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Townsville vs Sydney?

Discussion in 'Where to Buy' started by JenJen, 6th Jul, 2015.

  1. JenJen

    JenJen Well-Known Member Business Member

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    Hi

    I would really appreciate all feedback and discussion on this statement:

    "Please do not buy any property in Townsville. It is a market that historically suffers from radical price flunctuations and you will be putting yourself at risk.

    I think the safest strategy for you will be to buy a property around the Campbelltown area of Sydney - you need to find a property in the low 400's. Suburbs like Escol Park, Ruse etc offer very good capital growth potential."

    The comment above was made by someone who is into renovating, but not a qualified financial advisor.

    Cheers

    Jen
     
  2. Be Developer

    Be Developer Property Developer Business Member

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    Correct!


    low 400's for house would be big ask..

    i personally would buy in Sydney over Townsville ATM.
     
  3. HUGH72

    HUGH72 Well-Known Member

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    I don't understand Townsville, its one of the biggest regional centres in the country and has a diverse economy yet it property market has languished for some time.
    It has one of the biggest government payrolls outside of Canberra, the state government seems determined to push its cause as the second state capital. It has a large army base, port, large hospital, growing uni JCU, refinery and lots of fifo mining employees, industry and mining services. Yet the market has been going nowhere for a number of years.
     
  4. Be Developer

    Be Developer Property Developer Business Member

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    @HUGH72

    +1

    I remember couple of years ago, I couldn't find accommodation for night in Townsville.. As most good ones were booked.

    Economy was storng then.. May be still Strong but property market remains sluggish!
     
  5. The Falcon

    The Falcon Well-Known Member

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    Townsville is probably still recovering from the "Storm".
     
  6. Azazel

    Azazel Well-Known Member

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    I would definitely go for Townsville over Sydney at the moment. Granted, Sydney is a big place and there still might be, might be, some good buys somewhere.
    But I'm a big fan of buying when there's less competition.
    Things seem to be selling pretty well in the places I'm looking in Townsville.
     
  7. R377

    R377 Well-Known Member

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    Townsville does not suffer from radical price fluctuations. Can check RP data on the Kirwan, Douglas, Idalia and Annandale.

    The market has been flat for the past 5-7 years. With Cairns and Brisbane both getting growth in the past 12-18 months, it will have to ripple to Townsville....
     
  8. Bigmaan

    Bigmaan Active Member

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    I have one in Douglas that has done nothing in 6 to 7 years but I wont sell because I believe the place has so much potential and will pick up soon. They have a progressive council and the place is great to live or visit. Smarter people than I will have a reason why is hasnt taken off. The quality of the houses in those suburbs mentioned do laps around the dumps in certain places in Sydney. Then again, location, location, location.
     
  9. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Then the next question is, why choose Townsville over Brisbane?
     
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  10. HUGH72

    HUGH72 Well-Known Member

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    Both have underperformed, historically BN moves before regional Qld. Holding costs are significantly higher in NQ compared to BN.
    Townsville must be suffering from the mining downturn although I thought it wouldn't be the case. Its a polar opposite to Cairns which is on the improve due to tourism and an improvement in the local construction industry. The AUD/USD at 75 cents will give it a further kick along, probably no other regional market in the country more influenced by it IMO.
     
  11. JDP1

    JDP1 Well-Known Member

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    Broadly speaking, in the last 2 plus years after the end of mining boom, the majority of the growth in jobs and thus demand and therefore prices have been driven by the private sector or publicly listed companies.not the state nor federal govt. Thus syd and Mel have done the best (ignoring supply factors) and places like Townsville , Adelaide, Hobart etc havnt really moved much.
     
  12. Mick C

    Mick C Well-Known Member

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    ^ I would totally agree to this comment...however low 400's i dont think so...more like High 400- to low 500 now.
    ( low 400 was probably 4-6 month ago)
     
  13. JenJen

    JenJen Well-Known Member Business Member

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    I agree with a lot of the above comments, and have done some digging to see what the data shows. The data in the attached doc is courtesy of the CBA 'MyWealth' site. It shows historical data, and compares a handful of suburbs across Sydney, Townsville and Cairns. Note that it shows changes in Median Price not actual Median Price.

    Not withstanding the unit market (which has been skewed by insurance market failure in North QLD) my understanding of the historical relationship between the the markets mentioned is that very generally, QLD markets seem to have been influenced by the flow on effect from Sydney. The market cycle has tended to flow like a wave up from Sydney to Brisbane, with regional areas generally following on. However, the ripple effect has been disrupted by the impact of the GFC on tourism and the slow-down in the mining industry.

    Historically, and largely due to its diverse economy, Townsville suburbs (particularly blue chip) appear to have kept up with the general Brisbane growth trend, but are currently lagging. Overall, Townsville seems to have done better than Cairns, which was hit harder by the impact of the GFC on international travel, and it's over-reliance on tourism. This kept the Cairns market very suppressed, and it has taken some years to strengthen its economy and recover. The re-surgence of the tourism industry has fuelled Cairn's recent growth and seen it rise generally in line with the Gold and Sunshine Coast markets which are also tourism-based. A number of other factors are also influencing the Cairns market, including the retiring baby boomers, a general shortage of developable land (with the exception of Mt Peter), constrained by geographical factors, and tight vacancy rates. Townsville, on the other hand, has been more resilient in terms of it's diverse economy, and it's market did not take such a hit post GFC as the Cairns market did. During this period, Townsville suburbs appear to have out-performed Cairns suburbs. However, with a higher contingent of FIFO miners, Townsville was impacted more by the slow-down in the mining industry. At the same time, it was experiencing an enormous amount of construction growth in areas like Burdell, Idalia, Kirwan, and inner city units. These factors saw an oversupply in the market, and subsequent rise in vacancy rates, keeping the overall Townsville market generally very flat. However, this doesn't really give an accurate picture of what's really been going on in Townsville at the suburb level, which is captured much better in the attached graphs.
     

    Attached Files:

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  14. Azazel

    Azazel Well-Known Member

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    Wow. Thanks for the detailed info @JenJen .
    Going to have a look at it now.
     
  15. strongy1986

    strongy1986 Well-Known Member

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    We bought in West End (townsville) in December last year.

    398k for a queenslander on a 810 corner block with detached granny flat (which we will eventually bulldoze)
    The house was purchased by the previous owner for $480k in 2007

    Here's something for the investors - under the new town planning most residential blocks in Townsville are now zoned for dual occupancy / dwelling

    Only issues with it are the current vacancy rates and insurance premiums

    Bang for your buck - can't find better in Australia for towns with population over 100,000
     
  16. strongy1986

    strongy1986 Well-Known Member

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    Also what do people think Cairns have that makes it better than Townsville ?

    Better beaches and some Chinese floating around is all I can see

    The quality of housing, waterfront amenity and cbd is much higher in townsville I feel

    Anyone disagree...

    Interesting to see the Chinese talking up the port of townsville as a large agricultural exporter on channel 7 on Sunday night - not sure there plans would actually benefit Australia or Townsville though
     
  17. Jerry O

    Jerry O Well-Known Member Premium Member

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    Mick is right. Low 400's in the C-town area is a thing of the past now (landed properties) and nothing in the sub 300k for units. There'll be properties listed in the sub 400k but that is just a marketing tactic i reckon to attract inquiries, and they will put it up on auction as well, as they know it will still end up in the upper 400k mark after auction.
     
  18. JenJen

    JenJen Well-Known Member Business Member

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    Hi Strongy

    I believe that Cairns and Townsville are quite different. I wouldn't say either is better than the other though.
    • Geographically, Cairns is the 'wet tropics', whereas Townsville is the 'dry tropics'. The weather is completely different in Townsville, with over 300 days of sunshine a year. In my view, an understanding of this essential difference is key to understanding both the economies and the markets.
    • Cairns is seen as the 'gateway to the Great Barrier Reef', 'where the rainforest meets the reef', and the 'Jewel of the North'. A lot of the surrounding rainforest is world heritage listed, and of course you have heaps of tourist boats going out to the Great Barrier Reef is which is why it is a tourist mecca. Not so in Townsville. Magnetic Island is the main tourist destination, and reef trips tend to be confined to the Yongala Wreck.
    • Population wise, I believe that Cairns is far more likely to benefit from the wave of retiree baby boomers than Townsville. On the other hand, Townsville will be more likely to benefit from things like the medical, power and export industries.
    • The economies are quite different. Townsville has been more diverse for a much longer period of time, whereas Cairns has reinvented and diversified its economy post GFC. Among other things, both are capitalising on 'international education', 'health', 'tropical innovation' and the 'Asian food bowl'.
    • Cairns has a big international airport. It's about 10 times the size of the Townsville airport, which is technically an international airport, but is only just commencing international flights, and is currently undergoing an expansion program.
    • The capacity of the ports are quite different. The Port of Cairns is not a deep water port, which restricts it's ability to take larger vessels, and is why cruise ships currently anchor off Yorkey's and people are shuttled into town from there. Townsville Port is undergoing a continuous expansion program to position it as a part of the so-called Queensland 'Economic Triangle'. It is a deep water port, and has a much bigger capacity for exports than that of Cairns.
    • Chinese interest in the region has been primarily focussed on Cairns to date. However, the Townsville Council are pretty determined to position Townsville as an area ripe for investment, and recently embarked on a trip to China to do so.
    • For Townsville, both the economic sentiment and the property market are well behind Cairns. I would estimate at least a year. In my view, Cairns turned the market around September 2013. Townsville has only just been moved into the 'recovery' phase according to Herron Todd White.
    • Town planning - Townsville are probably more pro-active in taking an active hand in boosting the economy. Just today, the proposed $1.9b plan for Ross Creek developments was released for public consultation.
    Insurance issues have impacted the property markets in both areas, but far more so for units than houses. This is because unit blocks are more expensive to replace, and therefore considered a greater risk, with many insurers having pulled out of the market alltogether. Not so with housing, which has greater market representation and competition. These days you can insure a house for around the $2,000 mark.

    Unit prices have bottomed out in Cairns, and are now on the rise as costs outweigh expenses. Also, the price differential between houses and units has pulled up unit prices. I believe Townsville unit prices will follow suit.

    Cheers

    Jen
     
    Last edited: 7th Jul, 2015
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  19. HUGH72

    HUGH72 Well-Known Member

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    Nice summary Jen
    I remember you predicting some growth in Cairns about 12-18months on SS which was talked down but you were correct.
     
  20. C-mac

    C-mac Well-Known Member

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    Hugh nailed it with the holding costs mention in NQ and FNQ. Insurances are through the roof accordingly, making the returns harder to find. The TSV economy is stable but prone to fluctuations quitr frequently, making it unreliable.

    Also, unless you are buying along the Strand or in the immediate front foothills of Castle Hill, tenant quality in other postcodes in TSV can be... unreliable.