News & Case Studies

Tuesday, 02 August 2005

Coast defies sales bust

THE property boom is over … but are we headed for a bust? Leading Queensland valuer Ian Herriot thinks so. In response to BIS Shrapnel’s Building in Australia 2005-2020 report released yesterday, Mr Herriot said “the boom has well and truly busted in south-east Queensland”.
But while the report forecast a significant slowdown in housing activity in Brisbane in the next two years, industry experts on the Sunshine Coast said they did not believe it would be all doom and gloom in this region. Housing Industry Association regional manager Ben Barton said he believed rather than falling, housing activity on the Sunshine Coast would “stay where it is for the next 12-18 months. Certainly builders are saying there has been a drop in inquiries, especially for project homes, but we don’t believe we are in the position of having a major oversupply,” he said. “The population influx still has to be housed.”

Those comments would be welcome news for those people wondering whether we were on the verge of another post-1994 hiatus when prices went backwards or stagnated for six or seven years. Brisbane may be a different story, however. BIS Shrapnel senior project manager Jason Anderson said the Queensland capital was entering a transition period, with the number of new dwellings being built falling significantly and the number of first home buyers down 15% in the second half of last year. The report forecast that residential starts would stay flat across the state this financial year before decreasing by 3% in 2006-07. The number of new dwelling commencements has already fallen 20% for the three months to April 2005 from the same period in 2004.

Cont'd ...

... Coast still afloat in sales bust

However, the May approvals figure offered a ray of hope, bouncing up 2.7%. The big problem of course is the three-year boom that peaked at the end of 2003 has sidelined two key sectors of the market. Consecutive interest rate rises in November and December 2003 sent investors to the sidelines, and the unprecedented rise in property prices has made it almost impossible for the average first-home buyer to get a foothold in the market. Mr Barton agreed that investors were “watching their dollars”, while Mr Herriot said there were “virtually no first homebuyers in the market and the middle-market (homes priced from $300,000 to $500,000) is doing it tough.” But Mr Herriot said there were exceptions, including the luxury market which “will continue to be strong”.

So where to from here? BIS Shrapnel said the light at the end of the tunnel was a way off yet, with the company’s controversial forecast of significantly higher interest rates brought on by a tight labour market expected to see possibly years of lower housing activity. It predicted that the next upswing would start “towards the end of the decade”.

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