Townsville vs Sydney?

Safer is relative to your investment timeframe and your entry price.

Good entry price is very hard in Sydney at this stage of cycle.

If timeframe is 5 years or less, run the risk of making no money in Sydney after holding costs, purchase and selling costs.

If more than 5 years, risk the opportunity cost of no equity gain to use in the short term due to stage of cycle.

 

Not saying your wrong but people quoted the exact same to me 5 years ago and look where Sydney went.

I myself am 99% sure the next 5 years wont be like the past in Sydney
But im very interested to see how it performs against other locations eg townsville/bne etc

 

Hi Everyone

Regardless of location, I think it comes down to investment strategy and timing. For counter-cyclical investors wanting to buy at or near the bottom of the cycle in order to catch the wave and benefit from growth in the next few years, Sydney is not their preferred option.

The majority of Sydney investors I speak with are looking for low buy in prices, good yields, and good growth potential. For these reasons, as well as the tightening of lending criteria, Queensland, and Cairns in particular are on the radar. Plenty are still cautious about Townsville due to it's vacancy rate, but optimistic over the longer term.

The Herron Todd White property clock have Sydney at the peak of the market and Townsville at start of the recovery. SQM research have Townsville asking prices increasing and Sydney asking prices either decreasing, or having increased astronomically over recent weeks. I can't see how this growth is sustainable and concur with HTW.

Also, something to consider which has previously suppressed property price growth in North Queensland is the insurance issue, which many of you are well aware of. However, we are now seeing some very real changes, which I have written in detail about in the Cairns thread here: https://propertychat.com.au/community/threads/cairns.3045/page-3#post-66470.

Cheers

Jen

(p.s. The above is based entirely on my own observations, and not to be taken as specific advice. Allways seek professional advice before making an investment decision.)

 

The vacancy rates have been dropping rapidly in the inner suburbs - particularly for houses

No stats just observation

West End, hermit hyde park, south townsville

Dont look at the beachfront as much as they are more ppor price bracket

See townsvilke as low risk. 7 years of no growth
We bought a place in west end for 398 - sold for 480 in 2007 or 2008

 

Hi strongy 1986,

Is your house a highset house in Townsville? I have one in Townsville that is highset, and when I was getting insurance quotes the replacement values of the homes seemed quite high to me. I come to the conclusion that this was because my house was highset and to replace it would be quite expensive these days because of the costs involving safety regulations around heights.

As far as I could tell, if the insurance company paid out to replace the house on my property, then it would be a lump sum payout for me to do as I pleased with. So I decided that if I had to replace my house, I would be happy with replacing it with a slab on ground home that would not be anywhere near as expensive as one on stumps (essentially a two story home). I also took into consideration the clean up costs to demolish what was left of the house if I had to rebuild (don't forget to allow for asbestos clean up if that applies to you).

Cheers,

Brodie

 

My 2 cents re: Towny vs Cairns:

Tsv

• Huge defence force infrastructure & strategic base
• Port facilities
• International airport (but not utilised)
• Casino (small)
• Population base
• Mining economy (Charters Towers)
• University

Cairns

• Tourist based economy
• Large casino
• Full international airport (closer to Asian market)

The strong aud over the last 10 years has possibly contributed to the lack of growth in the top end as it was no longer a cheap holiday destination for Asia.

With the table turned, tourism will kick on but long term sustainable growth is questionable in Cairns but more likely in Tsv due to the more diverse economy.

 

Cairns also has James Cook University and the campus in Cairns is currently putting up two new buildings, and CQU also recently opened a new campus here in the city centre.

 

The cowboys winning the nrl premiership yesterday could cause a boom for property? (kidding)
?

 

Generally agree with this, I can add that Townsville also has many more government jobs. Cairns also has a significant JCU university campus and a large naval base.
Although TSV's population is larger Cairns supports a much larger regional population.

 

never really mentioned but the old housing stock in townsville is very high quality and good value for money
blocks are also more commonly 800-1000sqm

cairns has smaller blocks and only a couple of suburbs have well built houses

 

I'd say you listened to the wrong people . Most people who I respect on the forum were buying in Sydney 5 years ago .

We bought from 2009 to 2013 .

No plans on buying in Sydney in near to medium term . A change in PPOR is the only reason why we'd review that .

I think most places of any significance will out perform Sydney in the next 5-7 years. Sydney might be ok for next year but I wouldn't buy here .

Cliff

 

Been driving in and around Townsville the last few days.
Seems to still be plenty of land available to be released out near the "North Shore" development in Burdell.
Closer to the water seems to be holding its value better.
Might still be a bit too soft and vacancy rates a bit too high for me out that way.

 

Any updates on townsville? whats the word on the street?

HTW Cairns Rising, Townsville bottom
http://www.htw.com.au/Downloads/Files/278-Month_In_Review_February_2016_V2.pdf

 

Interesting that HTW have downgraded Townsville to bottom of market while earlier in the thread is was start of recovery and I also thought rocky was previously at bottom rather than approaching bottom .

Cairns seems to be the one out performing , but I'm still stuck in the mind frame of ten years ago when cairns was over dependant on the tourism market . Is that starting to change ?

The vacancy rates are my main concern at the moment .

According to sqm , cairns is a relatively healthy 2.2 %
Gladstone is 9.9 % .... ( yep , everyone knows it's bad )
Townsville at 7 % though , isn't two far behind Gladstone .
Rocky is 4.5 % which is higher than ideal
Mackay is 5.9 % , though starting to trend down .

Personally I'd want to see those rates coming down before buying up significantly .

Cliff

 

Cairns definately the pick. I didn't expect Townsville at 7...but I haven't really looked either
A couple of years could/should see things turn around. Would it be safe to think in the vacancy department t'ville pull ahead of gladstone and Mackay and look the more appealing investment. Rocky has cows so should hold steady compared to gladstone/Mackay

 

Hi Bob

Very generally speaking, Townsville is bouncing along the bottom. It’s definitely a buyer’s market if you’re happy to hold, and can mitigate any risks. I’ve attached an RP Data report for your interest.

• Buy in prices are low. With a median price under $350k, there is plenty to choose from. The median house price is now around 15% lower than that of Cairns.

• Yields range from approximately 4.3-6.5%.

• There are pockets of oversupply, and pockets where supply is limited, depending on what you are looking for.

• As mentioned by Strongy, decent quality stock with a good land size is scarce in Cairns, but not the case in Townsville.

In terms of growth, there is plenty to suggest that we won’t see much over the next 6 months or more. Local sentiment and business confidence is low, and unemployment and vacancy rates are high.

Having said that, the Townsville property market is very patchy, as you can see from the attached graphs. This is also reflected in the attached Feb 2016 Herron Todd White report which says:

• "During 2016 the outer suburbs will likely experience little change in value, while secondary or less attractive property may realise further value corrections. The inner ring suburbs and beachside locales should continue to enjoy stable to slightly improved values. “

From my personal observations, investors are still very cautious. However, all the tradies I know have been flat out since about October, and are still catching up. Yesterday I was chatting with a property solicitor who I work closely with, and they are flat out. Vacancy rates are still high, yet a client of mine just rented his renovated property out within 2 weeks. Also, we are starting to see some Commercial investors buying in, and the health sector is expanding rapidly, as evidenced by the expansion of the Mater private hospital, and the recent announcement regarding a new private hospital development by JCU: http://www.abc.net.au/news/2016-02-26/james-cook-university-plans-townsville-campus-private-hospital/7202140

Going forward, I anticipate that overall, houses in Blue Chip areas will stabilise or continue to grow, houses in less desirable areas will decrease further or stabilise, and units will trend lower, due largely to what I see as a hangover from the ‘insurance crisis’ and associated body corp fees. While Suncorp re-entering the Strata market is making a massive difference to insurance fees, there remain few body corps and insurance brokers even aware of the policy, and I believe unit prices will only move some time after house prices have moved upwards. This is the same pattern we saw in the Cairns market.

Overall, I think the Townsville market is around 2 years behind the Cairns market in terms of the property cycle.

Cheers

Jen

(p.s. The above is based entirely on my own observations, and not to be taken as specific advice. Always seek professional advice before making an investment decision.)

 

great on the ground info @JenJen ill get reading!!

 

Thanks for the info @JenJen
I saw plenty of developments and land on the Northside when I was there, will take a while for that to get absorbed. Vacancy rates are higher in some of those areas too.
But there are definitely some good buys around.

 

Hi Azazel
I totally agree with you re. supply in the Northern suburbs of Townsville. For investors, I wouldn't consider the area at this stage. Rather, just watch the Blue Chip and middle ring suburbs. Houses, not units. Be careful with flood zones. And be careful with vacancy rates and insurance prices etc. I strongly suggest getting insurance quotes prior to purchase. From an investor perspective it can make a huge difference.
Cheers
Jen

 

We had an IP in heatley in the last cycle which close to doubled in the last cycle . Bought for 155 and sold around 300 ? 305 .

A quick search shows lots of properties for sale at under 300 and the first one I opened , is Much nicer than the one we sold in around 2007 .

Short of a major turn around in the local economy , I will be surprised if we much movement in Townsville before we see a significant move in Brisbane . Brisbane needs to get to the point where people are profit taking and wondering where next .

There will be people looking for bargains at the moment , trying to find the perfect property at the perfect price , but I think in terms of velocity of money , Brisbane is going to out perform townsville for the next 2-3 years or more . I'm happy to let the bottom pickers get the perfect house at a bargain price 10 -20 % under market , but then come in when it is closer to wake up time , in the mean time , ride Brisbane as it goes up significantly more than the 10-20 % gain that the early buyers will get in townsville . Pre APRHA changes I might have had a look , but now I need to get my money working as hard as I can get it working.

In the mean time I will watch Jen Jen's every post with interest . Nice to have an informed source on the ground.

Cliff