Migration driving expected Queensland property surge
Migration driving expected Queensland property surge
In a year riven with uncertainty, one reliable constant has been the surge towards properties and locations that offer a reprieve from the restrictive aspects of the pandemic.
Brisbane and the surrounding coastal cities of Queensland have been a beneficiary of this flight to safety and sunshine throughout 2020, and forecasters are seemingly unanimous in their expectation that this year will see strong price growth.
ANZ recently forecast that Brisbane would attract house price growth of almost 10 per cent in 2021, while SQM Research predicted price rises of up to eight per cent.
An hour or two north of Brisbane, Sunshine Beach has already set the standard for what may be ahead, recording a whopping 27.6 per cent increase in median property prices in 2020, including the highest annual capital growth in houses nationally.
This highlights the shift in buyer sentiment compared with 2019, when urban St Kilda in Melbourne saw the highest housing growth.
Importantly, the Sunshine Coast has been a popular target of internal migration for years. In the year to June 2019, the Sunshine Coast region had the highest volume of net internal migration of the 88 comparable sub-markets in Australia. The Gold Coast was the third highest sought after destination.
COVID-19 is clearly contributing to this strong demand across the Sunshine Coast and Gold Coast, as the normalisation of remote work empowers more Australians to make a tree-change or sea-change.
According to the recently released CoreLogic Best of the Best 2020 report, Brisbane’s best performing suburbs in 2020 were a disparate mix of areas all recording median price growth above 10 per cent.
Topping the list was inner suburban St Lucia (13.6 per cent growth) with its $1.36m median price tag, whereas fourth place was taken by Russell Island (12.5 per cent), which is 40km south of Brisbane and has the lowest median value in the city ($233,816).
Teneriffe finished the year with the highest median value for houses with an average sale price of $1,859,323, while Noosa Heads topped the list for units at $892,838. Both of these suburbs have continued to lead the state as Queensland’s most luxurious markets.
REIQ chief executive Antonia Mercorella, said “2020 highlighted that the Queensland property market offers buying opportunities for a variety of budgets ranging from affordable housing in Blackall and Laguna Quays through to the prestige markets of Noosa and Teneriffe.”
Blackall in central Queensland and Laguna Quays in Australia’s sugar capital, Mackay, were the most affordable locations in Queensland for house and unit prices respectively, with median sale prices of $87,790 and $76,123.
“The allure of coastal Queensland grew to new heights in 2020 with many opting for the unique lifestyle that our coastal regions provide,” Ms Mercorella said.
“The pandemic provided many Queenslanders and interstate buyers with the catalyst to make the move.”
On the move in 2021
Migration from other states has not been this high in annual terms since 2006, and will only add to the already competitive housing market in Queensland.
Although interstate buyers are showing an interest in Queensland’s tourism centres, the majority are opting for properties in the metropolitan areas.
CoreLogic’s Head of Research, Tim Lawless said employment prospects meant most interstate migrants arrive in Brisbane and other areas of South East Queensland.
CoreLogic calculated that over the past financial year, 25,350 residents relocated from other Australian states to settle in the Sunshine State.
Many residents of New South Wales and Victoria moved to Queensland, which outshone other Australian states with interstate migration numbers. Latest numbers provided by CoreLogic suggest Queensland is 90 per cent above the decade average.
This has heavily influenced the positivity of the property market in Queensland, accelerating demand and creating opportunities for the state.
As demand increases, sale prices will rise and the time each property spends on the market will decrease.
“From a housing market perspective, population growth is a reliable proxy for housing demand,” Mr Lawless said.
“Especially the interstate migration component, as it has a strong relationship with purchasing activity.”
While the demand is a positive indicator for the Queensland property market, government measures are needed, to ensure we can satisfy the needs of new Queensland residents.
“High rates of population growth need to be accompanied by government policies ensuring appropriate levels of infrastructure including transport, education, health care and essential services are all keeping pace with the rate of growth,” Mr Lawless said.
Into 2021, record-low mortgage rates will likely be a significant tailwind for property values, and should place upward pressure on prices.
Combined with a recovery in economic, some earlier factors considered a major risk to housing markets have been reduced, such as the end of mortgage payment deferrals.
It’s not just the sales market affected by interstate migration either, as the rental market tightened considerably in 2020 and a predicted rental boom is on the horizon for 2021.
“Vacancy rates remain very low in most parts of the state in early 2021, driven by Queensland’s strong local rental demand as well as interstate migrators moving to the Sunshine State,” Ms Mercorella said.
At a time when overseas migration has been disrupted due to closed international borders, Mr Lawless said interstate migration and the rate of natural increase will be the primary drivers of population growth across the country.
Propertyology Head of Research Simon Pressley is predicting the biggest increase in rents that Australia has ever seen, with Brisbane’s lifestyle credentials placing it in the centre of that picture.
“Employment and lifestyle opportunities are driving accelerated demand and locations with these factors are likely to continue to produce the highest rent increases,” Mr Pressley said.
Rent yields in many parts of Brisbane had increased by five per cent or more, up to almost nine per cent in Moreton Bay and Macleay Island. In inner city Brisbane, rents climbed between five and seven per cent and look set for further growth this year.