A good investor understands that there are markets within markets and it is usually within these smaller submarkets where the best opportunities are found. A great example of a market within a market was evident during the global financial crisis when Australia’s stock market was tumbling, shareholders were seeing billions of dollars wiped off their portfolios except if you had shares in companies that were focused on gold. During the GFC investors rushed to gold as a safe haven for their money due to the uncertainty in the market and this rush sent gold prices skyrocketing. The sharp rise in the price of gold across the globe saw the share price of companies associated with gold move in a positive direction bucking the trend of many other companies at the time. As the owner of a Caloundra real estate agency and a real estate investor people always ask me what is the market doing? When is the right time to buy? These are great questions and although I don’t have a crystal ball and I cannot predict the future, I can however, look at what drives our market and identify when those effects are likely to have an effect.
Working so closely within the market allows me the opportunity to see these drivers come into effect before many others. Having seen our market go up and down in the past I have firsthand experience and know what to look for, this knowledge has helped me build a successful property portfolio and has also allowed me to help many others to profit from property investing. Ultimately time in the market is the most important factor however if you are able to time the market well you can fast track your property investment journey and timing the market relies on knowing your market and what drives its growth.
Caloundra is a regional real estate area and is very reactive to market influences, more so than a capital city due to our population and the size of our economy, so when changes occur they often happen quickly and in my experience that is definitely the case with our real estate market. I have always said that for our market to see the strong growth we will need to see a definite slowdown in the southern markets of Sydney and Melbourne. The slowdown needs to be to the extent that the media starts to report on the slowdown (because as we know most people take their investment advice from a journalist on the television or in the paper, you may be laughing but this in my experience is true) and it is only when the herd mentality kicks in that we see people start to look for the next hotspot. Smart investors understand the market and have already purchased before the real growth kicks in.
In my opinion, the best opportunities in the past 2 years for future capital growth in the Australian property market have been in South East Queensland. Many of those who were able to purchase in our region in the past two years were able to purchase a property at similar prices to 2008, as the past 9 years, in some areas have shown little or no growth. The Sydney and Melbourne median house prices have run well ahead of Brisbane and as they slow and buyers cash out and move their money north the Brisbane market will catch up and that price growth will flow north into Caloundra. I have seen this happen in the early 2000’s and that upcycle was driven from population growth into our region creating pressure on supply and demand. I am currently seeing the same signs in our current market and the media is starting to catch on with many articles talking about Queensland being the next hot spot as the heat comes out of the Sydney and Melbourne markets. On top of the population growth in the region, we have some of Australia’s largest infrastructure projects underway which is providing real jobs and real improvements to our economy and our region with the development of Aura and the University hospital precinct both well and truly underway. So when it comes to market drivers you need population growth you need infrastructure you need jobs and you need low interest rates all of these drivers are now coming into effect in our market.
The Caloundra property market is performing exceptionally well and is currently the strongest it has been since 2007. In fact, the current state of the local market is showing similar signs to the strong market of the early 2000’s, where we saw significant real price growth for that year and for most of the following decade. Current buyer demand is strong and we are fielding strong interest from buyers in the southern states especially NSW this is a sign that interstate migration is starting. Interstate buyers have been missing from our market over the past 7 years and it is only now that we have started to see the enquiry once again rise from this demographic. 6 of the 24 sales made by our agency during September were sold for street records being the highest sale recorded in their respective streets. This is a definite sign of real price growth and is a reflection of the current supply and demand in the market.
One thing that is also worth noting is rental vacancy rates. When limited property is available to rent this creates competition and rents ultimately rise adding to the yields available on investment property, making it more attractive to investors. This is a good indicator of upward price growth in the near future. Our rental vacancy rate across our 420 property rent roll is currently sitting just below 0.5% which is extremely low for this time of year. I track our vacancy rates as an indicator of market activity and in past years we have seen a vacancy rate of up to 4% at this time of year. In the past 9 years of trading, I have not seen our vacancy rate below its current level. Based on the information I am receiving from the coal face with property vacancy rates at all-time lows and buyer demand from interstate increasing, the next 12 months looks extremely positive for property owners here in Caloundra and surrounding areas.
If you are a property investor or if you have been thinking about investing in real estate now is a great time to increase your property holdings in our region. Alternatively, if you have ever considered upgrading your principal place of residence, now is a great time to invest more into the local property market, especially since price growth in your principal place of residence is in most cases tax exempt. I feel that there is still great opportunity in the market as we are in the early stages of the property growth cycle and I feel very confident about the future growth in the region.
Should you be thinking of buying or selling, or if you would like to know more about the market here in Caloundra please contact our team.