Start of a recovery
Wednesday 08 March 2017
The latest Herron Todd White (HTW) monthly report into property values in Central Queensland has for the first time in years, shown some property types entering a recovery phase.
It’s a particularly significant event because valuers work only on market evidence (rather than speculation) meaning that there is clear evidence that some property types are recovering.
In the commercial retail sector, HTW has classified Rockhampton as having entered the start of a recovery.
“While we anticipate that general real estate markets may improve in 2017, there is likely to be continued downward pressure on retail rentals and a strong presence of incentives given the current high vacancies in this sector in Rockhampton,” HTW said.
“In spite of this, well-anchored centres with good access and exposure are anticipated to hold their rental values.
“We are aware that major retailers and supermarket chains continue to search for key sites in Rockhampton for possible expansion, which provides a more positive outlook for 2017, and investors remain active for retail properties.
“However they are sensitive to tenant strength and unexpired lease term/WALE of properties.”
Not so bright news for retail property elsewhere, with Gladstone still stuck at the bottom of its market, and Mackay and Emerald still falling.
“In Mackay demand for speciality retail tenancies in neighbourhood shopping centres is moderate and vacancy rates have increased,” HTW said.
“This has been caused by the local economic downturn.
“Local sitting tenants in neighbourhood shopping centres have negotiated nominal rental reductions on market review, and we are not aware of any new leases in these centres over the past year.
“There is a risk that market rentals could ease as landlords lose their tolerance for vacancies.”
Interestingly the situation reverses for residential property according to HTW.
In this category, prices in Emerald are recovering, while in Gladstone and Mackay they are at their cyclical bottom.
Only Rockhampton is still falling.
“It’s now five years since the market crash and now is the cheapest time to buy in the past ten years,” HTW said of Emerald.
“ Most price categories are starting to firm (apart from units), and it comes down to what the buyer can afford.
“It’s the cheapest time to buy acreage especially if it’s not in good condition and it’s the cheapest time to buy a 1994 former mine home which provides average to above average accommodation for around $200,000.
“Confidence is growing again in the resource sector generated by increased employment off the back of better coal prices.
“It all depends on where the coal price will settle as to how far values rise.”
In Mackay, HTW says it's a great time to be a first home buyer.
"While the past three years have not been pretty, we now see the best buying conditions for the Mackay market in over a decade, with a plethora of options for the first home buyer,” they said.
“If you are handy with a hammer and paintbrush, there are older style 1950s to 1960s homes in the established suburbs on both sides of the river for under $200,000 and if you’re really handy, for well under $200,000.
“Moving up, there are good 3- and 4-bedroom 1990s dwellings available for between $250,000 and $350,000, and if you want everything now, you can buy brand new 3 and four bedroom dwellings starting at under $400,000.
“In the past few months, we have seen sale volumes increase right across the market.
“While this has not translated into any value gains yet, there appears to be a feeling of optimism that the worst might be behind us.”
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