2020-2021 Market Outlook for Moreton Bay, QLD

2019 Q4 Market Analysis

2020-2021 Market Outlook for Moreton Bay, QLD

The local government area (LGA) of Moreton Bay occupies an enviable position between Brisbane City to the south and the Sunshine Coast to the north. The LGA includes the facilities of its major towns—Burpengary, Morayfield, and Caboolture – along with rolling countryside and accessible beaches. Areas like Moreton Bay, to the north of Brisbane offer a stable place for property investment.
 
As can be seen in the map below, areas to the north of Brisbane are faring better in the current property market for houses than the LGAs to the south of Queensland’s capitol.
 
Brisbane and its surrounding LGAs didn’t appreciate as dramatically during the boom years as Sydney’s urban zone. The price correction occurring down in New South Wales isn’t as severe up in the north.
 
As a suburban and semi-rural zone, Moreton Bay is dominated by family homes. While house sales in the last quarter didn’t reach the levels of the densely packed Brisbane City LGA, to the south, sales volumes were higher in Moreton Bay than in all of the other LGAs that border the capitol district. The rental market for houses is particularly strong in Moreton bay.
 
Brisbane City saw a small price fall of 0.61 percent on a sales volume of 567 houses, compared to an average price increase of 3.05 percent recorded over 312 house sales in Moreton Bay. The closest comparison to Moreton Bay lies just to the north in the Sunshine Coast LGA, which had a price increase of 3.63 percent on average from the sale of 287 houses. Glamorous Gold Cost City to the south of the Brisbane area is more influenced by the property markets in Sydney and Melbourne, being a vacation home destination for residents of the big cities of the south. Prices there fell slightly by 0.03 percent on the sale of 417 houses. The worst price performance in the immediate vicinity of Brisbane occurred in Logan City, where prices fell by 1.64 percent in the last quarter with sales of 188 houses.
 


 
Unfortunately, the HtAG map doesn’t show results for unit sales in Brisbane City, where city centre locations are more likely to be provisions with a high proportion of apartments. The volume of unit sales in the LGAs around Brisbane city are very low. Moreton Bay illustrates this situation well, experiencing only 27 unit sales in the last quarter, but registering and average price increase of 3.51 percent. Sunshine Coast had more unit sales volume in the last quarter: 85, where prices rose on average by 2.67 percent.
 
the Gold Coast LGA had a significant number of unit sales. Those iconic views of high-rise ocean-front blocks tell us that this district is a hotbed of activity in the market for units and there were 207 units sold in that LGA during the last quarter. However, the average price of sold units in Gold Coast City fell slightly, by 0.3 percent.
 
The demand for houses in the LGA is at the very top end of the scale for the entire country – both as rental and for sale. The rental and sale activity for units is also very high in the LGA when compared to the rest of the nation. High demand is always a good indicator for property investors and implies that the Moreton Bay area will continue to be a good location for property investment.
 
Although rents have risen over the past year, the cost of buying property to let is also on an upward trend. This situation puts a squeeze on yields. Although capital values will continue in positive territory.
 

 
The demand profile for property sales over the past year, below, shows houses greatlyu dominate the market in Moreton Bay. Suburban LGAS close to the major cities of Australia typically show more demand for three and four bedroomed houses. However, this trend is amplified in Moreton Bay. The very large proportion of four bedroom house sales is particularly notable. The sale of five bedroom houses is also much higher than in comparable suburban LGAs.
 
The big message from the demand profile is that the sale volumes for houses in the LGA outstrips the sale of units.
 

 
 

 


Houses

 
Families are more likely to occupy houses than units. Another maxim in the property industry is that families prefer to buy than rent. This has never been the case in Moreton Bay. In every quarter since the HtAG data begins in Q3 2009, completed rental contracts have always outstripped house sale contracts in volume.
 
From 2011, house sale volumes started to climb dramatically, rising up towards the volumes experienced in the rental sector. However, this was not a switch over from rental to ownership because over the same period, rental contracts continued to increase. The volume of completed rental contracts has never decreased in Moreton Bay quarter-to-quarter. The volume of house sales has decreased quite dramatically since the end of 2018.
 
The house sales market volume peaked in Q4 2016 with 1,800 sales. In the same quarter, completed rental contract volumes stood at 1,900. This is the closest the two statistics have ever been and they have diverged ever since with sales falling and rental volumes rising.
 
Average sales prices dipped from Q3 2010 through to a low in Q2 2013. Since then, house prices have increase quarter on quarter to the present day. HtAG expects this rising trend to continue over the next two years, but at a decrease rate of increase, and also expects sales volumes to get onto a rising trend.
 
Average rents in Moreton Bay have never fallen. HtAG expects that trend to continue with rent level increases rising at an increase that is roughly in line with rent rises in the past two years. HtAG expects the demand for rental houses to remain roughly at current levels.
 
HtAG’s bedroom-level forecasts are currently using a beta model source, so expect these forecasts to be revised once the model is fine-tuned by our data science team.
 
The price changes indicated in the forecast graph can be seen more clearly in the market cycle graph for house sales, shown below. That one dip into negative price change territory from 2010 to 2013 is the one notable feature of the graph. The red section of the line graph denotes prospective price changes. The line stays above the zero line, meaning that prices in the housing market in Moreton Bay will continue to rise.
 
 


 
The heatmap of house price changes for Moreton Bay strikes a note of caution. Investors want certainty and all information thus far points to Moreton Bay being a safe investment for house buyers. However, those red patches on the zoomed-in price performance map modifies enthusiasm. What are those red patches? Why are there dark green areas immediately next to dark red areas. Clearly dark green means extreme price rises and dark red means heavy losses.
 
Desirable waterfront zones, such as Scarborough, Woody Point, and Beachmere show large price rises for the quarter: and 6.78, 7.11 percent, and 9.25 percent respectively. However, when Burpengary East, right next Beachmere saw a fall of 2.77 percent, worry sets in. However, the sales volumes in these areas are negligible. On estate sale or a divorce-forced sale in the quarter can easily push down average prices, whereas, the sale of one property with spectacularly landscaped grounds can push up the average price for the quarter in a neighbouring area.
 
Overall, Moreton Bay has a respectable sales volume level and so the continued price rises are reassuring. Burpengary East saw only two sales in the last quarter and so is not indicative of the overall direction of prices.
 
The scatter map below shows much more intense sales activity in the south of the LGA and almost no sales in the north. This reflects the varied nature of the Shire of Hornsby with the South forming part of Sydney’s suburbs and the North and West including sparsely populated rural areas.
 
The scatter map of the house sales that occurred in the last quarter shows where all the market activity lies. A combination of local knowledge and statistics should help any house purchaser in Moreton Bay steer towards a safe investment.
 

 

 


Units

 
Moreton Bay is not a major destination for investors who seek units. The Gold Coat, The Sunshine Coast, and Brisbane City are much more likely to attract unit buyers in larger volumes. In most markets, units are a better bet for buy-to-let investors. However, in Moreton Bay, renters are much more interested in houses than units.
 
There is more demand for rental units than units for sale in Moreton Bay and as a proportion, the turnover of rentals compared to sales is much larger in the unit market than in the market for sales. However, the demand for houses has always been higher in the rental market for houses than in the unit rental market.
 
One interesting factor that might make the unit market more interesting for buy-to-let investors is that the while average sales prices have risen steadily, rental prices are on a steeper incline. HtAG analysis sees this trend continuing with the percentage increase in rents increasing at a greater rate than the increase in sales prices.
 
The market cycle graph for units is very similar to the graph for houses in Moreton Bay. The unit sale value dip was actually a little shorter than the dip in house prices. Nevertheless, HtAG forecasts see continued unit sale price increases over the next two years, although at a slower pace.
 
 


 
The heatmap of unit sales in Moreton Bay is woefully short of sales data for districts within the LGA. But this just illustrates how small the market for units within the LGA is. There is no sales data for Caboolture, which makes up the largest population centre of the LGA. The two red areas in the map represent locations with unit sales price falls. These are Deception Bay, where prices fell by 4.85 percent on a sales volume of three units and Clontarf, where the average unit sales price for units fell by 3.5 percent, but with only two sales in the quarter. As with the market for house sales, investors in units in Moreton Bay should ignore zone sales data and focus on individual property attributes when looking for capital growth.
 
The scatter plot of unit sales shows how low the turnover is in this market, which means that aggregated data across the LGA as a whole is more reliable than zone-by-zone statistics.
 

 

Conclusion

 
Property investors looking to avoid the price falls that many LGAs in Australia threaten should certainly invest in Moreton Bay with confidence. The demand for houses in this LGA is particularly strong. Although prices aren’t expected to grow at a rapid pace over the next two years, they will grow. Better yet, rent levels are expected to grow at a faster rate. This means that Moreton Bay is a good place to invest for buy-to-let investors who can expect steadily growing income plus capital growth.

 
 
 

Matt Djolic
Matt Djolic

Matt is our applied knowledge strategist. A PhD candidate in Management, Matt Djolic focuses on leveraging the benefits of HtAG’s transdisciplinary knowledge pool. Also, a Senior Construction and Building professional, Matt ensures HtAG’s service is aligned with the changing requirements of the construction and development industry.

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