Boom­ing towns a pit­fall for in­vestors

Me­dian house-price growth may not be a re­al­is­tic gauge of where to buy, writes Prop­erty ed­i­tor Michelle Hele

The Courier-Mail - Property - - INFOCUS -

THE longer you hold on to a prop­erty the more it should in­crease in value.

If mar­kets act nor­mally, sell­ing af­ter five years will gen­er­ally mean you can sell for more than you bought in at, with a few ex­cep­tions to the rule.

Nat­u­ral dis­as­ters can of­ten leave lo­cal prop­erty mar­kets reel­ing long af­ter the de­bris is cleaned away with that ef­fect of­ten touch­ing val­ues of un­af­fected prop­er­ties as well.

And ac­cord­ing to RP data fig­ures, any­one who bought around 2010 prob­a­bly has a house that if they sold now they may not achieve what they paid for it a cou­ple of years ago.

While sub­urbs in min­ing towns fea­ture promi­nently on lists of those achiev­ing the strong­est growth in me­dian house prices over five or 10 years, they are mar­kets that de­pend on one in­dus­try con­tin­u­ing to main­tain cur­rent price and growth lev­els.

Wan­doan has had the high­est level of me­dian house-price growth dur­ing the past five years.

Its me­dian has jumped by 210.8 per cent, but that’s not go­ing to nec­es­sar­ily make sell­ers mil­lion­aires any time soon. The sig­nif­i­cant in­crease comes off a very low base with the me­dian house price now still only $322,500.

Min­ing towns also dom­i­nate in terms of 10-year me­dian growth fig­ures, but once again the base lev­els are low.

In the Bris­bane sta­tis­ti­cal re­gion it is the out­ly­ing sub­urbs which have recorded the best per­cent­age growth dur­ing the last five and 10 years.

RP Data fig­ures re­veal Rich­lands has had the best growth for five years and 10 years.

Nudgee, Ocean View, Corinda and Lutwyche all ap­pear in the top five with me­di­ans up over five years be­tween 44 per cent and 50 per cent.

When look­ing at sub­urbs with much higher buy-in prices, the per­cent­age growth of me­di­ans is much less sig­nif­i­cant.

Surfers Paradise has Queens­land’s high­est me­dian house price at $1.31 mil­lion, but val­ues have dropped 9.3 per cent dur­ing the past five years and grown only 7.8 per cent in 10 years.

In Bris­bane, New Farm has the high­est me­dian of $1.145 mil­lion, with growth over five years of 34.7 per cent and 21.9 per cent over 10 years.

Pro­pell Val­uers CEO Bart Mead says po­ten­tial in­vestors need to look at more than just the per­cent­age in­crease fig­ures when try­ing to work out whether an in­vest­ment is worth­while.

He says some ‘‘good re­sults’’ could be be­cause there are low num­bers of transactions or there are sales in the area which are de­vel­op­ment sites.

Mr Mead warns po­ten­tial in­vestors about buy­ing in ar­eas dom­i­nated by one econ­omy and says even though places such as Wan­doan are show­ing strong growth, buy-in prices are too high and the growth is only short term.

‘‘I would not rec­om­mend any­one look at in­vest­ing in a place like that,’’ he says. ‘‘Prob­a­bly 10 years ago you could buy a house for $30,000 to $50,000, now you are talk­ing $300,000, it is not sus­tain­able.’’

Mr Mead says when look­ing at in­vest­ing rather than just check­ing out past per­for­mance alone, buy­ers should look for ar­eas within about 7km to 8km of the CBD.

The four el­e­ments he says prop­er­ties should have – rather than where they are – is be­ing close to en­ter­tain­ment and cof­fee precincts, em­ploy­ment, ed­u­ca­tion and trans­port.

‘‘They all seem to re­ally drive the as­tute in­vestor,’’ he says.

Mr Mead says from a growth point of view they don’t see dou­ble-digit growth as sus­tain­able in the cur­rent mar­ket. ‘‘You need to look at what is re­al­is­tic, does the prop­erty ac­tu­ally make sense? Is the re­turn re­al­is­tic and sus­tain­able?’’

Queens­land Wan­doan Ruby­vale Rocky Point Boyne Val­ley Bar­cal­dine Hugh­en­den Ta­room Win­ton $322,500 $182,500 $435,000 $175,000 $207,500 $130,000 $235,000 $160,000 210.8% 160.7% 129.1% 127.3% 118.4% 116.7% 113.6% 110.5% Bris­bane sta­tis­ti­cal division Rich­lands $480,000 53.8% Nudgee $479,500 49.8% Ocean View $610,000 47.9% Corinda $607,000 46.6% Lutwyche $650,000 44.4% Tha­goona $389,000 44.1% Toor­bul $352,500 43.9% Up­per Mount Gra­vatt

$475,000

41.8%

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