Is all this investor interest in property a good thing?- Michael Matusik

Two out of five houses sold to investors last year in Queensland.

Investor interest in townhouses & apartments is much higher, with seven out of ten townhouses selling to investors & 85% of apartments being sold to non-residents.

Sales to investors are up on 2012, by about 10%. During 2014 they will get even higher.

This Missive outlines where most of the property investment buying has been taking place across Queensland.

Houses

Most houses in Queensland – like the rest of the country – are purchased by owner-residents. Investor interest is highest in mining-related regions & in resource-based towns. Investment interest remains high in those areas, albeit at a lower level than in previous years.

The chart below shows the proportion of house sales made to investors by select Queensland municipalities over the last 12 months.

Those shires in SEQ have been highlighted in blue.

Property investor interest – so far this cycle – has been more limited in the south east corner of the state than in Queensland’s regions. This is a trend that is somewhat consistent across townhouses & apartment sales as well.

Qld-houses-investors

Townhouses

More townhouses sell to investors than to owner-residents. A trend which is not only evident in off-plan/new townhouse sales, but also for resales too.

Owner-resident interest does increase at resale, but only if the townhouse complex has certain features. These include:

  • three or four-bedroom product
  • ensuites
  • off street parking for two cars
  • private courtyards
  • duplex arrangements
  • smaller complex
  • well located
  • acoustically proofed i.e. limited road traffic noise

And again, as shown in the chart below; the owner-resident interest in townhouses is highest in the south-east.

Townhouse living is becoming more popular in Brisbane & on both the Gold and Sunshine Coasts.

Townhouse development is expected to increase, at the expense of new house/land, across SEQ in coming years/decades.

Think townhouses, more maybe, than apartments.

Qld-townhouses-investors

 

Apartments

There is more consistency across Queensland when it comes to apartment sales to investors.

The vast majority of Queensland apartments sell to investors. The Queensland apartment market is driven by investment selling.

Reflecting the recent market downturn, investor interest in apartments was lowest on the Sunshine Coast; & in Cairns & Townsville last year. In was much lower on the Gold Coast (in 2011 & 2012) than the chart below suggests. Given the rock-bottom prices being offered for Gold Coast apartments in recent years, it is little wonder that investment interest has increased.

Owner-resident interest is there for resale apartments, but not to the same extent as townhouses or detached homes.

Apartments that attract the most owner-resident resales usually are:

  • in small complexes
  • have high quality – the four Fs
  • in an established neighbourhood
  • similarly sized (within the same development)
  • on a unique site – view, aspect, height

Qld-apartments-investors

Comments

For mine, too much property is still being sold to investors across many parts of Queensland.

The longer term averages are 30% for houses; 65% for townhouses & about 75% for apartments.

Yet, we will see more investment selling of Queensland property as the residential recovery gains more momentum during 2014 & 2015.

Investors should be wary of buying in a project or location which is seeing a lot of investment selling. There is only so much rental market to go around.

Investors also have a better chance of getting a better resale if the dwelling has owner-resident resale appeal.

Sadly, a lot of Queensland’s new residential projects of late, don’t.

[post_ender]



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Michael Matusik

About

Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive


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