Toowoomba Property Watch Q2 2011

For the purposes of this report, Toowoomba is defined as the area that falls within the same boundary as the old Toowoomba Local Government Area. This report will outline the major trends that have influenced the areas residential property market and identify the types of house, unit and vacant land stock that have transacted during the December 2010 half year period.

Demographics
According to the Australian Bureau of Statistics (ABS) estimated resident population, the Toowoomba Regional Local Government Area had a total of 98,649 residents as at June 2010. This equates to an increase of 1.7% or 1,636 new residents from the June 2009 population of 97,013. The population is dispersed across a variety of age groups with 20.4% of the population under 15 years of age and 15.3% of residents aged 65 years or above . This indicates that in order to cater for the needs of an assorted demographic, Toowoomba must provide an array of housing options . Toowoomba has a housing composition typical of a rural area, with 67.8% of residents living in a household that is classified as a family variation, 81.2% of dwellings a comprised of freestanding houses and only 18.2% unit or townhouse accommodation. The Toowoomba LGA also has a strong investment market accounting for 35.1% of dwellings, while 68.6% of residents are owner occupiers either servicing a mortgage or owning their property outright. The bulk of households, 68.9%, earn less than $1,200 per week, while toward the higher income bracket, a significant 16.6% of households earn over $1,700 per week.

House Market
The Toowoomba house market has been known to be consistently stable over the past decade, resulting in steady growth in home values. However, since the peak of activity experienced in the property boom of 2003, there has been an increasing trend of a declining level of transactions. For the most recent six month period ending December 2010, a total of 799 settled sales was recorded, equating to a softening of 28.3% from the previous year. The majority of sales that occurred over the December 2010 half year period took place in the price bracket of $200,000 to $299,999, with 46% of the total 799 sales. However when compared to the previous year, it is this price bracket that has contracted the most, with 206 less sales.

Over the six months to December 2010 , the Toowoomba LGA registered a median house price of $300,000, equating to nominal growth in the median price over 2010, of 3.8% or $11,000 . To gauge returns investors within the Toowoomba LGA, PRDnationwide Research conducted a resale analysis. This analysis revealed home owners who exited the market over the six months to December 2010 , benefited from a very strong average annual capital growth of 7.4% per annum. These houses were held for an average period of just over seven years.

When analysing suburbs, Rangeville experienced the most sales for the second half of 2010 with 95 settled transactions, followed by Newtown with 80. Middle Ridge maintained the highest median price of all Toowoomba suburbs, at $435,000, while Harlaxton was the most affordable, at $227,500. When looking at long term median price growth, houses in Toowoomba City have experienced the most growth at 8.4% per annum over five years, while Drayton houses increased the least at 2.6% per annum. Initial signs show that the 2011 Toowoomba house market has a declining trend in new house construction, with a steadying rate of sales. This equates to a rising market that is potentially moving off the bottom of the property cycle.

Unit Market
The Toowoomba unit market occupies only a small segment of the property market at 19% of total property sales for the December 2010 half year period. Longer-term, over the past five years apartment sales have averaged only 274 transactions per six month period. These sales have primarily been driven by a younger demographic seeking a low maintenance lifestyle, facilitated by proximity to amenity and central location.

Activity in the unit market has fluctuated over the past decade, with the recent spike in 2009 being fuelled by low interest rates and a stimulus driven market. Since June 2009 transactions have steadily declined with the most recent December 2010 half year experiencing a softening of 25.4% from the previous year, to register 211 sales. The price bracket to receive the most sales was the $200,000 to $249,999 bracket, with 29% of the total unit market, followed by the $250,000 to $299,999 bracket, with 23%. This suggests that there is little difference in the buying trends between the house and unit market, with the majority of sales occurring in the $200,000 to $299,999 price range for both markets.

The median unit price has also fluctuated through various levels of demand over the past decade, with an overall trend that has seen unit values increase over time. For the December 2010 half year, a final median unit price of $243,750 was recorded, equating to a healthy growth of 6% from the previous year. A resale analysis of Toowoomba LGA units has revealed an average annual capital growth of 5% per annum, with an average holding period of just under seven years . At the suburb level, most unit sales occurred in Kearneys Spring with 35 transactions, followed by Newtown with 26. Toowoomba City recorded the highest median price at $329,000, while Wilsonton Heights was the most affordable at $201,500.

Looking ahead into 2011, demand for new units has indicated to be fair, with a significant shortage of available unit stock in the rental market leading to a tightening in vacancies. Over the March 2011 quarter rental bonds for units have increased by 5.7%, while median rental prices have also increased by 5%.

Vacant Land
Within the Toowoomba LGA, vacant land comprises a significant portion of the landscape. According to the Broadhectare Study 2009, Glenvale, Highfields and Drayton have the greatest potential for residential dwelling yield accounting for 7,950 future residential dwellings in total.

Similar to the house and unit markets, vacant land sales have softened in activity since June 2009, with the most recent six month period ending December 2010 experiencing 77 sales, a decrease of 36.4% from the previous year. In terms of price points, the bulk of transactions occurred within the $100,000 to $149,999, with 31% of sales. This was followed by the $150,000 to $199,999 price point with 26%. Middle Ridge is the suburb that has experienced the most vacant land sales with 29 sold, followed by Harristown with 16.