Noosa Heads, QLD 4567

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2 thoughts on “Noosa Heads, QLD 4567”

  1. The total adult population (15 years or older) of Noosa Heads 4567 QLD is 4,475, with a median age of 54. Of those, 52.29% are married, 14.32% are divorced or separated, 27.46% are single and 6.08% are widowed.

    The average household size is 2.3 people per dwelling, and the median household monthly income is estimated to be $8,912. The median monthly mortgage repayment for households in this suburb is $2,167 which is 24.32% of their earnings.

    Source: ABS Census Data (2021)

  2. Noosa Heads, QLD 4567 is a suburb that perfectly exemplifies an area that has ‘run out of steam’!

    The area has experienced a 232% growth in the last decade which means that the typical price of property in Noosa Heads has more than doubled.

    Its yield on the other hand has experienced an 86% growth in the last decade, which is also high considering that the typical values have had a steep increase. Usually, exorbitant growth occurs in one or the other domain; within capital growth or yield domains. Noosa Heads has experienced substantial growth in both domains.

    On that note, the projection cone for the return on investment (ROI) covers an area between -4% to 16% growth.

    One would think that given that most of its other metrics are either opportunistic (IRSAD, Inventory, hold periods) or balanced (R|O Ratio, SoM%, Building Approvals Ratio, DoM, Vacancy Rates) that the area is poised for further growth. This especially becomes true when considering the past performance of the area and that the projection cone is more favourable to the upside than downside.

    Most importantly, although its Buy and Rent Search Index is 5, which is balanced, the Buy SI for Noosa Council is at a maximum value of 10.

    You would think that there is no stopping Noosa Heads, right?

    Let’s do a deeper dive to see if this is the case….

    WHY:

    With a Relative Composite Score (RCS) of:
    1. 69 / 100 for risk;
    2. 29 / 100 for cashflow;
    3. 38 / 100 for capital growth;
    4. 42 / 100 score for overall.

    The low-risk component supports the affluent and sought after nature of the area and the fact it has seen substantial growth in the past decade. However, Cashflow, Capital Growth and Overall RCS score are relatively low, meaning that investors can invest in Noosa Heads and be sure not to lose money, but they will definitely not have substantial returns as was the case in the past.

    Let’s look at other important metrics to see why the RCS score are not overly favourable:

    Fundamentals

    ISRAD score: 9 — the ISRAD metric highlights the socio-economic standards of the area in question. For Noosa Heads, QLD 4567, the score is 9 which represents extremely favourable conditions. Judging from this metric alone, we would say the Noosa Heads represents a good opportunity. However, investment is about balancing a multitude of different metrics to predict the future so a single variable is never the Holy Grail.

    Caveat to previous comments: Using a single variable such as price can be very effective in decision making when there is a large enough data set—when the price data points span back 20-50 years and the entire data set can be considered as one of Bog Data. ISRAD is not a data point like price and as such cannot be used as effectively in terms of eliciting trend.

    R|O Ratio: 24% — this relatively balanced score in the renter to owner occupier ratio is suggestible restricted supply of properties for sale.

    U|H Ratio: 56% — this rather unfavourable figure in the unit to house ratio is indicative of the area being a sough after holiday spot. Having a high proportion of units is usually negatively correlated to price growth. This has not been the case in the past for Noosa Heads, however, Noosa Heads has not had such a U|H Ratio in the past. This would be a red flag for me if I was a developer looking to enter the Noosa Heads market in this moment, especially when assessed in combination to the overall RCS score.

    The flow on effect is usually exemplified as such:

    Higher proportion of units = higher proportion of renters which = surplus in the supply of properties which = subdued price and rental growth.

    Supply Metrics

    SoM%: 0.42% (10 listings) — this is a relatively balanced number. SoM number has seen a reduction from 12 properties in March to 10 properties in April. The overall SoM% trend is also reducing which could signify a reduced supply if considered in isolation. I would be very cautious to make this conclusion in the context of Noosa Heads typical price of $2,262K and low RCS scores in cash flow and capital growth domains.

    Inventory: 1.62 — akin to SoM%, this figure is also opportunistic.

    Hold Periods: 10.68 years — this figure is opportunistic and the trend has been increasing meaning that people are holding onto houses for longer in Noosa Heads.
    this is a relatively balanced number which suggests continued downward pressure on the supply of houses when assessed in combination with other supply metrics. Most importantly, the constant rise in the hold period years since 2008 provide a favourable trend and one that is in line with previous statements regarding favourable R|O Ratio and U|H Ratio.

    Building Approvals Ratio: 0.42% — this relatively balanced metric which means developers are siting on their hand due to the overall rise in the inventory trend. This just reaffirms my previous comment that if I was a developer, I would stay away from Noosa Heads at the moment because of Very high U|H Ratio and increasing Inventory levels.

    Demand Metrics

    Demand metrics are those that highlight why RCS scores are low and why the SoM% and Hold Period metrics should be taken with a grain of salt.

    DoM: 88 — although this number is rather balanced, there has been a substantial increase in the days of market in the last 4 months. Why? Well, the increase in interest rates hurts the prestige markets the most. People are not in a position to sustain over 2 million typical price properties in unfavourable macroeconomic environments. Most importantly, the DoM trend line has seen a sharp increase since 2020. This tells me that SoM% is not decreasing because of increased demand, but rather because there is no demand.

    Vacancy Rate: 2.77%. Same as DoM, the Vacancy Rate number is rather balanced. What is concerning however is the sharp increase in the trend line since 2020. More specifically, Vacancy Rate metric has gone from 0.38% in 2020 to 2.77% in April 2023. This is a substantial increase.
    Overall, if you treat investment as a business, Noosa heads has become an overvalued market and one should look elsewhere for other opportunities.

    For a cheat sheet which highlights what are unfavourable, balanced and opportunistic statistics, refer to our Data Dictionary.

    If you want are on a lower budger, have a look at Mount Gambier for example. You can buy 4 properties in Mount Gambier for one in Noosa Heads if typical price is considered.

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