It has been a long tunnel!
Way back in mid-2011, I wrote an article for Permanent Parameters called Light at the end of the tunnel?
I was bemoaning the fact that Queensland real estate market conditions were the worst I had experienced in over 30 years in the industry and I was also examining the possibility that there was light at the end of the tunnel and a recovery was just around the corner!
There were some favourable portents in the air at the time. A surge of job-seekers were heading to Queensland; economic growth was predicted in the Courier Mail to “roar back”; and there was a growing discrepancy between the low price of property in Queensland compared to increasing prices in places such as Melbourne.
Unfortunately, the missing ingredient turned out to be “consumer confidence” and we have had to endure a further hard two years before any change in the market became apparent. The tunnel was longer than we thought!
Since mid-2013, the volume of real estate sales in Queensland (particularly south east Queensland) has jumped dramatically. It is interesting to note however, that while the sales numbers have jumped, the selling prices of homes, townhouses and units still remains some 6 per cent behind the peak values of 2007. It would seem to me that there are many sellers who are welcoming the fact that there are finally some genuine buyers willing to spend, and they are taking advantage of that fact before the buyers change their minds!
Of particular interest to on-site managers is the fact that a large part of the sales increase is being driven by investors. In November 2013, 38 per cent of all new property loans were made to investors. This is a very high percentage, particularly when compared with the first home buyer percentage for the same period of 12.3 per cent – an historical low since the ABS index started in 1991.
While the figures quoted above refer to Australia as a whole, I would be surprised if Queensland does not leap to the fore for investor interest in 2014. Real estate prices are still down on historical values and rentals in many areas are providing a good gross return (with the not unrealistic hope of future capital gain).
One slightly dark cloud is the lessening in permanent tenant demand that we have seen over November, December and January. This however, may just be the cyclical downturn that is often evident at this time of the year. The next three/six months will tell the tale.
In the meantime, sales of management rights complexes remain buoyant. RAAS settled over 60 complexes in 2013 with a very large carry-over to 2014. While this is nothing like a record, it is still a sound result in this market, and reflects the continuing interest in our industry. Multipliers are holding up well and there are certainly some signs that they will increase marginally in the coming year.
Fingers crossed, folks. Maybe that light we see this time really is the end of the tunnel!
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