November 19, 2013
Here is a question for you. How many homes sell for under $250,000 across Queensland? The answer is many more than you probably think.
Out of sync
Most property commentary – like journalism per se, these days – tells you what you want to hear. The digital medium, especially, allows – no, in fact – encourages the media cycle to build around a single issue. Fact or fiction, it matters not. They seem to get a life of their own.Witness of late the “housing bubble”; “Chinese buying”; “unaffordability”; ‘”apartment living”; “mining-town bust”; “interstate influx” and “top-end recovery” - to name just a few.
The media like to sync up. The storytelling is repeated – often embellished over time – without the base premise being questioned. We are often out of sync. It is often on purpose. We like to question most trends. Much of what is written about the property market – in my experience – is either wrong or at best only half right.
It takes time & effort to question a topic. Data needs to be found, analysed & placed in a digestible form. Sometimes we find very little to report. It is often a frustration to our younger staff when we don’t use much (sometimes none) of the material they have dug up. “Less is more” is the motto around here. Every missive is like an experiment. We spend a lot of time thinking through the constraints of an issue – like how many overseas home buyers are there really in Australia – rather than accepting what has already been reported about a certain topic. We like to keep our sample to markets we know very well. That’s why we focus largely on Queensland real estate.So with that preamble in mind, let’s answer the question.
There were just under 100,000 improved (i.e. houses, apartments & townhouses/duplexes etc., not land) settled across urban Queensland last year.
There were 67,000 detached house sales across the 25 municipalities in our sample; 24,000 apartment sales & just under 7,000 attached dwelling sales, like townhouses.
One in ten Queensland detached houses sold for a price under $250,000 - about a third of these were in SEQ. One in five apartments sold for under $250,000 (over half in SEQ) & one in eight townhouses sold for under a quarter of a million, many of which were in the outer Brisbane suburbs.
When looking at the volumes traded below $500,000 – two-thirds of the detached houses sold in Queensland trade for under half a million; 85% of apartments do so & three-quarters of townhouses sell in this price range.
When looking at the more expensive stock – just a third of the detached houses sold in inner Brisbane, for example, trade for more than $750,000. On the Gold Coast (for detached houses) it is 15% & 11% on the Sunshine Coast. Less than 7% of Queensland’s apartments sell for more than $750,000. This market share falls to 2% for townhouses.
What does this mean? Well, a couple of things:
Most homes in Queensland still sell for under $500,000. Established homes can still be purchased in many parts of the state – even in the capital, on both coasts & in major regional centres – for under $250,000.
There are affordable housing options out there. True, they all need a bit of TLC (some much more than others) but basic shelter is very affordable in Queensland.
This wide bell curve of second hand property for sale under $500,000 is making new home sales difficult. Second hand property in Queensland is much cheaper, in most locations, than new stock. For many buyers – especially first-home buyers; owner-residents with families at home & for many investors – this second hand market is perceived as better value.This volume of affordable Queensland property – when viewed by the Sydney/Melbourne and even Perth markets – will see (it is already starting to happen, albeit slower than past cycles) more buying into Queensland from interstate & even overseas.The top-end of the Queensland residential market is very thin. It is likely to remain so. Much of this market is anchored by discretionary spending & in those ‘good-time’ markets.
The current improvement is coming from a very low base. Great prices are available. The top-end market in Queensland seems – finally – to be at the bottom of the cycle. Some potential future gains are possible; but much less than some agents are advocating.
Top-end in Queensland – as an investment – can also be spelt ‘disaster’.