Between them they have more than 500 years experience in real estate, and have survived the rollercoaster ride that is Queensland’s property market — from the ‘recession we had to have’ to the GFC, the mining downturn, pandemic and everything in between.
Sixteen real estate veterans from across Queensland have shared their predictions for the next stage of the property cycle, and given their advice to buyers, sellers and renters who are navigating a new wave of interest rate hikes, soaring inflation and economic headwinds.
And it won’t be for the faint hearted, according to Area Realty FNQ principal Karen Ranie, who has clocked 42 years in the industry.
“Many of the homes sold in the past six months have doubled in value (but) the contract sale price to bank valuation ratio has been a very real concern,” she said.
In other words, new homeowners face the double whammy of rising rates and falling values, with interest rates ratcheted up by a shock 0.5 per cent on July 5.
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Governor of the Reserve Bank of Australia Philip Lowe (Photo by Louie Douvis – Pool/Getty Images) That followed the first lift in the official cash rate from 0.1 per cent to to 0.35 per cent – the first rise since November 2010 – in May, and again in June, up 0.5 per cent to 0.85 per cent.
The official cash rate, following the July hike, now sits at 1.35 per cent, and the pain looks set to continue with many experts tipping the cash rate to hit at least 2 per cent by Christmas.
Professionals Edge Hill/Cairns principal Billy Gartner, who has 35 years in the game, said the biggest challenge facing buyers now was affordability.
“Thirty years ago, it was possible to buy a property for $50,000 to $75,000, renovate it and resell it and make a $30,000 to $50,000 profit,” he said.
“Today, you need to spend $400,000-plus to hopefully get the same result.
“Even though interest rates were very high (back then), it still took a smaller percentage of your income to pay off a mortgage.”
House values on the Sunshine Coast soared during the pandemic property boom.Supplied.And the rental market was now “in a state of crisis”, according to the veteran agent, whose sentiment was backed up by Ray White Surfers Paradise Group chairman Andrew Bell, who himself has a whopping 47 years in the property game.
“I truly can’t recall a period of time in which renters faced a housing crisis,” he said.
“Most of the time the rental market has either been in a balanced situation … or from time to time there was a glut of rental properties which very much favoured tenants.”
While vacancy rates in places like the Gold Coast hit records lows.Supplied.But it is not all doom and gloom.
While most of the agents believed the red-hot price increases were likely over, most believed that the more affordable regions had some life left.
Janice Gallagher of Janice Gallagher Real Estate, who has 40 years experience, said the Townsville region still had some way to go to claw back to the prices achieved in its last boom in 2007/08.
“It will be slow and steady compared to the southern market,” she said.
Colliers Cairns director Stacey Quaid holds a similar view on the market in his patch, adding that Cairns “had lagged since the GFC”.
But the predictions were mixed in the overheated southeast corner.
Tom Offermann of Tom Offermann Real Estate on the Sunshine Coast, whose agency chalked up some of the biggest sales during the pandemic property boom, doesn’t think the heat will come off much anytime soon.
“Demand for property in Noosa will continue strongly for as far as I can see,” Mr Offermann, with 36 years under his belt, said.
“The last couple of years have been a sprint, and increasing interest rates and other economic factors will slow it down to a jog or walk, and this is a period that should be seen as a buying opportunity.”
Tom Offermann, Supplied But on the Gold Coast, Professionals Serendipity Tamborine Mountain agent Barry Chick, who is about to turn 80, believes the “feeding frenzy is over”, while Mr Bell called the end of the boom in November.
“We should expect 18 months to two years of price readjustment or price correction,” Mr Bell said.
As for a solution to the housing crisis, almost all of the agents agreed time was key.
But they urged councils to speed up land releases and called for more incentives for investors.
“This is new terrain, so it is hard to predict how it will all play out,” Low Fee Real Estate principal Allana Brown said.
In Brisbane, Dixon Estate Agents director Patrick Dixon has this bit of sage advice: “Buyers, be patient.Sellers, don’t be greedy.Renters, look at creative ways to enter the market.”
>>>WHAT THEY SAID: REGION BY REGION
CAIRNS
Name: Karen Ranie
Agency: Principal of Area Realty FNQ
Years experience: 42
Quote: : The coming market conditions are not isn’t for the faint hearted.
Past challenges: Financial uncertainty – employment changes from less permanent positions to more casual and part time employment.
High childcare costs, larger deposits required by the banks.Massive interest rate differences.During the 1980s a home loan was available at 18 per cent.Today there are families with a fixed term 2 per cent loan.The recent period of no rises in the home loans rate has lulled borrowers into a false sense of security and the next months of rate increase will influence the price sellers can expect.
Karen Ranie Challenges now: The biggest challenge is the cost of property today.
Thirty years ago, a small annual increase in value was the accepted norm but over the years of boom and bust markets it’s been difficult to establish value.Many of the homes sold in the past six months have doubled in value.
The contract sale price to bank valuation ratio has been a very real concern.A house recently sold for $625,000.00 but the valuation was $515,000.00.
Buyers chose to proceed but it required some serious juggling on their part to acquire the loan.
Consequently, a number of contracts didn’t proceed because of the differences.Another example is a contract price of $485,000, valuation $340,000.
Employment is also less certain today and the interest rate will continue to increase.Covid-19 has also influenced the market in many negative ways, less stock, older sellers staying in their homes, extraordinary building costs and a lack of tradies.
Is the boom over? Yes, I believe so.This has been brought on largely by the side issues of Covid.
Sellers may be still keen to sell but are very concerned about the prices elsewhere and what can they rent while they look around for a new home.The outcome of these issues is that listings are shrinking.Less stock available would normally mean an increase in prices but the threatened interest rate rise is of concern for buyers.It’s a standoff driven by fear.
What will happen next? Buyer inquiry slows, listings shrink, sellers sit on the market for longer as they are reluctant to lower their prices.
This time is just a little different.A lot of my market is over 60 and there is a fear of Covid-19 among some people.The opinion is it’s best to stay put! The coming market conditions isn’t for the faint hearted.
What is the solution?
Political stability and financial certainty with the interest rates, business confidence and less government interference in small and medium businesses.Stable overseas markets for our exports also.
Take climate change out of the conversation and let people get on with their lives and the market will steady itself.Halt Covid fear mongering!
What is a smart investment now? Vacant land, rental properties, homes with granny flats and small acreages.
Your advice for buyers, sellers and renters? Buyers , stop waiting for a perfect set of circumstances.Every generation has faced hardship and uncertainty of some kind.Just do it!
Sellers , they need to be sure they really want to sell and that they are committed to the process.
And disappear for the inspection.Buyers will spend longer in a property if the seller isn’t home.
***
Name: Billy Gartner
Agency: Principal.Professionals Edge Hill/Cairns
Years experience: 35
Quote: : The rental market is in a state of crisis
Past challenges: In 30-plus years, almost every challenge imaginable!
Challenges now: Affordability is getting worse and worse; 30 +years ago; it was possible to buy a property for $50,000 to $75,000, renovate it and resell it and make a $30,000 to $50,000 profit.Today, you need to spend $400,000-plus to hopefully get the same result.
Even though interest rates were very high (peaking at over 18%), it still took a smaller percentage of your income to pay off a mortgage.
The rental market is in a state of crisis with nothing available to rent, and rents are increasing at way more than people’s wages.I’m quoting negative vacancy rates.When a property does become available, there can be 20-plus applicants.This problem is getting worse as when an investor decides to sell, those properties are being snapped up by first home buyers and owner occupiers and are then permanently off the rental market.
Is the boom over? I wouldn’t say it’s over completely as there is still more demand than supply in most segments of the market.
There are already signs though that rising interest rates are already putting negative thoughts into investors heads and making it less affordable for first home buyers and owner occupiers to afford the increasing mortgage repayments.
Billy Gartner.Picture: Stewart McLean What will happen next? I wish I had a crystal ball.Rents aren’t going to come down in the next couple of years.Why sell now? Where are you going to park your money? The capital growth is bound to settle down for a few years, but a lack of supply and demand for rentals will keep the rental prices from dropping and until we come up with a solution for rapidly increasing building costs, there’s no sign of the supply of rental properties increasing.
What is the solution? I like some of the ideas that have been bandied around like helping young people out with low interest loans and smaller deposits so they can get in and start paying off there own homes, but this doesn’t help renters.
There needs to be more tax incentives brought in and low interest funding available to developers to create new stock for the rental markets.Developers need to be able to build and hold rather than always building with the intention of having to sell at a profit.If funding was available and developers could get a loan for the entire build cost based on the rental return that we know could be generated from the finished product, this would be an answer to get more housing into the rental markets.
What is a smart investment now? Bricks and mortar is always the best and safest long term investment.I can see other investments in the share market, crypto currencies and so on, being much riskier than investing in good real estate in an area where you know the rental demand is high and availability is low.
Your advice for buyers, sellers and renters? Owner occupiers , get into the market as soon as you can, any way you can.If you can find a way of getting into the market and your repayments based on a 5 per cent interest rate are around the same as paying rent just do it! Investors, if you can hold onto a piece of real estate with an almost guaranteed return from a strong rental market and get a return of 10 to 20 times more than parking your money in the bank, why wouldn’t you? Put it into Super instead? I can remember a time (after the GFC) that every time you looked at your Super statement, it had gone backwards.
As the funds invested in Super are also tied closely to the share market and other investment products, I would be much more worried about the possibility of that crashing than losing you’re investment property (as long as it’s rentable).Sellers , why are you selling? Every situation is different but if you’re upsizing or downsizing, do it in the same market.Whatever you do, don’t sell in a rising market and wait to buy in again as you may end up losing more profit than you’ve gained by having to pay more to get back into the market.Renters , if there is any way possible to get a deposit together and get a financier to lend you the money, do it, as long as you know you have the ability to pay the mortgage if the interest rates do go up.Once your settled in, you will have a wonderful sense of security of knowing you don’t have to worry about being “out in the street” again.
***
Name: Stacey Quaid
Agency: Director, Colliers Cairns
Years experience: 35
Quote: : Cairns has lagged since the GFC and the growth we have seen over the last few years was inevitable.
Stacey Quaid Past challenges: Stock availability has always been a challenge.In various markets, we have seen issues in financing, valuations lagging after market growth, as well as in times of decline.If the valuations aren’t keeping pace, funding is difficult.
Challenges now: Today, information is more available, which brings benefits and confusion.
Conflicting data and a lack of underlying understanding can make it difficult for new buyers to make great choices.Our exposure to bite sized information and a myriad of experts seems the way of the world, however it is harder today for buyers to work out what they can trust.
I s the boom over? We don’t think so.Cairns has lagged since the GFC and the growth we have seen over the last few years was inevitable.Given our (Cairns) current median housing value is still at circa $450,000, with wide open spaces and an enviable lifestyle choice, the North Queensland market still shows lots of promise.
What will happen next? Historically, when we have seen the build-up of negative economic factors, market engagement drops, values hold for a period and then soften as the dynamic changes from a sellers to a buyers’ market.
The new cycle post Covid-19 may be different.In our region we have seen a lot of wealth created in recent years with supply outstripped by demand and strong external interest.For the North, with affordable pricing and a major upside once tourism regathers, we still see a period of continued growth ahead
What is the solution? From experience, over time we have seen things balance themselves out.Increased construction costs stemmed from supply chain failings, higher demand and a ‘can’t wait’ attitude can resolve but it comes from several solutions.Covid, trade relations, competition from world demand, will resolve as we work through or around the problems.Adjustment to acceptable time frames and a slowing of opportunist pricing can all add to an improved circumstance.
What is a smart investment now? As in any time of market flux we see smart money returning to “blue stocks”.
Position, rarity, security, opportunity, and value for money seems to be again the direction of smart money today.
Your advice for buyers, sellers and renters? Don’t get caught up in the moment, good deals occur in every market, take your time in being prior organised and properly prepared and then act with haste.
***
Name: Allana Brown
Agency: Principal, Low Fee Real Estate
Years experience: 42
Quote: : This is new terrain, so it is hard to predict how it will play out.
Past challenges: The rental squeeze, like at present.Low returns on investments due to rents staying low at different times, with higher standing charges such as rates, body corporate fees, insurance costs creeping up.
Challenges now: It is easier to get a loan now.
It is easier to get assistance say with first home buyers/no stamp duty etc.But many homeowners who are mortgaged highly will be unaware of what a hike in interest rates can do to create financial pressure.Banks have been through repossessions and prefer not to have to go there, so they have, I believe, written in an expectation of a hike in interest rates so that borrowers should be able to manage.However, if there are other factors occurring in the future such as loss of income or increasing food and fuel costs, then coping may be a problem.
However, todays community is so used to living with debt/credit cards/Afterpay that the lack of savings and living on credit may feel normal.
Is the boom over? It is definitely stalling since the election.
Allana Brown PICTURE: ANNA ROGERS What will happen next? Inflation suggests that the best place for your money is property for capital gains or interest bearing deposits, but this is new terrain, so it is hard to predict how it will play out.I don’t think there will be a falling market like there was back in the 1980s, may be an adjustment back.It is common talk of a 10 per cent adjustment down.
What is the solution? Well not a solution, but a consequence.Some building companies will go bust due to the difficulty of handling material costs within their budgets and Quote: s.There is a great problem with supply chains and time is money.A solution? As a builder or a developer, be conservative and start to correct expectations now.Reduce costs, take on less work, make sure the work you take on is completable.
What is a smart investment now? Domestic rentals in good areas with low overheads (eg watch that body corporate cost if you own or are buying a strata property.)
Your advice for buyers, sellers and renters? Get more conservative, do your figures, take responsibility for your financials.Pay down your loans as much as practicable.
Tenants hang in there/ keep stable if you can.Sellers, still go for it but consider where you are placing your money after the sale.
***
Name: David Forrest
Agency: Director, First National Cairns Central
Years experience: 40+
Quote: : The solution is not governments building more affordable housing – they are simply not good at it and they are poor at managing it.
Past challenges: Both rental and sales markets rotate around the property clock, swinging from undersupply with high demand to oversupply and low demand.Operating as a buyer, seller or agent means that you have to adapt with the changing markets.On top of that all parties have to deal with government fiscal policies and in turn bank lending policy changes.
Investors have also had to deal with state government tenancy legislation changes as well as taxation changes.Real estate is a constantly changing industry and those operating within it must maintain vigilance to the changes.This includes the changes technology has introduced
Challenges now: The most obvious is that median house prices are significantly more times the average earnings now than they once were.Average mortgage sizes are higher than they were 30 years ago and buying a home is, in general, a much bigger commitment.
Is the boom over? I do not think so but a lot will depend on interest rates and government leadership in matters such as taxation, investment allowances and general fiscal confidence.
We are still getting good interest from the south.
First National Real Estate Cairns Central Director David Forrest PICTURE: ANNA ROGERS What will happen next? Cannot comment on the whole Queensland market as there are so many (different markets).Brisbane is not the same as Far North Queensland or North Queensland, and they are different again to Western Queensland.In our region I expect the market to continue as a pretty balanced market.
What is the solution? This is not just a Queensland problem.The solution is not governments building more affordable housing – they are simply not good at it and they are poor at managing it.The governments need to embrace the private sector and work with them.
What is a smart investment now? A house.
Your advice for buyers, sellers and renters? Buyers , the best time to buy is when you can afford too.Sellers , it depends on your time of life, trading down or up, watch the market and if that suits your personal plans then act.Remember, you will normally buy in the same market as you sell.Renters , get a rental and stay there as long as possible.
***
TOWNSVILLE
Name: Brad Matheson
Agency: Principal, McGrath Estate Agents Townsville
Years experience: 33
Quote: : I see a good balanced market for the next year or two, with a little more choice for buyers but also some steady price increases as our city grows
Past challenges: A significant challenge for buyers back in the 1990s when we had ‘the recession we had to have’, was that interest rates rose to 17-19 per cent and buyers needed a 20 per cent deposit.
It was really tough for anyone entering the market to save a 20 per cent deposit and get a loan approved.Then, after the GFC in 2008, all banks were really worried and buyers struggled to obtain finance approval so sales halved and the prices for the sellers dropped significantly
Challenges now: It is much easier to obtain finance compared to the 90s, for example.The biggest challenge now is ensuring that finance is organised and buyers are ready to buy if they find the right home.The good homes in our market are still selling quickly and with multiple offers so buyers are often in competition
Is the boom over? I don’t believe it is for Townsville, or many other regional areas.We still have some catching up to do and property is still very good value compared to other markets.Townsville is also the 14th largest city in Australia and has a very strong economy with lots of employment opportunities bringing new people to our city.Some major projects along with growing industries such as health, defence, our university and mining and agriculture, there is plenty of work and Townsville is now seen as an investment hot spot.
BRAD MATHESON What will happen next? Queensland will undoubtedly continue to benefit from the current trend of buyers relocating to upgrade their lifestyles while also downgrading their mortgage.Townsville has not seen the significant price growth that the capital cities have had so we have some catching up to do in North Queensland, and capital growth is going to occur as interstate investors are now seeing our investment market as great value.
I see a good balanced market for the next year or two, with a little more choice for buyers but also some steady price increases as our city grows
What is the solution? The solution to the lack of supply of rental properties is more investors buying, which is already happening in Townsville, and also councils speeding up their approval processes for land developers to release more land.
What is a smart investment now? Townsville’s median price is still under $400,000, and the lower to middle bracket is a good investment with good capital growth potential and a good rental yield.The upper end has grown 20-30 per cent in value and now we are seeing the lower end starting to improve significantly.With rents increasing 20 per cent or more in some cases, and the prices at the lower end in many suburbs having only grown 10 per cent, the return on investment is now very good.
Your advice for buyers, sellers and renters? For buyers and sellers , if you are upgrading or downsizing it really doesn’t matter what the market is doing because you are doing it in the same market.So if you plan to live in the new home for the next 10 years, just make sure it is a home you’ll enjoy.For renters , the rental market in Townsville is not going to change for some time so make sure you can afford the home and consider the option of getting some advice on how to plan to purchase.With the rental market still very tight, renters need to stay close to the agents as many properties are renting before getting to the market.
Anything else? Going through the ‘recession we had to have’ in the 1990s, the mining boom in the 2000s, then the GFC in 2008 and it’s after effects with unemployment reaching more than 10 per cent in our city, Cyclone Yasi in 2011, the Townsville floods in 2019, and the Covid-19 pandemic, we found out how resilient the city and it’s people are, and also how resilient the market is.In 1989 when I commenced my career the average home price in Townsville was $72,000.Three decades on it is four times that.
***
Name: Janice Gallagher
Agency: Director, Janice Gallagher Real Estate
Years experience: 40
Quote: : The market has not corrected back to 2008 prices as yet so we are a long way off of the market declining.
Past challenges: I have seen both stock shortages and also oversupply with heaps of listings and no buyers.
Challenges now: Buyers don’t realise how good the market is when you tell them there are other offers, that they must put their best offer in or miss out.
Interest rates have never been so good.Lifestyle home are available for buyers to live their best life.
The market has not corrected back to 2008 prices as yet so we are a long way off of the market declining.We are lucky in Townsville because we have so many opportunities and infrastructure.
Is the boom over? No, we are a long way behind down south.
We have more buyers than properties for sale at the moment.
Janice Gallagher What will happen next? It will be slow and steady compared to the southern market.
What is the solution? What goes up must come down.Be patient.
What is a smart investment now? When you buy real estate it is a long-term investment.Be a stayer in the property market for the rise and fall in the market.
Your advice for buyers, sellers and renters? If you can tick off 8/10 things on your wish list, you are doing well.Pay attention to the cycle of the market and be a stayer.
It is time to shine a light on regions like Townsville who are yet to see property prices reach the level of the 2008 property boom, making it a worthwhile opportunity for savvy investors.It’s all about timing when you enter and leave the market.Look for markets with growth left in them and Townsville is a no-brainer.
Aerial shot of Townsville, which could see more price growth yet after values tanked a decade ago during the resources downturn.***
Name: Felix Reitano
Agency: Principal, Felix Reitano Real Estate – Ingham
Years experience: 3rd generation, 40 years
Quote: : Do homework on the location, and listen to honest advice from the professionals.
Past challenges: The availability of suitable homes to fit their budget.
Challenges now: New banking interest rates which many will find.However I remember interest rates at 18-21 per cent.
Is the boom over? Not fully, but there has been a slowdown.Maybe election jitters had some affect.
What will happen next? This will make buyers somewhat more cautious in their approach, but sales will still be made.
What is the solution? Governments need to assist first home buyers more.We have homes here around $200,000, which would get them into a home and help free up some of the rental sector.
What is a smart investment now? One that does not leave the borrower in financial stress.
Your advice for buyers, sellers and renters? Find the property that well suit your needs in the next five years.Do homework on the location, and listen to honest advice from the professionals.
Felix Reitano ***
Name: Ian Clarke
Agency: Principal and auctioneer, Ian Clarke Real Estate – Townsville
Years experience: 30
Quote: : The peak of the market place rarely stays at the peak for long and unfortunately for many that is when they rush in to buy due to their fear of missing out.
Past challenges: All city’s are growing, even large rural centres are growing, as people move for convenience and facilities.
This means available land and premium locations are in demand, but we all won’t be able to start out with the mansion on the ocean front.People’s expectations are certainly on a grand scale and in the larger regional areas the homes are considerably bigger than they were historically, Interestingly, the land value versus the building value has changed significantly, in some cases the building has been four times the land value.
Challenges now: A buyers expectation of what their home should be, and this is the same for renters.When I started in real estate, an airconditioned main bedroom was a big draw card.Now it is just expected, along with split systems in every room, dishwashers, solar, all included.
The ongoing maintenance for a property owner has increased considerably compared to the rent return.Home buyers also have so many more items financed compared to years ago, from new cars, boats and caravans to furniture, holidays even investment portfolios, all financed against the home loan.
Is the boom over? For the Townsville region, we are less affected by external forces, having a very stable base with the military, university, hospital and many state and federal government agencies based here.The Townsville region still has positive growth in building new, and the prices of established homes are still considerably more affordable compared to the new build costs and those of other significant regional cities.
Ian Clarke What will happen next? Every major centre does survive on its own local economy and generally finds its own level.In Townsville, generally our market is being revitalised by external buyers such as investors considering more affordable assets compared to their local market place.
This appears to be the key initial driver to our market moving forward, and our market can survive with further positive growth well after other major areas start levelling out or declining.
What is the solution? Personally, we see the problem as a cyclic event, much of which has been borne by the market place itself.Certainly, there other economic factors in place due to the recent Covid shortages.Inflation pushes everything along.If the “bread line” is raised then unfortunately everything else pushes along with it – including inflation.
Perhaps building styles and construction methods need to be revisited from former eras, or consider futuristic designs for the more populated locations as we won’t all be able to live on a 1000 sqm block on the harbour.
What is a smart investment now? For younger folks, couples or singles, buying a property well with in your budget that has a generous land content.It will be the land and location that will improve in value.Staying close to major facilities and amenities such as schools and major shopping centres will also drive the value of your land over time.For middle aged folk,
buy where you want to live as over time, when you downsize, the value of your property will be in line with the price expectations and capacity of those first home buyers.For the older folks, its all about proximity to amenities.If the property is a unit, avoid lifts, swimming pools and gyms in smaller complexes as the body corporate fees will be a burden.
Your advice for buyers, sellers and renters? The market place changes based on demand, and prices are always in line with this, regardless or whether you are buying selling or renting.The peak of the market place rarely stays at the peak for long and unfortunately for many that is when they rush in to buy due to their fear of missing out.
Real estate is about the longer term and has to fit your financial situation.
Buyers need to consider that although they are buying a home to live in, there lifestyle may change faster than expected – a growing family, more toys like a boat or camper trailer.Sellers need to keep in mind why they are selling – if they are downsizing, the peak of the market is sometimes the best time as the demand for their property will be at a premium.When upsizing, it may be best to wait for a flat market.Renters need to keep in mind that they are generally more flexible and able to adjust to the market place.Renters should always be mindful of the fact that although their rents may fluctuate with the market place, generally the fixed costs to the property owner rarely fluctuate lower and generally increase independent to the market place.
Anything else? Buyers should strive to grow a significant deposit before entering into the housing market.Avoid the rush spurred on by external investors and unrealistic incentives to bait buyers into the market.
Be patient and we don’t mean forever.Time moves swiftly and market place changes happen just as quickly.
***
MACKAY/WHITSUNDAYS
Name: Troy Liesch
Agency: Principal, Whitsunday Realty
Years experience: 32
Quote: : Renters, find a way to get a loan and get out.
Most rents exceed repayments now with little prospect of change in the short term.
Past challenges: The ever changing landscape of the banking world has made it difficult for some very good potential buyers to obtain finance.
Whitsunday real estate agent Troy Liesch.Challenges now: The recent price increases have made the market very competitive.The change from buyers being able to get low doc (designed for self-employed workers) and 110 per cent loans is also a big change from years ago.
Is the boom over? Here in the Whitsundays, the market has backed off but the boom is definitely not over.Supply is low, buyers seem to be able to get finance and the flow of interstate buyers is still high.
What will happen next? I don’t see the prices rapidly falling in the area.
The shortage of land for both residential and commercial property is restrictive.The mines also have a big influence, and while commodity prices including coal and sugar remain high, and tourism continues to improve, I believe the market will remain strong.
What is the solution? The local council need to have a streamline their approach to building applications and development applications.The supply of building materials is a real concern.The government needs to find a way to guarantee the supply of cost effective materials.
What is a smart investment now? In the Whitsundays, commercial and industrial sheds are at 100 per cent capacity so if the land is available, building sheds would be the best investment option.
Your advice for buyers, sellers and renters? Buyers, wait! Sellers, go now before interest rates start to have an effect.Renters, find a way to get a loan and get out.Most rents exceed repayments now with little prospect of change in the short term.
****
SUNSHINE COAST
Name: Tom Offermann
Agency: Principal, Tom Offermann Real Estate
Years experience: 36
Quote: : The last couple of years have been a sprint, and increasing interest rates and other economic factors will slow it down to a jog or walk.
Past challenges: The challenge facing homebuyers today is the sheer volume of information available to them online to decipher before making decisions.It can potentially be confusing.Thirty years ago people found their properties by either seeing a for sale sign or looking into an agent’s window.
Back then people would actually hop in the agents car and be driven around to suitable rentals or properties to buy.Seems mad looking back now.
Challenges now: Transactions in real estate are taken more seriously than most other decisions because of the magnitude of their value and their potential to significantly change people’s lives.Whether it is buying, selling, or renting, it is always a negotiation, and supply levels will always dictate the challenge.Almost everyone is looking for a bargain when they are buying, however when selling, they instantly transform and want the best price in the neighbourhood.
It would be easy to say that people are greedy, but it is because these transactions are so life changing that they create anxiety.Especially when people are buying, they are fearful of overpaying because the values are so objective and are so difficult for people not in the industry to understand.The big challenges facing buyers or potential renters around Noosa is the extreme shortage of choice, vacancy rates are less than 1 per cent and less than 1 per cent of properties are available to buy.In a normal balanced market these would both be around 5 per cent.
Is the boom over? Property is a long term safe secure infallible investment, and there is no need to speculate on whether it will go up if you take a long-term view.
Demand for property in Noosa will continue strongly for as far as I can see.I can’t imagine anything slowing the demand, and people will remain extremely reluctant to sell due to the difficulty of getting back in.
Tom Offermann, Supplied What will happen next? The last couple of years have been a sprint, and increasing interest rates and other economic factors will slow it down to a jog or walk, and this is a period that should be seen as a buying opportunity.When you don’t have 10 people bidding against you, you should feel lucky.If there is no one bidding against you, you should feel extremely lucky.
What is the solution? Building cost uncertainty is driving a lot of people to delay starting their project, so if that’s an option for you, then it might be wise to hold off for a while.
The building industry is stretched with flood repair work and extraordinary growth in demand for renovations and new homes, but eventually like the bizarre increase in the cost of second-hand motor vehicles, things will normalise.
What is a smart investment now? Just buy the best located, free standing property that your budget can afford, and keep it for as long as you can.The value is in the land, which is the basis of all wealth, and it increases steadily over time, however the house will date and deteriorate over time.
So have a bias towards the land content while maintaining a good roof over your head.
Your advice for buyers, sellers and renters? Renters , we have been experiencing some of the most affordable times to buy property with interest rates so low that many properties can be owned for less than the weekly rent you are paying.The hardest property to buy is your very first, but it is worth doing everything in your power to become a homeowner.My advice to sellers is to engage the absolute best agent in your area and take their advice.Why quibble over half a per cent in fee differences and then choose an inferior agent who sells your house for 10 per cent less.The best advice for buyers is to do lots of research so that when you come across the ideal property, you will recognise it as an opportunity.And also for buyers, think less about today’s property value, and more about what it will be worth in the future.
Anything else? There have been numerous climatic, economic, political and health events that have changed the pace of the real estate market during the 36 years I have been an agent.Nearly everyone has a story about the property they could have bought, and in 5 or 10 years time people will be saying exactly the same about properties on the market today.
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GOLD COAST
Name: Barry Chick
Agency: Sales agent, Professionals Serendipity Tamborine Mountain
Year experience: 41
Quote: : Hold what you have, wait for the market to cool off, and look for fire sales towards the end of 2022 and into 2023.
Past challenges: In short, finding the balance between supply and demand and fluctuations in availability of finance.
Challenges now: Covid has certainly had a huge impact on the market generally over last 2+ years with the unprecedented price rises.
Considering the mandates and lockdowns causing loss of jobs and income, this has been totally unpredicted and hard to explain.
Is the boom over? The feeding frenzy is over but there is still a large number of buyers looking and very few properties available.So demand still outweighs supply.Buyers generally are now less inclined to offer over asking price and want to negotiate down.
But some sellers are reluctant to adjust their expectations.
Barry Chick.Supplied.What will happen next? Tamborine Mountain is quite a unique market, without the peaks and troughs of other more volatile areas.
There are far less first homeowners, and buyers with large mortgages in our area, partly because we have a lot of retirees here that don’t need finance.There is also the ongoing trend for buyers wanting to move out of cities into a more ecologically friendly, more community minded environment.The ability of being able to work online is another factor.
What is the solution? The government needs to provide more affordable housing to lower income buyers on a rent/buy program.It will be interesting to see what Labour does about it in the next few years.
What is a smart investment now? Hold what you have, wait for the market to cool off, and look for fire sales towards the end of 2022 and into 2023.Be a lateral thinker and know that change is inevitable.
Your advice for buyers, sellers and renters? To sellers , it is still a good time to sell as there are many buyers still out there, but be prepared to meet the market.
To buyers , sellers are becoming more flexible and there is now less competition.To renters , don’t leave home too early!
Anything else? The so-called ‘recession we had to have’ in 1990-1992, I had just bought an investment unit at 18 per cent interest and then tenant vacated.It was tough times but I survived.The last two years have been challenging, but very rewarding.My highest income ever which caused me to put off my retirement.
Now it’s the end of 2022 (for retirement) as I turn 80 in January.
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Name: Andrew Bell
Agency: Chairman, Ray White Surfers Paradise Group
Year experience: 47
Quote: : To buyers, take advantage of the next 12 months to two years, which is the correction phase of the market.
Andrew Bell and Ray White Chief Economist Nerida Conisbee.Picture: Tertius Pickard Past challenges: I truly can’t recall a period of time in which renters faced a housing crisis.Most of the time, the rental market has either been in a balanced situation, where there was adequate supply or, from time to time, there has was a glut of rental properties which very much favoured tenants.Over the years legislation has continued to provide greater and greater benefits to tenants, so over the past 47 years, generally speaking, renters have had no particular challenges.However over the past 18 months, there has been somewhat of a catch up in rental rates giving a double whammy of higher rents and negligible properties to rent.
For buyers, it’s always been a case of trying to save a sufficient deposit.
Whenever there are periods of price escalation, that challenge becomes even larger.There are brief occasions, usually about once every 7-8 years, where the real estate market will soften, but most of the time it continues to be a challenge to save fast enough.
Buyers are also then affected by the cycle of interest rates and sadly most don’t continue paying the same loan repayments when interest rates fall.When interest rates rise again they immediately feel hardship.
For sellers, if they play the long game they are always going to benefit from property prices increasing.But they must pick their timing because if they are caught out in a correction phase it can have substantial negative effects on their financial position.The overall challenge that everyone faces is that Australian real estate prices are among the highest in the world and there is no immediate prospect of that changing anytime soon.
It would always have to be done without undermining the financial viability of so many Australians.Increased supply will play a significant role and should be targeted towards providing affordable housing for first home buyers and lower income earners.
Challenges now: Beyond question the entry into the real estate market is made more difficult by the substantial taxes that are applied to everything from charges to developers for the building of properties, local government taxes associated with development and building applications, all the way through to what is now excessive stamp duty.The household budget is absorbed in such a huge array of costs which makes saving harder than ever.I would say the largest challenge is the discipline to be able to save for your first home, as that is the starting block of wealth creation.
Is the boom over? Yes, I called November as the peak in the property cycle.
What will happen next? The property market, like the economy and most other commodity markets, follow cycles.
We should expect 18 months to two years of price readjustment or price correction.The typical cycle sees rising interest rates at or around the time we are at the peak of the real estate market and is an intentional strategy by the RBA to reign in property price growth, which is a major contributor to rising inflation.
Sadly, it is usual that the RBA moves too late and therefore has to apply the brakes quickly through higher and faster interest rate increases.While interest rates do affect a proportion of the housing market through having to pay higher loan repayments, a very large proportion of the property market have owned their properties for years and are not as deeply affected by rising interest rates.What is affected is consumer confidence.The fear of what may happen with interest rate rises, which tends to cause people to stop buying or be far more conservative in their buying.This process does generally take 18 months to 2 years to settle and being able to predict exactly what is going to happen in this cycle is extremely difficult as there is a significant number of unique circumstances both nationally and internationally that will come into play.It’s quite possible that within two years the inflation is brought sharply under control which may give the opportunity to ease interest rates.
But for now, we are in the normal cycle after the boom of some price correction, which we should remember is just giving up some of the substantial gains that have been made in price growth over the past two years.
What is the solution? The first is to provide immediate relief by bringing substantially more rental properties to the market.This could be done by both state and federal government and would provide substantial incentives to investors to buy in the areas of most need.Tax incentives could be substantial reductions in stamp duty at a state government level, while at the federal level it could be either an investment bonus or tax relief for say those who buy within the next 6-12 months.It would encourage investors in the market and direct their buying into the areas of greatest need.
For a longer term solution both governments need to come together to address the emerging build to rent sector that could be highly incentivised to build substantial developments, either apartments or housing in the areas of most need.
What is a smart investment now? A smart investment is to buy in the area of greatest need and the product of greatest demand.That generally is in prime employment areas and near public transport.These days increasing attention should be put towards properties that are the least expensive for tenants to occupy which would include smart homes with solar hot water/power, that provide cycling options for tenants, and of course are near public transport.
Your advice for buyers, sellers and renters? To buyers , take advantage of the next 12 months to two years, which is the correction phase of the market.Negative media may well make people feel now is not the time to buy, when in fact this phase of the market is where buyers have the greatest opportunity to negotiate better prices.There will be a percentage of more motivated sellers because of financial pressures and so on, and so this market should be taken advantage of.You may well have to compromise on the style or area in which you want to buy, but better to do that and get into the market rather than be caught eternally in the rental market.To sellers , if you have to sell or want to sell then do so now rather than later.As interest rates rise, the brakes go on harder and this does affect pricing.
Otherwise ride out this period of time, although be aware that the next phase of the market after correction is the consolidation phase where there is little price growth and the market generally flat lines for 3-4 years.For renters , stay put where you are and sadly budget for further rent increases.I don’t see any immediate relief and a roof over the head is essential so it may well be that other lifestyle living costs need to be compromised if not surrendered in order to maintain a roof over the head.
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BRISBANE
Name: Patrick Dixon
Agency: Director, Dixon Estate Agents
Year experience: 45
Quote: : Buyers, be patient.Sellers, don’t be greedy.
Renters, look at creative ways to enter the market.
Past challenges: Depending on the real estate cycle the challenges vary dramatically.
Back in 2017 you were excited if you got one group through an open for inspection in Pullenvale.Now you would get 15 groups and five or six registered bidders.It has been a seller’s market since November 2019 (five months pre-Covid) and was turbo charged post-Covid and continues.
Potential tenants are facing a tough time as over 10,000 houses were withdrawn from the Brisbane rental market courtesy of the February 2022 floods.
Challenges now: Buyers now face significantly higher entry prices but they have significantly lower interest rates.That said, it is harder to enter the market today than it was 30 years ago.Brisbane had started its transformation into an international city and economic power zone so buyers are looking at a more sophisticated and valued market than they were when Brisbane was a large country town.
Is the boom over? Property booms always last longer than economists predict and the down cycle does as well.This Brisbane boom was not a Covid-related surge as Brisbane had missed the 60 per cent capital growth enjoyed by Sydney and Melbourne over the past 10 years.
Brisbane had high pent up demand.Its prices was obviously out of sync with southern capitals, and with the winning of the Olympic Games and the ensuing infrastructure, jobs and southern migration, the market has underlying strength to avoid any downturn seen by our southern cousins.
PATRICK DIXON What will happen next? With the huge injection of printed money by the federal government and all other G8 nations, there is no historic precedent to this money expansion so it is therefore difficult to make economic predictions.Inflation is always a positive outcome for assets, however rising interest rates are a negative.Once again, coming off historically low interest rates, it is hard to make a call as to what level of increase will be needed to flatten buyer interest.Ten years ago, interest rates under 4% could not be imagined.
What is the solution? The former Morrison government, to save the economy through an unmatched support to the economy, was, with the wisdom of hindsight, an over-reaction, and has overheated the building industry.Flood repairs have exasperated construction costs and the record low vacancy rates.
Market corrections in the building industry will cool construction costs.
Brisbane City Council should immediately give purpose built student accommodation providers the opportunity to lease their products to non-students.This would immediately expand the available stock of rentals, therefore reducing rental prices.This could be reviewed by the council when student numbers recover.
What is a smart investment now? Cycles come and go, a quality location is always in demand.
Your advice for buyers, sellers and renters? Buyers, be patient.Sellers, don’t be greedy.Renters, look at creative ways to enter the market.
Government subsidies, parental assistance, joint ownership with friends.
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Name: George Hadgelias
Agency: Principal, Ray White Paddington
Years experience: 35+
Quote: :
Past challenges: Interest rate high’s have been the biggest deterrent to a strong real estate market, which showcases solid turnover and regular year-on-year capital growth.
Challenges now: The ratio/and cost of borrowing compared to price has increased.The ratio of wage to cost has soared.
Is the boom over? Good property, when priced fairly, will always sell when researched.
It’s amazing how much stock is actually on the market at any point in time.Agents get lost in the selling process and slow down on the listing process.
George Hadgelias What will happen next? I can’t foresee a dramatic drop in values.Talk of a 20 per cent correction is impossible to foresee.Outer suburbs will struggle to hold value adjusting down 10 per cent, while inner city (capital city) markets will continue to remain solid.
What is the solution? Government acquisition of existing multiple dwellings will be the platform for the future.Allowing different lot size subdivisions in areas where infrastructure is in existence will lower the cost of housing.
What is a smart investment now? Apartment living in traditional residential areas is the way forward from a serious government’s perspective.
Your advice for buyers, sellers and renters? Buyers, save with an acquisition in mind.
Sellers, property should be viewed as a long-term investment.Buy and hold for as long as you can.
Currently there is no shortage of tenants and no signs this will change in the short to medium term.Renters, stay as long as you can.The cost of moving is a burden on the pocket.
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Name: Simon Wheelans
Agency: Principal, Place West
Year experience: 35
Quote: : The challenge first homebuyers face now is accepting that they can’t have everything they want in their first home.
Past challenges: The change from advertising on shop frontage to digital transition was a big change.The older demographic didn’t really understand the process for many years.Vendor paid advertising is now just an accepted expense when selling your home.
Challenges now: The challenge first homebuyers face now is accepting that they can’t have everything they want in their first home.Spending habits have changed, and living in a disposable world, the younger generation find it difficult to have the control to save.It is about hard work, renovating, missing out on the wants and concentrating on the needs.
Is the boom over? No, we believe there will continue to be growth in the housing market.With the lead up to the Olympics and interstate migration, Brisbane is still looking relatively inexpensive compared to southern states.
As affordability in the inner-city locations becomes less achievable for most buyers, the apartment market will also continue to improve.
What will happen next? Inner city Brisbane will not be affected, but when you go to the outer and regional areas, mortgage repayments, living costs and over commitments will cause stress to homeowners.This will lead to some having to sell their homes and return to the rental market, which is already seeing shortages.
Rental rates will continue to increase and we will move from a seller’s to a buyer’s market.
SIMON WHEELANS What is the solution? Time takes care of this.With the pressures of fuel and transport costs, and interest rate rises, the demand for renovations and new builds will decrease.Competition between builders/tradespeople will result in a stabilisation of building costs.
What is a smart investment now? We have always seen buying and holding inner city Queenslanders as the smartest property investment.Over time you will always see capital growth.
Your advice for buyers, sellers and renters? Buyers, be patient.Sellers, buyers will determine the market value of your property.Renters, budget and try to save to get into the market anyway you can..
