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REIQ's Queensland Market Monitor Released

​Signs of life on the horizon for Queensland’s property market

Editor Nicole Madigan Data: Taun Vos Analysis: Nicola McDougall and Kieran Clair

Record low interest rates for the majority of the June quarter, followed by two subsequent cuts to the cash rate of 25 basis points each, have done little to boost the Queensland property market, though signs of an impending upward turn are evident.

Despite interest rates being lowered to 1.00 per cent, housing demand continued to decline throughout the quarter, a trend that has persisted over the past few years. While interest rates have held since July, the true impact of the cuts, if any, will become evident over the next few quarters.

Overall, the Queensland housing market remains sluggish, with sales volumes easing, although house prices are proving resilient.

Reserve Bank of Australia Governor, Phillip Lowe, said while the outlook for the economy remained reasonable, the uncertainty generated by the trade and technology disputes was affecting investments, meaning that the risks to the global economy were tilted to the downside.

“Economic growth in Australia over the first half of this year has been lower than earlier expected, with household consumption weighed down by a protracted period of low income growth and declining housing prices and turnover,” said Mr Lowe.

“Looking forward, growth in Australia is expected to strengthen gradually to be around trend over the next couple of years.

“The outlook is being supported by the low level of interest rates, recent tax cuts, ongoing spending on infrastructure, signs of stabilisation in some established housing markets and a brighter outlook for the resources sector.”

While employment has seen consistent growth over recent years, with labour force participation at a record high, the unemployment rate has remained steady at 5.2 per cent, as at July 2019.

Agents continue to report that borrowers are struggling to access credit. This, combined with strong competition for borrowers of high credit quality, is putting further pressure on the market.

But there are signs of improvement in the Queensland residential market overall, which has historically delivered consistent growth, and continues to follow that trend.

Offering a unique lifestyle to its residents, along with relative housing affordability, it’s little wonder Queensland’s internal migration rates remain the strongest in the country.

Consistently high numbers of residents relocating from the southern states to Queensland will see the local population rapidly increase, pushing down supply and in turn, driving prices upwards.

From an investor perspective, Queensland continues to offer ample opportunity, due to its strong rental demands, increase in rental population and steady rise in rental rates.

Investors are also attracted to Queensland’s affordability and heathy returns on investment, which are generally more lucrative than in the southern states.

Key Findings:

• Demand continues to decline across housing, units and land sales markets, a downward trend that has persisted over the past few years.

• An increase in property listings year on year for both houses and units, alongside an increased number of days on market, as well as slightly increased vendor discounts indicates increased market pressure as supply rises while demand slows.

• Mackay and Rockhampton are standout performers again this quarter, with growth in Mackay at 1.5 per cent and Rockhampton at 2.3 per cent, compared to last quarter.

• Year on year, Sunshine Coast (SD and LGA), Noosa and Fraser Coast continue to be strong performers with Noosa topping the list at 2.6 per cent growth.