townsville in focus · comprise a trend average of just 26 new houses being approved per month, and...

Townsville in Focus January 2019

Townsville Townsville Townsville Townsville Level 1,41 Denham Street Townsville Qld 4810 PO Box 915 Townsville Qld 4810

Telephone: (07) 4724 2000 Email: [email protected] htw.com.au

Townsville in Focus January 2019

TOWNSVILLE IN FOCUS JANUARY 2019

Table of Contents

TopicTopicTopicTopic PagePagePagePage

Directors Notes................................................................................................... 1

Overview ............................................................................................................. 1

Business Conditions .......................................................................................... 2

Labour Market .................................................................................................... 3

Building Activity .................................................................................................. 4

Commercial and Industrial Property ................................................................. 5

Industrial Land ................................................................................................... 6

Office Market ...................................................................................................... 7

Residential Market - Houses ............................................................................. 8

Residential Market - Units ................................................................................. 9

Residential Market - Land .............................................................................. 10

Residential Development ............................................................................... 11

Residential Market Metrics ............................................................................ 12

Residential Rental Market .............................................................................. 13

Mount Isa ......................................................................................................... 14

Burdekin .......................................................................................................... 15

Charters Towers .............................................................................................. 16

Ingham ............................................................................................................. 17

Sugar Cane ...................................................................................................... 18

Beef Cattle ....................................................................................................... 19

Conclusion ....................................................................................................... 20

At A Glance ...................................................................................................... 20

TTTTownsville ownsville ownsville ownsville Level 1,41 Denham Street Townsville Qld 4810 PO Box 915 Townsville Qld 4810


The Fine Print: Information in this publication is based on an analysis of data from a number of sources, often subjected to technical procedures of seasonal adjustment and trend analysis. Seasonal adjustment is a means of removing the effects of normal seasonal variation from the data, so that comparisons can be made of data against their established seasonal patterns. Trend analysis smooths the seasonally adjusted estimates to provide a clearer picture of the underlying behaviour of the series over time. The trend estimates apply the same procedures used by the Australian Bureau of Statistics in producing trends for national aggregates. No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication. Neither the whole nor any part of this publication or any reference thereto may be included in any published or photocopied documents, circular or statement, nor transmitted or published in part or full in any way, including electronically, without written approval of the form and context in which it may appear. Liability limited by a scheme approved under Professional Standards Legislation. The scheme does not apply within Tasmania. Acknowledgement: We acknowledge David Lynam Photography for the cover photo. Further samples of David’s work can be viewed at http://davidlynamphotography.4ormat.com/ Cover Image © David Lynam Photography. © HTW Copyright 2019

Townsville in FocusTownsville in FocusTownsville in FocusTownsville in Focus January 2019January 2019January 2019January 2019 1

Residential

Commercial &Industrial

Starting to Decline

Declining Market

Approaching Bottom of Market

Approaching Peak of Market

RisingMarket

Start of Recovery

Peak of Market

Bottom ofMarket

Nov 2009,Nov 2011- Nov 2012,Nov 2015 - Nov 2016

January 2019Nov 2010 - Nov 2018

January 2019

Nov 2010, Nov 2013 - Nov 2014,Nov 2017 - Nov 2018

Nov 2008

Nov 2009

Nov 2008

DIRECTORS NOTES

The February 2019 Townsville floods have had a devastating human and social impact, but perversely, may provide a stimulus to the broader local economy and subsequently the property market overall. There will be winners and losers throughout the community, but the outside injection of funds, from insurance and government sources, will be an overall economic positive for the city as it feeds through into retail sales, repair and reconstruction activities. From a property perspective, there is likely to be a period of upheaval in the market as it undergoes a period of adjustment, with property transactions likely to be driven as much by emotional factors as market fundamentals during this process. Based on experience from similar events in other communities, it could be up to 2 years for the property market adjustment process to run its course. Townsville in Focus is now released at six-monthly intervals. We welcome your feedback, and should you have any thoughts or questions on the material presented, please do not hesitate to contact our office on 07 4724 2000, email [email protected] or visit our website at www.htw.com.au. Jason SearstonJason SearstonJason SearstonJason Searston DirectorDirectorDirectorDirector

OVERVIEW

Townsville’s Property Market Clock

Townsville’s residential property markets remain at the start of recovery phase, though the market for houses is ahead of that for units. Meanwhile the commercial and industrial markets are demonstrating little movement and remain at the bottom of the cycle.






Source: HTW Analysis of Employment Websites

Dec-2014Mar-2015

Jun-2015Sep-2015

Dec-2015Mar-2016

Jun-2016Sep-2016

Dec-2016Mar-2017

Jun-2017Sep-2017

Dec-2017Mar-2018

Jun-2018Sep-2018

Dec-2018

0

200

400

600

800

1,000

1,200

Monthly Average Jobs Advertised

Actual TrendActual Trend

Source: PVW Partners

Mar-2009Sep-2009

Mar-2010Sep-2010

Mar-2011Sep-2011

Mar-2012Sep-2012

Mar-2013Sep-2013

Mar-2014Sep-2014

Mar-2015Sep-2015

Mar-2016Sep-2016

Mar-2017Sep-2017

Mar-2018Sep-2018

Mar-2019-15

-10

-5

0

5

10

15

Quarter Ending

PVW Partners Business Confidence Change Index

BUSINESS CONDITIONS

Business Confidence

Townsville’s business confidence readings for the March 2019 quarter - measured before the February floods – have weakened from the previous quarter, according to the latest PVW Partners’ Townsville Business Confidence Survey. Nevertheless the PVW raw results and the HTW calculated trend both remain in positive territory. PVW Partners comment that for the first time since June 2017, there’s been a reversal in confidence between the bigger and smaller businesses across the region, with smaller operators responding more positively than their large business counterparts. The latest quarter’s result was the lowest level of confidence held by bigger businesses since March 2016.

Job Advertisements

The trend in the number of jobs being advertised on employment websites for the Townsville region has started to kick again over recent months, reversing the softening otherwise seen during the opening months of 2018. The trend in the number of jobs advertised during December 2018 is down by 8.3% compared to December 2017, but remains nevertheless at relatively strong levels consistent with forward net employment creation.




Source: Derived from ABS Labour Force Survey data

Dec-2008Jun-2009

Dec-2009Jun-2010

Dec-2010Jun-2011

Dec-2011Jun-2012

Dec-2012Jun-2013

Dec-2013Jun-2014

Dec-2014Jun-2015

Dec-2015Jun-2016

Dec-2016Jun-2017

Dec-2017Jun-2018

Dec-201890,000

100,000

110,000

120,000

130,000

Persons Employed (Log Scale)

Original Trend

Source: Derived from ABS Labour Force Survey data

Dec-2008Jun-2009

Dec-2009Jun-2010

Dec-2010Jun-2011

Dec-2011Jun-2012

Dec-2012Jun-2013

Dec-2013Jun-2014

Dec-2014Jun-2015

Dec-2015Jun-2016

Dec-2016Jun-2017

Dec-2017Jun-2018

Dec-20180%

3%

6%

9%

12%

15%

Unemployment Rate (Actual and Trend Basis)

TownsvilleRegion

All Queensland

LABOUR MARKET

Persons Employed

The employment trend in the Townsville Region (extending from Townsville through to the Burdekin, Hinchinbrook, Palm Island and Charters Towers LGA’s) has been in strong rebound since mid 2016, but that growth has faltered slightly over the last twelve months. The trend in the number of persons employed in the region stood at 107,100 in December 2018, which is 0.5% below the corresponding trend in December 2017. At this stage we regard the employment slowdown over the last twelve months as a temporary setback, but a close watch will be required during 2019. N.B. The Labour Force figures published by the ABS are estimates derived from a sample survey of only about 500 Townsville Region residents, and hence are subject to potentially large margins of error. Whilst neither the original nor the trend estimates should be interpreted as precise values, greater reliance should be placed on the trend.

Unemployment Rates

The unemployment rate in the Townsville Region has reduced significantly over the last twelve months, down to a latest unemployment trend reading coming in at 5.5% in December 2018. However this comes as an artificial result due to reductions in the ‘participation rate’. These conditions are normally associated with jobseekers experiencing weak employment prospects to the extent that they give up looking for work and are no longer counted as unemployed. The challenge for 2019 will be to rebuild job growth to keep unemployment low while the participation rate regains normality.

N.B. To be counted as ‘unemployed’ in the ABS Labour Force survey you need to not have a job and be actively seeking work. People who do not have a job and are not actively seeking work are not counted as unemployed, they are regarded as ‘not in the labour force’.

TownsvillTownsvillTownsvillTownsville e e e Level 1,41 Denham Street Townsville Qld 4810 PO Box 915 Townsville Qld 4810



Source: ABS

Dec-2008Jun-2009

Dec-2009Jun-2010

Dec-2010Jun-2011

Dec-2011Jun-2012

Dec-2012Jun-2013

Dec-2013Jun-2014

Dec-2014Jun-2015

Dec-2015Jun-2016

Dec-2016Jun-2017

Dec-2017Jun-2018

Dec-20180

50

100

150

200

250

300

Quarter Ended

Quarterly Non Residential Building Approvals ($m)

Actual Trend

Source: ABS

Dec-2013Apr-2014

Aug-2014Dec-2014

Apr-2015Aug-2015

Dec-2015Apr-2016

Aug-2016Dec-2016

Apr-2017Aug-2017

Dec-2017Apr-2018

Aug-2018Dec-2018

0

50

100

150

200

250

300

Number of Dwellings Approved

Houses Units Total (Trend)

BUILDING ACTIVITY

Residential Building Approvals

The trend in new dwelling approvals has been consistently declining since the middle of 2017, trailing away to the lowest reading ever since records began in 1991. The latest levels of building activity, as at December 2018, comprise a trend average of just 26 new houses being approved per month, and zero new units. Approvals for new houses have reduced by 51.6% in trend over the period from December 2017 to December 2018, while unit approvals have dropped by 100% over the same period.

Non-Residential Building Approvals

Non-residential building approvals have also trailed away significantly since the spike created by the $250 million stadium approval in the September quarter of 2017. The total of non-residential building approvals reached $203 million in the 2018 calendar year, a big drop from the $514 million posted in 2017. By sector, the reduction in 2018 consisted of a 28.4% drop in approvals for private sector buildings, and a 78.6% drop in public sector building approvals.




Source: HTW Analysis of RPData

Dec-2008Jun-2009

Dec-2009Jun-2010

Dec-2010Jun-2011

Dec-2011Jun-2012

Dec-2012Jun-2013

Dec-2013Jun-2014

Dec-2014Jun-2015

Dec-2015Jun-2016

Dec-2016Jun-2017

Dec-2017Jun-2018

Dec-2018

0

10

20

30

40

50

60

70

Quarter Ended

Number of Sales per Quarter

Standalone Premises Strata Premises Total (Trend)

Source: HTW Analysed Sales

Dec-2013Apr-2014

Aug-2014Dec-2014

Apr-2015Aug-2015

Dec-2015Apr-2016

Aug-2016Dec-2016

Apr-2017Aug-2017

Dec-2017Apr-2018

Aug-2018Dec-2018

0%

2%

4%

6%

8%

10%

12%

Average Net Yield (%)

Actual Trend

COMMERCIAL AND INDUSTRIAL PROPERTY

Commercial/Industrial Sales

Sales of developed commercial and industrial properties continue to show activity slightly reducing, with sale volumes in the December quarter of 2018 trending at about 34 transactions per quarter. This compares to around 38 transactions per quarter in the December quarter of 2017 and 39 transactions per quarter in the December quarter of 2016. The current market has for some time been largely confined to affordable properties that ‘tick all the right boxes’ in the sub $1 million range, and largely catering to intending owner occupiers. There are occasional high end syndication/trust purchases, but only for properties with strong lease profiles. Southern investors are also actively looking given the attractive yield spread available in regional areas relative to their home locations, provided they have access to finance.

Property Yields

Average yields for commercial and industrial property have nudged down over the last four years due to a continuing flight to quality, as investor sales increasingly focus on properties with strong lease covenants, tenant profiles and lease periods. While the majority of sales that take place are now analysing in the 7½% to 9½% range, sales are very sensitive to their fundamentals and the yield spread remains widened. The market is maintaining a minimal yield differential between the industrial and commercial sectors, but a wide differential between primary and secondary stock.





Dec-2012Jun-2013

Dec-2013Jun-2014

Dec-2014Jun-2015

Dec-2015Jun-2016

Dec-2016Jun-2017

Dec-2017Jun-2018

Dec-2018

0

2

4

6

8

10

12

$0

$40

$80

$120

$160

$200

$240

Quarter Ended

Number of Sales per Quarter Median Price per Square Metre

Land Sales Land Price PSM

Source: HTW Survey

Dec-2013Mar-2014

Jun-2014Sep-2014

Dec-2014Mar-2015

Jun-2015Sep-2015

Dec-2015Mar-2016

Jun-2016Sep-2016

Dec-2016Mar-2017

Jun-2017Sep-2017

Dec-2017Mar-2018

Jun-2018Sep-2018

Dec-2018

0

20

40

60

80

100

Quarter Ended

No of Developer Lots Available

<2500 sqm 2,501-5,000 sqm

5,001 sqm-1ha >1ha

INDUSTRIAL LAND

Industrial Land Sales

The industrial land market (inclusive of new developer lot sales as well as industrial land re-sales) continues to suffer from limited demand in the current economic climate. The majority of the industrial land sales that have taken place during the last twelve months have come about from re-sales of previously existing lots rather than new industrial land take up. In addition many recent sales appear to have been with an intention to develop for roadhouse or transport terminal purposes rather than engineering or warehousing pursuits, at commensurately lower price levels. Our general feeling is that despite volatility in the median industrial land price since the December 2015 quarter, the going rate for industrial land for engineering or warehousing pursuits has remained at $120 to $160 per square metre consistently over the last seven years.

Industrial Land Stocks

Our latest industrial land survey indicates a developer stock of 68 serviced industrial lots available for purchase during the quarter ended December 2018, only marginally down from the 71 lots available during the December 2017 quarter. This comes as a result of the absence of new lots being introduced to the market combined with extremely limited sales activity. The mix of lots currently available reflects a broad spectrum of locations and lot sizes, and continues to imply a more than adequate range/supply of industrial land available for foreseeable levels of demand.




Source: HTW Survey

A Grade B Grade C Grade D Grade Total

0%

10%

20%

30%

40%

50%

60%

Vacancy Factor

Jan-2016 Jul-2016 Jan-2017 Jul-2017

Jan-2018 Jul-2018 Jan-2019

Source: HTW Survey

Jan-2009Jul-2009

Jan-2010Jul-2010

Jan-2011Jul-2011

Jan-2012Jul-2012

Jan-2013Jul-2013

Jan-2014Jul-2014

Jan-2015Jul-2015

Jan-2016Jul-2016

Jan-2017Jul-2017

Jan-2018Jul-2018

Jan-2019

-5,000

0

5,000

10,000

15,000

20,000

Square Metres

A & B Grade Total

OFFICE MARKET

CBD Office Vacancy Rate

Townsville’s CBD office vacancy rate rose slightly from 30.2% to 30.4% over the six months from July 2018 to January 2019. Office vacancy rates rose from 18.3% to 19.0% in the A Grade sector as a result of negative net new absorption, whilst in the B Grade sector, the vacancy rate declined marginally from 28.8% to 28.7% as a result of additional net take up.

CBD Office Space Absorption

The CBD office market experienced overall negative net absorption of rental space over the latest six months, as the office rental market continued to experience slow leasing conditions. We are still seeing a large amount of tenant churn as tenants adjust their space requirements and needs. Office rental rates remain soft with high levels of leasing incentives in order to attract and/or secure tenants. Also noticeable is a need for refurbishment and/or modernisation of older style premises in order to attract and or retain market appeal.





Oct-2012Apr-2013

Oct-2013Apr-2014

Oct-2014Apr-2015

Oct-2015Apr-2016

Oct-2016Apr-2017

Oct-2017Apr-2018

Oct-2018

0

50

100

150

200

250

300

Number of Sales per Month

Actual Trend


Dec-2012Jun-2013

Dec-2013Jun-2014

Dec-2014Jun-2015

Dec-2015Jun-2016

Dec-2016Jun-2017

Dec-2017Jun-2018

Dec-2018$300,000

$320,000

$340,000

$360,000

$380,000

$400,000

Median House Price

Actual Trend

RESIDENTIAL MARKET - HOUSES

House Sales

House sale volume trends have remained relatively stable over recent months, with sale volumes as at October 2018 trending at a level of approximately 170 transactions per month, 4.0% below the levels observed in October 2017. In addition the present market is highly suburb selective, with reasonable turnover levels in the sought after mid to inner suburbs, but slow sales in the outer areas and/or suburbs with perceived ‘social issues’. Most houses continue to be sold to intending owner occupiers as opposed to investors.

House Prices

Townsville’s median house price finished 2018 at a lower level than it started at, with the latest trend median standing at $320,000 for houses sold in December 2018. This signifies a 1.6% reduction compared to December 2017 and a cumulative 11.5% reduction compared to December 2013. However in our view recent individual property values have been generally static, with the change in median prices caused by changing market composition. Sale values being achieved in the better regarded suburbs are often coming in at the upper range of expectations, while values elsewhere continue to struggle. The influence of mortgagee-in-possession sales is diminishing but remains higher than normal.





Oct-2012Apr-2013

Oct-2013Apr-2014

Oct-2014Apr-2015

Oct-2015Apr-2016

Oct-2016Apr-2017

Oct-2017Apr-2018

Oct-2018

0

20

40

60

80

100


New Established Total (Trend)


Dec-2012Jun-2013

Dec-2013Jun-2014

Dec-2014Jun-2015

Dec-2015Jun-2016

Dec-2016Jun-2017

Dec-2017Jun-2018

Dec-2018$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

Median Unit Price

New Established

RESIDENTIAL MARKET - UNITS

Unit Sales

The number of units being sold and settled spiked up for four of the five months over the period from June to September 2018 for no seemingly obvious reason, but appears to have reverted to otherwise normal levels during October 2018. Nevertheless the additional sales from June to September have resulted in an elevated trend of 45 sales per month in October 2018, up from 40 per month in October 2017. New unit sales have faded away to almost nothing, meaning that it is established unit sales that are carrying the market.

Unit Prices

The established unit market during 2018 continued to be influenced by affordability concerns, an aversion to high body corporate expenses, a dominance of entry-level or low end investor sales, and a continued high prevalence of mortgagee-in-possession sales. The December 2018 median trend price came in at $225,000, which is 16.3% below the level that prevailed in December 2017. In our view this reduction is more a reflection of compositional movement in the sales mix rather than actual value change. Meanwhile the median new unit trend price technically came in at $290,000 in December 2018, but because of the extremely low volume of sales, may or may not be an accurate reflection of the market.





Oct-2012Apr-2013

Oct-2013Apr-2014

Oct-2014Apr-2015

Oct-2015Apr-2016

Oct-2016Apr-2017

Oct-2017Apr-2018

Oct-2018

0

30

60

90

120


Actual Trend


Dec-2012Jun-2013

Dec-2013Jun-2014

Dec-2014Jun-2015

Dec-2015Jun-2016

Dec-2016Jun-2017

Dec-2017Jun-2018

Dec-2018$100,000

$120,000

$140,000

$160,000

$180,000

$200,000

Median New Land Price

Actual Trend

RESIDENTIAL MARKET - LAND

Residential Land Sales

The amount of vacant land that has been sold and settled by developers has slowed to a trickle, down to a trend level of just 11 sales per month as at December 2018. This represents a whopping 84.7% reduction in the trend volume of sales over the five year period since April 2013. Current land sale volumes are also being reflected in a very slow rate of new housing construction, with no drivers in sight to halt the slowdown.

Residential Land Prices

The trend in Townsville’s median vacant land price has technically risen over the last twelve months, to $173,000 as at December 2018. This represents an 11.7% increase compared to December 2017. However because of the extremely low volume of sales, the rise is a technicality which is not a genuine reflection of the market. In our view competitive pressures and low demand are keeping land values at static to slightly declining levels.




<350 sqm 350-<600 sqm 600-<1,000 sqm 1,000-<2,500 sqm >=2,500 sqm

Mar-2017Jun-2017

Sep-2017Dec-2017

Mar-2018Jun-2018

Sep-2018Dec-2018

0

50

100

150

200

250

Quarter Ended

Lots Contracted for Sale during Quarter

Source: HTW Land Survey

Mar-2017Jun-2017

Sep-2017Dec-2017

Mar-2018Jun-2018

Sep-2018Dec-2018

0

200

400

600

800

1,000

Quarter Ended

Lots Available at End of Quarter

Source: HTW Unit Survey

Dec-2012Jun-2013

Dec-2013Jun-2014

Dec-2014Jun-2015

Dec-2015Jun-2016

Dec-2016Jun-2017

Dec-2017Jun-2018

Dec-2018

0

50

100

150

200

250

0

20

40

60

80

100

Quarter Ended

Number Available Sales per Quarter

Available Supply No. of Sales

RESIDENTIAL DEVELOPMENT

New Unit Sales and Supply

The number of units being contracted for sale in new unit project developments remains at a standstill as a result of very low supplies of new units available coupled with a lack of demand for new unit product due to competitive price pressures from the established unit market. Our survey shows there have been no new units contracted for sale by developers during the twelve months to December 2018. The supply of new units available for purchase remained unchanged at 39 at the end of December 2018. The vast majority of these units are unsold units from previously completed developments that remain in developer’s hand, and have been rented out in the interim.

New Residential Land Sales and Supply

Our Developer Land Survey shows that there was a total of 696 developer lots available on the market as at the end of December 2018. This represents a net reduction from the 750 lots available as at the end of September 2018, in part reflecting no new land releases during the period. Lots remaining available are spread across a variety of size ranges, with the highest number being in the 350 to 600 square metre category. The number of lots absorbed during the December 2018 quarter, from vacant land sales as well as house and land packages, totalled a very low 59, down from 97 lots absorbed during the September 2018 quarter. The predominant level of absorption occurred in the 350 to 600 square metre size category.




Note: Comparability Break between Jul-Aug 2018Source: CoreLogic

Oct-2016Dec-2016

Feb-2017Apr-2017

Jun-2017Aug-2017

Oct-2017Dec-2017

Feb-2018Apr-2018

Jun-2018Aug-2018

Oct-2018

0

500

1,000

1,500

2,000

2,500

3,000

Number of Properties For Sale

Houses Units

Houses Units0%

3%

6%

9%

12%

Median Vendor Discount

Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Apr-18 Oct-17 Jul-18 Oct-18

Note: Comparability Break between Jul-Oct 2018Source: CoreLogic

Houses Units0

30

60

90

120

Median Days on Market

RESIDENTIAL MARKET METRICS

Residential Property Listings

Whilst longer term comparisons are difficult due to a comparability break in the source data, it can be said that the number of properties being listed for sale has increased in each of the last two months. During the month of October 2018 there were 2,500 properties listed for sale, of which 2,000 were houses and 500 were units. The slow increase in numbers of properties being listed for sale could be a sign of vendor frustration with the market, having given up on waiting for the market to improve before bailing out.

Market Metrics

Other market metrics are now showing mixed signals, compounded by the comparability break in the source data. For the twelve months ended October 2018, the median time taken for a listed property to reach a sale stood at. 55 days for a house and 61 days for a unit. Meanwhile median vendor discounts – the difference between the sale price first asked and the sale price ultimately achieved – stood at 8.0% for houses and 10.0% for units.




Source: RTA

Dec-2013Mar-2014

Jun-2014Sep-2014

Dec-2014Mar-2015

Jun-2015Sep-2015

Dec-2015Mar-2016

Jun-2016Sep-2016

Dec-2016Mar-2017

Jun-2017Sep-2017

Dec-2017Mar-2018

Jun-2018Sep-2018

Dec-2018$240

$260

$280

$300

$320

$340

$360

$380

Quarter Ended

$ per Week

Houses Units

Source: HTW Rent Roll Survey

Dec-2016 Mar-2017 Jun-2017 Sep-2017 Dec-2017 Mar-2018 Jun-2018 Sep-2018 Dec-2018

0%

2%

4%

6%

8%

Percentage Vacancy

'Balanced Market' Range

Houses Units Total Trend

RESIDENTIAL RENTAL MARKET

Rental Vacancies

Our HTW Monthly Rent Roll Survey indicates that rental market conditions in Townsville overall have broken through the lower end of the ‘balanced market’ zone, with houses in particular moving into much tighter supply. Vacancy trend levels in December 2018 stood at 2.0% for houses, 3.6% for units and 2.5% overall.

Median Rents

Tighter rental vacancy rates are manifesting in increasing rents, especially for houses. During the December 2018 quarter the trend median house rent stood at $330 per week, and the trend median unit rent at $260 per week. In trend terms, median rent movements from the December 2017 quarter to the December 2018 quarter have seen a 3.2% increase for houses, and a 0.8% increase for units.





Dec-2008Dec-2009

Dec-2010Dec-2011

Dec-2012Dec-2013

Dec-2014Dec-2015

Dec-2016Dec-2017

Dec-2018

0

40

80

120

160

$0

$120,000

$240,000

$360,000

$480,000

Quarter Ended

Number of House Sales Median House Price (Trend)

Number of Sales Median Sale Price

Source: RTA

Dec-2013Mar-2014

Jun-2014Sep-2014

Dec-2014Mar-2015

Jun-2015Sep-2015

Dec-2015Mar-2016

Jun-2016Sep-2016

Dec-2016Mar-2017

Jun-2017Sep-2017

Dec-2017Mar-2018

Jun-2018Sep-2018

Dec-2018$100

$200

$300

$400

$500

$600

Quarter Ended

Median Rent ($ per Week)

Houses Units

MOUNT ISA

House Sales

The number of house sales taking place in the Mount Isa market was unusually low during the December quarter of 2018, but the overall trend in sales volume remains relatively flat at about 32 sales per quarter. The median house price trend came in at $235,000 in the December quarter of 2018, and continues to exhibit a flat trend. Prices in Mount Isa have in effect stabilised over the last two years as the local economy improves. It is likely to be some time before prices see any substantive upwards movement due to the large overhang of existing stock that needs to be absorbed. There has been early evidence of a market shift away from the cheaper houses to more family homes in the $250,000 plus price bracket. Local data suggests that Mount Isa’s population has increased by some 2,000 over the last 12 months.

Rent Levels

The rental market in Mount Isa has stabilised from its 2013 to 2016 slump as vacancies have reduced and rents have crept very mildly up. Vacancy rates for both houses and units are lowering with houses proving the most active area of the market. The median house trend rent stood at approximately $370 per week in the December quarter of 2018, which represents a $15 per week increase since the December quarter of 2017. Meanwhile the median unit trend rent came in at $210 per week in the December quarter of 2018, $10 per week above that in the December quarter of 2017.



Townsville in FocusTownsville in FocusTownsville in FocusTownsville in Focus January January January January 2019201920192019 15


Dec-2008Dec-2009

Dec-2010Dec-2011

Dec-2012Dec-2013

Dec-2014Dec-2015

Dec-2016Dec-2017

Dec-2018

0

20

40

60

80

$0

$80,000

$160,000

$240,000

$320,000

Quarter Ended




Dec-2016Feb-2017

Apr-2017Jun-2017

Aug-2017Oct-2017

Dec-2017Feb-2018

Apr-2018Jun-2018

Aug-2018Oct-2018

Dec-2018

0%

5%

10%

15%

20%

25%

Percentage Vacancy


BURDEKIN

House Sales

The Burdekin property market appears to have experienced a distinct lack of sales during the latter half of 2018, but in our view, that represents purely statistical variation. Our own observations are that market volumes overall remain generally stable. The median house price trend has been steady during the course of 2018. The median trend came in at $167,200 in the December quarter of 2018, which represents less than 1% variation compared to the December quarter of 2017.

Rental Vacancies

Burdekin’s rental market has seen its overall vacancy rate consistently remaining in the 7½% to 10% range over the last two years. Even so, vacancy levels have reduced notably over the last two years for units. Vacancy trend levels in December 2018 stood at 5.5% for houses, 11.6% for units and 7.6% overall.





Dec-2008Dec-2009

Dec-2010Dec-2011

Dec-2012Dec-2013

Dec-2014Dec-2015

Dec-2016Dec-2017

Dec-2018

0

10

20

30

40

50

$0

$50,000

$100,000

$150,000

$200,000

$250,000

Quarter Ended


Number of Sales Median Sale PriceHouses Units Total Trend


Dec-2016Feb-2017

Apr-2017Jun-2017

Aug-2017Oct-2017

Dec-2017Feb-2018

Apr-2018Jun-2018

Aug-2018Oct-2018

Dec-2018

0%

5%

10%

15%

20%

25%

30%

Percentage Vacancy

CHARTERS TOWERS

House Sales

The number of house sales in the Charters Towers property market has fluctuated significantly from quarter to quarter over the last three years, but has on balance maintained a consistent on-going average of about 18 to 20 transactions per quarter. Median price trend levels have experienced reductions interspersed with bouts of stability over the same period. The median house price trend came in at $140,500 in the December quarter of 2018, which is 6.4% below the level that prevailed in the December quarter of 2017.

Rental Vacancies

The rental market in Charters Towers has seen reductions in vacancy levels during the last two years, with its overall rental vacancy rate now indicative of only a mild over-supply of rental properties in the market relative to the levels of demand. Vacancy trend levels in December 2018 stood at 4.6% for houses, 12.7% for units and 6.0% overall.





Dec-2008Dec-2009

Dec-2010Dec-2011

Dec-2012Dec-2013

Dec-2014Dec-2015

Dec-2016Dec-2017

Dec-2018

0

5

10

15

20

$0

$80,000

$160,000

$240,000

$320,000

Quarter Ended




Dec-2016Feb-2017

Apr-2017Jun-2017

Aug-2017Oct-2017

Dec-2017Feb-2018

Apr-2018Jun-2018

Aug-2018Oct-2018

Dec-2018

0%

5%

10%

15%

20%

25%

Percentage Vacancy


INGHAM

House Sales

The number of house sales in the Ingham property market has fluctuated significantly from quarter to quarter over the last three years, but has on balance maintained a consistent on-going average of about 8 to 10 transactions per quarter. The median house price trend came in at $173,200 in the December quarter of 2018, which is 4.2% below the median house price trend that prevailed in the December quarter of 2017. However in our view this reflects compositional movement rather than value change.

Rental Vacancies

Ingham’s rental market has seen vacancy levels start to creep up during the last half of 2018. Vacancy trend levels in December 2018 stood at 8.1% for houses, 19.0 for units and 11.9% overall, and remain indicative of an over-supply of rental properties in the market relative to current rates of demand.




Note: NY 11 Prompt Futures ContractSource: ICE

Dec-2008Jun-2009

Dec-2009Jun-2010

Dec-2010Jun-2011

Dec-2011Jun-2012

Dec-2012Jun-2013

Dec-2013Jun-2014

Dec-2014Jun-2015

Dec-2015Jun-2016

Dec-2016Jun-2017

Dec-2017Jun-2018

Dec-20188.0

16.0

24.0

32.0

40.0

$160.00

$320.00

$480.00

$640.00

$800.00

US cents/lb $A/Tonne

US cents/lb $A/Tonne


19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

20162017

2018

0

30

60

90

120

$0

$6,000

$12,000

$18,000

$24,000

Number of Sales Median Price per Hectare

Burdekin No of Sales

Burdekin Median PPH

Herbert No of Sales

Herbert Median PPH

SUGAR CANE

World Sugar Prices

World sugar prices have stayed low and volatile over the last two years, with the latest world sugar price of 12.6 US cents/lb in December 2018 translating to an Australian dollar price of $A 392 per tonne. Furthermore world sugar prices are expected by ABARES to be driven down to a 10-year low in 2018-19 as a result of elevated world production and record carry-over stocks. ABARES also points the finger at support policies in the European Union and countries such as India, Thailand and the United States which maintain their sugar prices well above the world price, and operate to the detriment of free market producers such as Australia. Due to weaker world sugar prices, cane prices received by Australian growers are expected by ABARES to reduce to around $31 per tonne in 2018–19, down from $44 per tonne just two years ago in 2016-17.

Cane Farm Sales

Cane property sales during 2018 have dropped back in number from the flurry experienced in 2017, to re-establish at more moderate levels consistent with the preceding seven years. Despite the current slump in sugar pricing, median cane farm sale values have increased during 2018, to $18,000 per hectare for properties transacted in the Burdekin and around $13,000 per hectare for properties transacted in the Herbert. Drivers for the value rate rises despite the commodity trend have included acquisitions for family expansion purposes, to set the next generation up and increase enterprise scale.




* Average NQ saleyard price of 200-330 kg D2 Restocker SteersSource: RBA, MLA

Dec-2014Mar-2015

Jun-2015Sep-2015

Dec-2015Mar-2016

Jun-2016Sep-2016

Dec-2016Mar-2017

Jun-2017Sep-2017

Dec-2017Mar-2018

Jun-2018Sep-2018

Dec-2018150

200

250

300

350

400

$0.60

$0.66

$0.72

$0.78

$0.84

$0.90

North Qld Cattle Price (Ac/kg lwt)* Exchange Rate $US/$A

NQ Cattle Price $A

* Properties > 2500haSource: HTW Analysed Sales

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018$0

$80

$160

$240

$320

$400

Average Analysed Price per Hectare

Northern Central Downs

Other North Queensland

BEEF CATTLE

Cattle Prices

Cattle prices, as exemplified by the North Queensland Saleyard Indicator (for 200-330 kg D2 restocker steers), have dropped back considerably from their 2016 peak, reducing by 28.0% over the period from September 2016 to November 2018. Not only have slaughter cattle prices been affected by ongoing drought conditions driving higher than average cattle turn-off across eastern Australia, but low demand for restocker cattle due to the lack of grass in major growing areas has produced a negative double whammy for North Queensland producers. However North Queensland producers will be in an almost unique position to benefit this year from having grass following the recent rains/floods.

NQ Grazing Property Prices*

North Queensland grazing property prices have jumped again during the 2018 year to reach similar levels as the peak of the last property cycle in 2008. Northern Central Downs is the most efficient market to depict the trend, which has shown a near 50% lift in average analysed prices per hectare over the four years from 2014 to 2018. Other North Queensland has greater variance due to the composition of sales occurring. At this stage land values are generally expected to continue to rise into 2019, with North Queensland expected to be insulated from negative land value impacts due to drought conditions elsewhere. The impact of the recent flood event has created strong interest from wider Queensland, New South Wales and Northern Territory graziers. Expected grass growth has been the attraction. It is likely that there will be a number of acquisitions for grass.




CONCLUSION

The statistics - all of which predate the February 2019 floods - are not painting a very pretty picture of Townsville at present, with faltering employment growth, artificially reduced unemployment, a near collapse in the residential construction and land development sectors, and other sectors generally static. Nevertheless amidst these conditions there are pockets of encouraging activity levels and an overall air of expectation that the worst is over. As we head into 2019 unemployment figures, job security, rental vacancy rates and population growth will be the indicators to watch. Our belief is that the year ahead has a positive outlook economically which will hopefully help improve market indicators and provide more certainty around employment for property market participants.

AT A GLANCE

IndicatorIndicatorIndicatorIndicator CommentsCommentsCommentsComments Current SentimentCurrent SentimentCurrent SentimentCurrent Sentiment

Business Confidence Remaining positive

Labour Market Still weak

Residential Construction Declining

Non-Residential Building Weakening

Industrial Land Market Dormant

Industrial Improved Market Slow

Commercial Improved Market Slow

Demand for Office Space Slow

House Sale Volumes Stable

House Prices Static

Unit Sale Volumes Variable

Unit Prices Struggling

Residential Land Sales Severely declining

Residential Land Prices Static to declining

Rental Vacancy Rate Declining

Median Rents Slowly increasing

Cane Farms Consolidating

Cattle Property Rising

townsville in focus · comprise a trend average of just 26 new houses being approved per month, and...

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