22 May 2010

Townsville Real Estate Buyers Bonanza

Townsville's confident and cashed-up buyers and investors actively searching the residential and commercial property markets now and in the coming months could find excellent investment opportunities.

The word on the street suggests that factors impacting both the supply and demand sides of the market may be combining to present confident and cashed-up investors the foundations for future positive returns and yields. To use a well used cliche, investors 'make money when they buy, not when they sell', so this could be the time for those investors.

In the first instance, there are supply trends that are seemingly emerging on the back of strategic financial and political events in the international, national, state and local markets that could see further property stocks being released.

On the minds of many people are events such as; interest rate increases, Australian $ and company stocks taking a dip in value, European bailouts, federal tax reform on mining, all of which may be combining to affect the asset holder's evaluation of perceived financial constraints and risk profiles.

These inconclusive factors at this stage of political and financial uncertainty could be pressuring property owners, particularly reactive and fearful sellers, to seek a more fluid asset base and thereby push their properties onto the market for sale to reduce their residual risk exposure.

While on the demand side of the market, confidence levels have decreased by as much as 10-20% in recent reports. This is due to the uncertainty in future private capital investment impacting the mining industries, employment prospects, sale of government assets, and lower than expected investment programmes announced in the Federal Government's budget for the Townsville region. Unqualified discussions and observation by our office of buyer behaviours in their research and decision-making suggests buyers are treading carefully.

Although not uncommon for investors and business to take a wait and see approach in an election year, I believe the announcement of the "super profits" tax on mining companies and the way in which this prospective tax was announced by government may have contributed significantly to the perceived reduction in confidence for real estate buyers.

Despite these perceptions however, the fundamentals and broad base of the Townsville economy is solid and should sustain property prices on quality property assets in the coming period of perceived uncertainty.

For some sellers the perceptions, fear and circumstances may just be enough to present confident and cashed-up investors a buying bonanza in the Townsville Real Estate market in the coming months.