Property News

Rate rises lead to median price movements

14 December 2006

The Brisbane property market has shown widespread resilience but effects of the three interest rate rises have begun to show, according to the latest statistics released by the Real Estate Institute of Queensland (REIQ).

REIQ Chairman Peter McGrath said the interest rate rises have caused some notable movements in median house prices – both in the south east corner and throughout the state.

The September quarter results highlight positive developments in the state capital, which recorded a median price of $382,000, an increase of 2.4% since the June quarter 2006.

"The middle ring suburbs (between five and 20 kilometres from the city centre) were the strongest performers in Brisbane over the September quarter, with a high volume of sales and robust price growth," Mr McGrath said.

In the north-west corridor, Everton Park (9.1%), Ashgrove (7.5%), Windsor (6%) and Kedron (5.2%) all performed particularly well.

Similarly in the east, suburbs such as Hawthorn (13.5%), Murarrie (7.1%) and Camp Hill (5.7%) showed similar trends.

Mr McGrath believes a major attraction in these areas is the dining and entertainment precincts that are increasingly considered as highly desirable features of suburban living and favourable attributes to potential buyers.

"Brisbane has really come of age as a cultural and entertainment hub. Residents appreciate the outdoor dining and café experience and this has created a stimulus for the growth of trendy dining and retail strips in many middle-ring suburbs," he said.

According to the REIQ, the other factor contributing to the remarkable growth experienced in these areas is the increasing number of higher income buyers who are diverting their attention away from the higher priced inner suburbs in the wake of escalating loan costs.

"The effects of rising interest rates are starting to influence buyer behaviour apart from the most expensive levels of the market, where the demand for prestige property continues unabated," Mr McGrath said.

In Brisbane's surrounding shires, sales volumes and median price growth declined over the quarter in Ipswich (-2.1%), Logan (-0.6%) and Redland (-2.1%) during the September quarter, while Caboolture remained steady with a median sale price of $270,000 and Pine Rivers and Redcliffe saw only small gains with 1.6% and 1.7% respectively.

"Lower income earners and first home buyers have been the hardest hit by rising interest rates and decreasing affordability this year. Nowhere is that more evident than in Brisbane's outer suburbs and surrounding shires during the September quarter, where price growth in the more affordable areas has slowed," Mr McGrath said.

Over the 12 months ending September 2006, however, median prices in Brisbane's surrounding shires have shown solid growth as a result of the variety of affordable options still on offer. The Gold Coast experienced fewer sales in the quarter compared with the same period last year but maintained a steady median sale price of $400,000, the second highest of any LGA in the state.

According to Mr McGrath, local agents have indicated that middle income buyers on the Gold Coast have begun to spread out and move throughout a wider range of suburbs over the past six months.

"They have a budget and they are willing to hunt around in a wider variety of locations to find the property they want, rather than choosing a single suburb and homing in on it exclusively," he said.

"Central Gold Coast suburbs such as Ashmore, Parkwood and Biggera Waters experienced good growth in the September quarter, largely due to the fact that they represent such good value for money."

Mr McGrath believes that suburbs in the Gold Coast's northern corridor have also seen the effects of this year's interest rate rises.

"Sales volumes remain high in this fast growing region but buyers are tending to seek out more affordable properties that better suit their budget."

The Sunshine Coast house market recorded fairly flat figures with Caloundra on 1.6%, Maroochy on -2.6%, and Noosa on -3.4%. However, Mr McGrath explained that while affordability was still a major issue in the region, anecdotal evidence indicated a jump in activity since September.

"While the Sunshine Coast's market typically heats up over summer, many agents have reported that the first two interest rate rises this year seem to have spurred people into buying sooner."

Across the state, Queensland's mining towns continue to benefit from the resources boom and subsequent population growth. Mt Isa recorded a very strong 10.8% increase in the September quarter, with Bowen (8.5%), Dysart (8.3%) and Gladstone (5%) among other solid performers.

"The Dalby shire in the state's inner south-west recorded a notable 16.5% price growth over the quarter, on the back of a number of industrial and infrastructure developments that have been announced for the region."

"Dalby's population, currently about 12,000, is expected to increase by 50% over the next five years as more and more people settle in the town and take advantage of its existing, and rapidly growing, infrastructure," he said.

In the north of the state, towns and shires from Home Hill right through to Port Douglas have experienced solid price growth over the quarter.

Mr McGrath said the ongoing strength in the Townville market can, in part, be attributed to its relative affordability compared to other major coastal centres such as Cairns and Mackay.

"Townsville remains one of the more affordable regional centres in North Queensland and, like other areas of the state, it is experiencing a very low rental vacancy rate and continuing to attract investors," he said.

"The defence contingent and large industry base in Townsville have also brought hundreds of people to the area and contributed to the strong price growth."

Townsville and Thuringowa recorded increases of 6.8% and 3.1% respectively over the quarter.

Cairns saw increased sales volumes in the September quarter as the median house price for the shire climbed 3.3% to $310,000. Mr McGrath said the Far North Queensland town was benefiting from high demand and a tight supply of houses.

"This year's interest rate rises have resulted in a downturn in new residential construction. This has increased the pressure on the established housing market, and helped to force it up," Mr McGrath said.

"Growth is likely to continue with demand predicted to stay strong. Cairns has recorded a 13.2% median house price increase to the end of September, so growth has easily outstripped this year's rate rises."

Mareeba (8.2%) and Johnstone (7.6%) were among other strong performers in the far north.