Herron Todd White finds 5.7 per cent lift in Townsville median house price
Townsville’s residential sector is leading a recovery in the city’s property markets with the growing volume of house sales now putting upward pressure on prices, a report says.
Townsville’s residential sector is leading a recovery in the city’s property markets with the growing volume of house sales putting upward pressure on prices, a report says.
Herron Todd White has released its Townsville in Focus report which provides an overview of the city’s economic prospects and charts the health of residential, commercial, industrial and rural property.
It finds the Townsville economy is rebuilding strongly from the effects of the COVID-19 pandemic with business confidence rebounding and the labour market in solid recovery.
It says the residential market is powering on with strong uplifts in sales and upward pressure on prices, coupled with an ultra-tight rental market and a depleting supply of stock.
Herron Todd White has advanced the city’s residential property phase for houses to that of a “rising market”, while it says the unit market is lagging and remains at the “start of recovery”.
Industrial property is also found to be at the “start of recovery”, while retail and office property remains at the “bottom of the cycle”.
HTW Townsville director Jason Searston says the past year has been roller coaster for property markets.
But he says the year ended with a strong residential market, multiple offers happening for property sales and a scramble to secure home lots to meet demand boosted by the Federal Government’s HomeBuilder grant.
Mr Searston says there are suggestions population growth is occurring as families exit the major capitals in favour of secure and functional regional cities like Townsville where people can work from home for capital city employers at capital city wages.
“Nevertheless a concern is that market conditions are being buoyed by support measures such as JobSeeker, JobKeeper and HomeBuilder packages,” Mr Searston says.
“The real test will be when individuals and industries need to stand on their own two feet once the stimulus packages run out. The key question by then will be whether future population growth can supplant current support measures to maintain the market continuum.”
The report says trends in house sales have escalated to show strong growth from June to September, compensating for sales lost during the COVID-19-related lockdown.
In September, sales were trending around 260 per month, the highest level since 2009 and an impressive 36.8 per cent above those in September 2019.
Herron Todd White’s median price trend for houses sold in October came in at $334,800, a 5.7 per cent increase over the previous 12-month period.
The report says the trend in new dwelling approvals for Townsville has been boosted significantly by the HomeBuilder grants scheme introduced in June.
For September, trend approvals were up by 33.8 per cent compared to May and were averaging 59 dwellings approvals per month, primarily consisting of houses rather than units.
The report says the trend in non-residential building approvals appears to be holding steady to mildly declining, based on a steady stream of small to medium scale developments of up to $40 million coming into the construction market.
The value of non-residential building approvals totalled $266m in the year to September 2020, compared with an abnormally high $393m in the previous year.
Current activity is being led by public sector works with $157m in approvals for the year to September compared with $109m in the previous year.
The report says sales of developed commercial and industrial properties slowed by about 20 per cent between the March and September quarters to about 25 transactions per quarter.
But Herron Todd White believes the market has started to regain its normal pace and that the slowdown, typically, was caused by longer lead times in commercial sale negotiation rather than any slowdown in demand.
On industrial land, the report says the market continues to experience variable but generally limited demand.
It says the median price of industrial land purchases has wavered over the past six years but remains at $120 to $160 per square metre.
Their industrial land survey found a supply of 90 serviced lots available in new subdivisions which Herron Todd White says is more than adequate for current and foreseeable demand.
On vacancy rates in the Townsville CBD, the report says rates rose from 29 per cent to 31.1 per cent over the six months to July as the net result of increased supply exceeding net office space take up.
The office vacancy rate rose from 18.7 per cent to 22.8 per cent in the A grade sector despite additional take up of close to 1200 square metres and rose from 27.8 per cent to 29.9 per cent in the B Grade sector as a result of softer demand.
The report says Herron Todd White’s overall assessment is that there is ongoing leasing demand for good quality office premises and that the vacancy rate adjustments primarily reflect net change to supply from additions to the rental stock, outweighing a change to occupancy levels from tenant churn.