From the myriad factors that determine a property’s price potential, location – and specifically proximity to community services, and availability of facilities and infrastructure – seems to hold firm as the perennial key to future capital growth.
Schools, shopping centres, public transport, parks and, increasingly, cafes and restaurants, are all desirable aspects of suburban living and favourable attributes to potential buyers and potential tenants.
Commuting time in general will always be a key consideration for residents of metropolitan areas, and are therefore the driving force behind buyer demand for inner to middle ring suburbs. And as our State grows, access to good local amenities will be the driving force behind the growth of our outer ring suburbs in the south east particularly.
Infrastructure projects also have an important role in the growth of property prices. Improved infrastructure provides improved services for local residents as well as providing improved access for surrounding regions.
New infrastructure also plays a key role in creating local and regional employment opportunities and such projects are generally in line with government planning instruments at both a local and regional level.
While local residents will find the construction phase of such projects to be of some nuisance, they will be very much benefitted from the improved access and facilities once complete. This in turn will also increase the value of their properties.
With a number of infrastructure projects underway or nearing completion, such as the Airport Link here in Brisbane, the suburbs directly affected are set to benefit in the very near future, if not already, as more people find the area a desirable location to live.
Current property prices, low interest rates, as well as vacancy rates in most areas below 3 per cent, all paint very favourable conditions for property investors. And with the number of investors in the Queensland market still tracking below historical averages, competition is also low, which means better bargaining positions for buyers.
The REIQ’s June residential rental vacancy rate report found vacancy rates in Brisbane to be 2.1 per cent – a slight easing compared to March when it was 1.7 per cent. This easing however is typical for this time of year with school holidays and university terms ending. A vacancy rate of 3 per cent is commonly accepted as the equilibrium point where demand and supply are balanced.
Vacancy rates continue to be particularly tight in Central Queensland where the resources boom is putting substantial pressure on the pool of available rental properties. Rockhampton recorded a vacancy rate of just 1.1 per cent in June and Toowoomba was only 1.2 per cent. Mackay posted a vacancy rate of 1.7 per cent. While in Cairns low investor activity has seen the rental pool continue to dry up, with the vacancy rate now being 1.9 per cent. A significant difference compared to 12 months ago, when vacancy rates were above 3 per cent.
In most other areas where vacancy rates are below 3 per cent, the relatively low numbers of active investors over the past two years means rental supply levels have gradually been absorbed particularly as there has also not been the usual churn of young renters becoming home owners which has added to the current pressure on supply.
By Yvette Burton, research analyst, REIQ