The
long-term fundamentals for Queensland property
remain very solid.
Along with lots of other places, the Queensland investment property market has come under the spotlight in recent times. Having experienced exceptional price growth over the past few years, experts are now saying the market there has turned. Where last year everyone was talking about Queensland being a seller’s market where prices were going up, the general view now is that it’s a buyer’s market and prices are dropping.
And they’re now saying over the next 12-18 months prices are likely to drop further. Some of the experts say they’ll drop a little, some say a lot.
This type of talk sets the alarm bells ringing for a lot of people who are considering investing in property. Why on earth would you invest in a place where prices are going down? Good question indeed.
Well firstly, we need to remember that none of these so-called experts accurately predicted the price boom which has occurred in the very same area over the past 18 months, or the one that happened in Perth at the same time. Nor did they pick Sydney’s biggest-ever price boom right after the 2000 Olympics. In fact they mostly picked the opposite, wrongly predicting prices would crash. History shows “expert” opinions on what’s going to happen in the property market is actually pretty much like crystal ball gazing and is of little real value when making investment decisions.
The other thing to remember is that property is not a short-term investment. Trying to second guess what might happen over the next couple of years is in some ways irrelevant. It’s in the long term that real wealth is created by investing in property.
So the only way to make a good decision is to look closer at the facts that underpin the long-term future of the area. And what we’re really looking for is the same thing as in any economic equation – what is the long term demand and supply equation likely to be?
The reason this question is so important is that it directly determines price growth. Put simply; if there is plenty of housing to cater for the demand, whatever that might be, there won’t be much competition and prices will not grow quickly. But if the demand is greater than the supply, meaning there are more people wanting houses than there are houses available, competition will be strong and prices will grow more quickly.
There are cold, hard facts available which make the real picture clear.
The first facts relate to demand; – how many people are looking for housing? In a report compiled by KPMG, “Population Growth Report 2007”, seven of Australia’s top-ten fastest growing towns are on the Queensland coast. The Queensland Treasury says that over the next year, 1800 people per week will move to Queensland, and all of them will require somewhere to live. Most of these people will come from overseas, but Queensland is still the most popular choice in Australia for interstate migration as well and has been for some time.
Let’s face it; Queensland is an attractive place to live. The weather’s great, there are beautiful beaches along the coast, and housing is still more affordable compared to other capital cities. The state has a buoyant job market and a growing economy - the government has committed to spend $100 billion over the next 20 years upgrading everything from health and education to roads and railways.
So it is clear there is a strong and increasing demand for housing, with no obvious signs that current trends are likely to change.
Next up we need to look at the supply side of the equation – how much housing is available?
The Housing Industry Association’s national chief economist said that Queensland has not met new dwelling demand for a couple of years. In fact, he said that by June next year the state will be about 5000 dwellings short of demand for new homes. His view is that unless there is a strong recovery in building approvals, this gap is set to continue for some years to come.
So we can see continuing and increasing demand and limited supply. Simply put, Queensland ticks all the boxes for positive price growth in the long term.
Like our relationship with our clients, our attitude towards property investing in any given area is based on a long-term commitment. It’s worked for us well over the past ten years – our successful track record speaks for itself. It’s not rocket science – we just look at the facts that relate to the long term and don’t get distracted by all the talk of what could happen in the short term. In Queensland it’s clear the economy is solid, demand is strong, and supply is constrained. It’s why we’ve been working there for some time, and why we’ll continue to work there in the future.
Beautiful one day, perfect the next!
by Stephen McCarthy
If you’d like to find out how McCarthy Group can help you discover investment property hotspots in Brisbane, give us a call on 1300 850 318, or visit http://www.mccarthygroup.com.au/free_consultation.html.
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