

39 Ormuz Road, Yeronga sold for a record price last weekend, with a Melbourne couple splashing $2.8 million to secure the property. Photo: Ray White New Farm

“COVID has done wonders (for our market) … and we’ve had our biggest year (of sales) yet.

“We sold over $100 million in just half a year alone, and I reckon I’ll get $200 million by the end of the year. I’ve never done that before; my record is $130 million.”

Mr Lancashire said the level of interstate and overseas migration to Brisbane alone was unprecedented with the city set to topple Melbourne for liveability thanks to the affordability of homes and the laidback lifestyle on offer.

“And this trend is sustainable … It’s not necessarily that prices are going astronomically through the roof, it’s more that they are creeping up – but it’s also our days on market. Things are transacting incredibly quickly.”

He said the appetite for high-end homes had also sparked a domino effect into the prestige rental market, with some buyers forking out thousands per week in rent while they waited for the right home.

“High-end rentals and high-end sales – everything is just going bananas … I had eight auctions on Saturday, and I sold seven. The minimum amount of bidders was four, and I sold those seven for $27.5 million,” Mr Lancashire said.

Holidaymakers and property buyers

Matt Lancashire had a very successful auction event at the Calile Hotel in Fortitude Valley on the weekend, which he says is an indicator of the strength of Brisbane’s market right now. Photo: Tammy Law

“It’s unbelievable because in April we were rethinking our business strategy and how we’ll adapt and how we’ll support our people … and then May came, and we had a record month.”

While Queensland’s housing market has nothing short of boomed off the back of the global health crisis, it was a tougher climb back into the black for the state’s holiday rental sector, with thousands of homes sitting empty during June and July – causing millions in lost revenue from the tropics down to the Gold Coast.

But even before state borders opened to release the interstate holidaymaker flood, industry experts said the sector was all but saved by stir-crazy locals who splashed serious cash from September onwards to holiday in their own backyard.

Mark Beale, from Ray White Whitsunday, said while their holiday and property industry all but ground to a halt halfway through the year, both sales and holiday rentals had since soared with $2 million in properties sold sight-unseen last month alone, with the agency recently clocking a record week in holiday reservations.

“A lot of people are now booking their flights and coming up here because they are not travelling overseas … instead of spending $50,000 on that trip abroad they’re saying ‘let’s put that towards a holiday (on the Whitsundays),” Mr Beale said.

Holidaymakers and property buyers

Holidaymakers have rushed to book their summer vacations in the Whitsundays. Photo: Supplied

“During the pandemic, we had a lot of bookings in our holiday rentals, and pretty well everyone cancelled … we lost a lot. But as we got to August, they started to come back. Then four weeks ago we had really good bookings and last week we achieved double our personal best because people are booking their holidays for 2021.

“And there’s a lot of interstate interest, particularly from Sydney. So, while it was all south-east Queenslanders leading up to mid-November – when the borders looked like opening – it changed. And then three days before they opened it went crazy.

“On average they are paying $675 a night and the average time they are staying is now seven nights. Our sales are also double what they were last year. As for permanent rentals, we now have a 0.4 per cent vacancy rate.”

Emily Thomas, of LJ Hooker Peregian Beach, said while their Sunshine Coast holiday rentals also ground to a halt during the toughest quarantine months, it was locals from Brisbane who brought it back to life in September, with interstate families quick to take up the mantle – leading to a booked-out Christmas and January period.

“It’s almost back to normal now … and we have no properties available over Christmas,” Ms Thomas said.

Holidaymakers and property buyers

Peregian Beach on the Sunshine Coast is completely booked out over Christmas. Photo: Supplied

“During that tough period, more than 50 per cent of our holiday homes were sitting empty. We didn’t know what would happen and we normally have people from down south come up for three months in the winter period, and that didn’t happen.

“But then November – which is normally quiet – was really busy. The locals kept us alive.”

It was entirely thanks to those south-east Queenslanders that Ray White North Stradbroke agent Chris Ransley said his patch of island paradise stayed afloat, with the quiet holiday spot now undergoing a boom.

“The market on the island from both holiday rentals and sales is now really strong … it has gone from strength to strength since the island reopened,” Mr Ransley said.

“But when it was closed off for part-time owners and holidaymakers (from March to May), they were zero-dollar months – and that really tested the island. We did, unfortunately, lose some businesses – they just couldn’t afford to stay open.

“But then in June, July and August (three normally quiet months) it was huge.

“We are finding that usually, our generic customer who comes over to the island will be 80 per cent a return visitor and 20 per cent a ‘newbie’. But that’s completely changed. For June, July and August it was 80 per cent ‘newbies’, and they were people who normally go to Fiji or Bali – and instead they came here.

“And I think that strength is going to continue.”


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Market Place

Boomers a ‘Force of Change’ in Retirement Property Market

Property Market

As teenagers they invented pop culture and now—much older, collectively wealthier and arguably wiser—they are defining a new age group and re-inventing retirement living.

Millenials may have surpassed them in numbers but baby boomers are still having significant influence on world economies and trends—not least in the property market.

“The baby boomers are coming through and have become a force for change in the seniors’ market,” said Cameron Kirby, managing director of Kirby Consulting Group, a retirement and aged care specialist.

“The more progressive operators are definitely getting their ducks in a line.

“And there’s a lot of developers interested in dipping their toes in the market for the first time, some of them with more than 30 years’ experience in the development industry, because they can see there is huge opportunity.

“[But] many developers that want to enter into this space are probably a bit reticent because they’re worried about the complexity of it, they’re worried about the unknowns.

“The opportunities, however, far outweigh any of their concerns.

“And if you’re offering what the market wants, you’re going to be successful.”

Kirby will be a speaker at The Urban Developer Developing For An Ageing Demographic vSummit on April 28.

“The sector is continuously changing,” he said.

“You’ve got land lease communities and over-55 developments that have been moving into the traditional retirement village space.

“And, at the moment, there’s a lot of talk about integrated care in retirement living with a greater weighting on having more retirement villages and less aged care.”

Last year, a survey by benchmarking firm StewartBrown showed 58 per cent of aged care homes were operating at a loss, up from 55 per cent the previous financial year, and 32 per cent made a cash loss.

“Aged care has got some major challenges … but in the meantime there’s also the baby boomers coming through,” Kirby said.

“What I’ve seen over the last 10 years is a bit of a slide where low-care people that used to go into aged care are more likely to go into retirement villages and, equally, people that used to go into more traditional retirement villages are now probably more interested in moving into land lease communities and over-55s concepts.

“Land lease communities are growing very fast and are hugely attractive, there’s no doubt about that … but retirement villages have upped the ante enormously as well, they tend to offer much more wellness and are moving more towards the care side of things.

“Certainly, operators who are offering care in retirement villages are going from strength to strength.

“There’s an increasing amount of quality retirement villages with hotel and resort-style living and state-of-the-art amenities coming online. Pools, gyms, spas, saunas, cinemas, you name it they’ve got it. 

“But those retirement living operators that have a full continuum of care solution that’s what the market is demanding … [the boomers] know they’re going to need some support down the line so they’re planning for their future.

“It really doesn’t matter, however, whether you’re doing aged care, retirement, over-55s or land lease community … because demand is outstripping supply. There is a market for all of those and they attract very different types of buyers.”

Kirby said given Australia’s ageing demographic, the seniors and retirement market was a “much more defensive proposition” for developers.

“Just as healthcare is a defensive stock on the stock market, I think seniors living is a much more defensive play in the property sector,” he said.

“It tends to be more needs driven than what a straight-out residential property play would be.

“And so, I think if we are going to be headed towards a softer property market this is an area that can really shine because seniors will still have the wealth and will still want to move and look at downsizing opportunities.”


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Houses still in high demand, apartment prices lag


The price growth of apartments continues to lag rocketing house prices in many suburbs across Sydney and Melbourne, with the trend showing little signs of abating.

The widening price gap between houses and units is a long-term trend driven by land scarcity in our biggest cities, with the difference tending to be widest between houses and high-rise apartments.

While house prices in Sydney’s North Ryde soared 29 per cent in the year ended March 31, unit prices in the suburb grew by a mere 6 per cent. Similarly, prices in Homebush grew 29 per cent, compared to unit price growth of just 7 per cent.

In Sydney’s Pennant Hills, house prices grew 24 per cent, while unit prices were flat, figures from CoreLogic show.

It is the same story in many parts of Melbourne, with Essendon North house prices growing by 19 per cent over the same period, while apartment prices fell by almost 1 per cent.

Houses in Melbourne’s Canterbury saw their prices jump more than 14 per cent, while units dipped 4 per cent. In inner-city Hawthorn East, houses were up 9.6 per cent, compared to a 6 per cent fall in unit prices.

Earlier analysis by CoreLogic showed more expensive property markets, particularly those close to CBDs and in areas where there are high numbers of units relative to houses, tend to have the biggest price gaps.

Eliza Owen, head of research at CoreLogic, says one of the reasons for the relative recent poor price performance of unit markets is COVID-19 related travel restrictions, including the closure of Australia’s international borders.

Demand for investment units in urbanised centres likely fell because of their high exposure to migrants and international students.

During the height of the pandemic, many units were empty, particularly in inner Melbourne.

The re-opening of international borders is seeing arrivals from overseas rising quickly, which should help to support the prices of units in both Sydney and Melbourne, she says.

However, Owen says one area of concern remains the prospect of higher mortgage interest rates, with prices of investment units more sensitive to rate movements than houses.

Many analysts expect the Reserve Bank of Australia to start increasing official interest rates this year, possible as early as June, with lenders expected to pass on any hikes in their variable rate mortgages.

Following two years of surging property prices, the big gains made over the past year appear to be over.

Sydney house prices were 0.1 per cent lower in March after being flat in February. Unit prices were 0.5 per cent lower in March and 0.3 per cent lower in February.

In Melbourne, house prices down 0.2 per cent lower in March, following flat prices February. Unit prices were 0.2 per cent higher in March and 0.1 per cent higher in February. However, those small gains came after big falls in inner-city unit property values during COVID-19 restrictions.

Coming off the back of strong annual growth, falling affordability continues to be a key factor affecting property market conditions.

A surge in the cost of living and rising rents is restricting the ability of prospective homeowners to save and borrow.

In last month’s federal budget, the government expanded the number of places available in its low-deposit scheme.

The program allows first-home buyers, and others, to buy new or existing dwellings with a deposit of only 5 per cent, instead of the usual 20 per cent that is needed to avoid paying expensive lenders’ mortgage insurance.


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Brisbane house prices leave units in the dust

Brisbane house prices

The gap between house and apartment prices in Brisbane is now the widest in at least two decades, but is set to shrink over the next 12 months as housing affordability bites and buyers choose cheaper options, Colliers says.

Colliers residential director Queensland, Andrew Roubicek, said the price difference between houses and apartments in Brisbane has reached 45 per cent compared with an average of around 20 per cent between 2003 and 2015.

Brisbane house prices further escalated with the onset on COVID-19 when people placed a higher value on privacy with interstate migration to the Sunshine State also propelling Queensland’s property market.

Property data company CoreLogic estimates that Brisbane house prices increased 32 per cent in the year ended March 31 compared with 15 per cent growth for units over the same period.

CoreLogic said house price growth is slowing faster than units and Mr Roubicek predicted that Brisbane apartment values will rise by “at least” another 15 per cent in the next 12 months.

Mr Roubicek said rising construction costs have hit the new apartment market hard and that comparable established stock costs about 25 per cent less.

“There have been several examples of new developments achieving pre-sale [targets] only to have developers refund deposits and tear up contracts because building costs escalated to a point where it was financially unviable,” he said.

“As a consequence, developers who are looking to acquire new development sites are forced to increase their projected sales prices by around 20 per cent.

“Just 18 months ago a two-bedroom apartment in Brisbane might have sold off the plan for $9000 per square metre.

“But to build that apartment today the developer would need to achieve a sale price of $11,000 per square metre for the project to stack up.”

He said as result new stock is selling slower than established units, a trend that will play out through the rest of this year.

“The market is coming to terms with those newer prices and are seeing in the short-term better value for money in the established unit market.”

He said it is a similar scenario to when GST was introduced in 2000.

“When GST came into the market overnight the cost of housing went up 10 per cent and put more demand into the established market, where the prices of stock grew and the difference between new and second hand became narrower.”

Mr Roubicek said he believed the record price gap between houses and apartments will contract through the year.

“If you believe in history, if you believe in charts, and take a long-term view you would have to think that gap is going to narrow because everyone’s talking about affordability, everyone’s talking about interest rate movements,” he said.

“Natural forces will push what would have been a buyer of a detached home back into the unit market because of affordability.”


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