Ipswich Area Property Watch Q2 2012

The following Property Watch report is the result of an investigation into the historic and current market trends of the Ipswich Area, which encompasses the suburbs within the 4304, 4305 and 4306 post codes.

The Ipswich Area house market registered 509 settled transactions in the six months to December 2011, representing an 18 per cent decrease in sales volumes from that recorded during the corresponding period in 2010, though on par with that recorded in the preceding June 2011 half year period. It has been 15 years since sales activity in the Ipswich Area market was this diluted. Vacant land sales were also subdued over the December 2011 half year period, registering a total of 136 transactions, though translating to a marginal improvement from the preceding half year period.

Poor confidence continues to underpin the performance of the Ipswich Area property market, with many speculators looking but failing to commit to anything other than a perceived bargain. In more recent times, the combination of tighter lending practices, increased interest rates (independent of the Reserve Bank of Australia), and the uncertain political environment leading up to the State Elections all contributed to limited participation in the market. This will no doubt exacerbate the typically quite month of January in 2012, with confidence expected to restrict notable growth for the rest of the year. End users continue to make up a significant portion of purchases in the current market, with the first home buyer segment rekindling some interest from their absence during 2010, perhaps looking to take advantage of the various government and developer incentives available to them (e.g. $10,000 First Home Builders Boost) and relatively low interest rates during 2011.

Observing the House Price Points Chart over the December 2011 half year period, reiterates the markets appetite for a bargain with 11 per cent of purchases transacting in the sub $200,000 price range. The staggering fall in sales volumes combined with the gradual shift in activity to the lower price brackets suggests that vendors have to price their property in line with the market in order to sell. This is evidenced by the gradual decrease in the median price and sales volumes since the stimulus driven 2009 market. Furthermore, there is currently an over-supply of affordable house and land packages in the immediate area that are not moving, which is diluting resales in the established market and subsequently placing downward pressure on prices. This pressure has been exacerbated by a subdued level of demand in the market which has derived from increasing unemployment in the area, with anecdotal evidence suggesting a rise in casual and contract work and the closure of many small to large business during 2011.

Enquiry from investors remains quiet despite the vast availability of well-priced investment opportunities. Perhaps they, like many prospective buyers in todays market, are conscience of the possibility that capital values may continue to soften, thus only committing to property that represents extremely good value and competitive cash flow. As illustrated by the Median Rents Chart to the left, house rents across the Ipswich Area have been rather flat for the past three years. With no material improvements to rent over recent years, rental growth prospects are perhaps deterring many investors from entering the market.

In the medium to long term, strong population growth will support the market to a healthy yet gradual recovery. The chart below highlights the Ipswich Local Government Area demonstrating the highest average annual population growth rate from 2006 to 2011 in the South East Queensland region. The Ipswich Area has excellent exposure a variety of services, industry and amenity and benefits from infrastructure that positions it within a short commute to Brisbane, Logan and Toowoomba. With the expansion of the Amberley Military Base, and completion of major infrastructure projects, the Ipswich Area looks poised for further investment. However, the area may have to wait until such time when the nations two speed economy finds a more sustainable equilibrium. This will be sure to improve business sentiment and subsequent employment in the area. With that said, many people who perhaps live and/or work in Brisbane are still attracted to the Ipswich Area property market, as it is on average some 25 to 35 per cent less expensive. It is expected that housing affordability in the long term, will transpire to become the backbone of a sustainable and resilient property market.