The 18th May 2019 will go down in history as a pivotal moment on our property cycle clock in my opinion and whilst we won’t have concrete numbers on that opinion for the next 6 months or so, I could almost guarantee you that will mark Townsville’s turning point and pathway to a genuine recovery in our property market.  The federal election showed more than ever that the health of the economy still remains central to politics and with not only our region doing it very tough now for 3-4 years so too has many parts of regional Queesland from the coastline to out west where our poor farmers have not only been battling tough market conditions but also crippling drought.  You can also bet the State Government was watching very closely and we have all seen their farcical about face on the proposed Adani mine.  Whilst controversial in itself and not the subject of this column, the great thing for Townsville and regional Queensland is our State Government will be doing all they can with whatever resources they have at their disposal to win back Queensland before the next state election in 18 months time, and that my friends can only be a good thing for Townsville and our economy.

So the prospect of significant taxation policy changes plus removal of negative gearing and the reduction in Capital Gains Tax (CGT) that were proposed by the Labor party, wasn’t something Queenslanders were prepared to take a chance on and opted for stability of government instead.  The day after the election the entire real estate industry breathed a collective sigh of relief so too did landlords, mortgage holders and tenants.  We also saw a significant announcement by the Australian Prudential Regulation Authority (APRA) just following the election that they are proposing amending their guidance on mortgage lending with the view to relaxing serviceability.

This announcement along with recent relaxations by some of the major lenders on the previous rigid policy on not taking on interest only loans for investment properties (a result of the banking Royal Commission) is another barrier removed for home buyers old and new which can only further stimulate buying conditions.  So with a combination of the property sector not having key incentives removed or altered (negative gearing and CGT reduction) and more favourable lending conditions Townsville is primed for a turnaround and in a big way in my view.  External demand for real estate from investors has already started since the election and this will continue over the coming 12-18 months which will put pressure on the local house hunters to get involved.  In time and with enough of this demand we should see prices start to rise and home owners start to claw back the lost ground endured over this past 5-10 years.

Time will tell but the writing is certainly on the wall.

By Damien Keyes

6 Responses to “WHAT DOES THE ELECTION RESULT MEAN FOR TOWNSVILLE’S PROPERTY MARKET”

  • David Irwin says:

    That is some of the positive feedback that we like to hear. This is very well written and gives us some hope for the future.

    • Damien Keyes says:

      Hi Denis, thanks for your comment. Yes when conditions are ripe and developers lucky enough to have stock on the ground at the right time it can cause a flood of supply which can have negative effects on returns. My view on Douglas is that it performed brilliantly in the flood times back in February it was the unfortunate suburbs further down stream that had the biggest challenges. Residential returns here are steadily increasing and are generally in the order of 5-6% gross and in some cases a little more depending on the property which is still better than the banks. This is why I genuinely feel we are not too far away from things lifting across the board here as the pieces to the puzzle just keep dropping into place. If you are in Townsville now and considering that upgrade of the family home you have soft house prices and a falling interest rate with two more drops predicted before the end of the year. If you are an investor you have exactly the same available to you and Townsville is the biggest population outside the south east corner and we have a State Govt. fighting to keep office next year and recognize Townsville’s significance in that so you can bet that means more infrastructure and upgrades to services for our community which investors will be noting and our community will all feel positive about. Whilst the past few years have no doubt been tough I am really looking forward to the next few as things are really lining up and we are selling properties to both locals and investors so as more optimism creeps back into our market I can only see one way for our market and that is up!! Thanks again and keep in touch…

    • Damien Keyes says:

      Hi David, thanks for your positive feedback mate much appreciated. I am sure if you look at my comments above you will see the reasons why I believe things will continue to build and push Townsville back in the right direction. Thanks again for following the blog be sure to keep in touch and if you need any advice on anything don’t hesitate to ask.

  • DENIS DIXON says:

    Fortunately, my leased property at Riverside Gardens (adjacent to the shopping centre) is elevated and flood-free; however, recent comments by agents indicate that the flood effect on top of development and employment limitations is an ongoing limiting factor. This is not encouraging for those considering sale.

    In Southern Queensland, a $350,000 quality construction (2010) still fails to attract more than $320,000 in the current environment. Great motivation to invest in residential property when developers continue to flood the market without regard for the consequences to investors.

  • Margaret Tavener says:

    Hi Damien

    My friends’ auntie’s niece’s cousin said “the Townsville Council will just open up more land and properties will still be in excess of need.” So as landlords the market will be depressed. Why wouldn’t the Council or state government just sell off more land for home building? Thanks Margaret

    • Damien Keyes says:

      Hi Margaret, thanks for your comment. In my view the situation for landlords in Townsville should continue to improve over the coming 12 months. Whilst the past 2-3 years in particular have not been fun to be a landlord with rents dropping and high vacancy rates this has been turning around steadily over the past 18 months. Our vacancy rate got out to over 6% at one point and just prior to the floods hitting it had dropped back to around 4% and many agencies were reporting very slight increases in prices per week. Obviously the flood situation has distorted things in the short term but when that returns to normal I think the rental market will finally begin to return to a more landlord’s market as opposed to the strong conditions that have been favouring tenants. On top of this the CBA Cheif economist suggested we will see two more interest rate drops by Christmas which in my view will be very hard for savvy investors to resist and we will see more investors (landlords) start to return to the market and buy properties in Townsville. The key for landlords is picking the right properties and ensuring they are in a good state of repair so that tenants will be attracted to their property first and when you get a good tenant hang onto them and offer incentives to keep them on either 12 month or even 2 year leases. Thanks again for your reply hope this info helps and lets hope Townsville keeps heading in the right direction!

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