Local,
state and federal governments have been acutely aware of the cost pressures
being felt by North Queensland property owners, particularly in the strata
unit market, who by and large are first home buyers or elders in their twilight
years of retirement, due to un-costed climate change policies, back flips and
innuendo by previous governments and left wing lobby groups leading to an
environment fit for power brokers in the insurance, energy and public taxation sectors to gouge profits.
Could a plan of fleecing struggling North Queensland property owners of their hard earned money while masquerading as energy suppliers, climate protectors, climate risk adjusters and dare I say it humanitarians be the intention of our domestic and global leaders?
Could a plan of fleecing struggling North Queensland property owners of their hard earned money while masquerading as energy suppliers, climate protectors, climate risk adjusters and dare I say it humanitarians be the intention of our domestic and global leaders?
It seems the balance of social and economic policy has gone too far and now the North Queensland strata unit market is the warning signal. It is a barometer of market economists and investors tracking the perfect storm hitting North Queensland strata property owners in the hip pocket.
The demand in the strata unit market in Townsville continues to feel the strain of government housing initiatives moving welfare or means-tested battlers into affordable housing schemes such as the National Rental Affordability Scheme (NRAS), defence housing moving to build and acquire more exclusive housing stock for military personal, a crack down on non compliant government funded housing tenants being pushed onto the private housing sector or distressingly into temporary shelters.
In addition, the broad base of demand from government and engineering industries have less economic support with higher unemployment figures which sits at 7.0% in Oct 2013 (ABS Labour Force Survey Data) in the North and North-west Queensland region.
Recent increases in the cost base for strata units such as higher levies driven by insurance, energy and local council charges (mostly driven by justifiable weather event and asset life cycle risks) has caused less discount affordability for owners to reduce rental prices while bearing the loss of more vacancy days at historical prices.
Townsville's rental vacancy rate for strata units stood at over 6.5% in Nov 2013 up from the record high of 5.5% in August based on Herron Todd White's Rent Roll Survey. Although many people have left the city for work, breaking their leases in the process, others have become an owner occupier while mortgage rates are at record lows. But many people are being drawn out of the rental market by the government funded NRAS.
Increasing rental prices therefore have come to a stop in 2013. In fact medium rental prices for houses have dropped by $10 per week while strata unit prices have not changed. Is this steady unit price due to strata unit holders having less timely control on cost adjustments while being impacted by increased costs to insurance, energy and government charges? The evidence seems to suggest yes!
Townsville Real Estate Blog believes the increasing cost base for strata unit owners and dwindling demand driven by unemployment and government funded schemes is creating a challenging period for Investors.
Prices in both the new and existing unit market has reduced over the past 12 months by $15k and $22k respectively. An increasing number of existing units have come onto the market for sale in the past few months suggesting more strata unit holders are exiting the market. The combined price discounting in both units and houses, the market is ripe for buyers seeking an entry point to the market with lower interest rates and capital city prices and demand increasing substantially over the past 12 months.
With approval of the Abbott Point Coal Loading facility by the Federal government and increasing tourism and construction expenditure, Townsville's residential property market cycle is set for recovery with local economists predicting a property "pulse" in 2014.
Townsville Real Estate Blog also believes 2014 should see a surge in demand with further sideways movement on prices early until existing supply thresholds are exhausted and demand again drives price increases off the back of growing capital city confidence, employment improvements and a slide in government funded residential housing initiatives. But the extent and timing of the recovery will also depend in no small part on the policy makers and global climate risk adjusters suspending their appetite for profit making in the strata unit market, which is traditionally placed at the most affordable spectrum in the property market.
Landlords need not be alarmed for the medium to long term as demand should improve driven by government and private investment confidence, capital projects such as Abbott Point, public infrastructure funding, and restructuring of government business models, returning robust economic activity to small to medium size businesses.
For North Queensland property owners, it's the policy makers and influencers driving costs to insurance, energy and government charges that pose the greatest risk to their short term wealth and lifestyle planning objectives.
For specific real estate advice, services and solutions, don't hesitate to contact the author with your comments. Real estate specialist and this Blog sponsor is www.rapidrealty.com.au
References:
Townsville in Focus Report, Nov 2013
Australian Bureau of Statistics Labour Force Survey Data