Townsville - gone ballistic?

[ChrisOs]

I had a chat with a Buyer's Agent today who has recently returned from a trip to Townsville. He suggests there are limited opportunities in Townsville at the moment and goes so far as to say that prices have gone "ballistic", yet rental yields are still low (4.5% - 5.2%) even though vacancy rates are around 1%.

He gave an example of a unit in North Ward that was listed for $269,000 and the selling agent advised him it had been sold last week for $321,500! Sounds like a buyer's feeding frenzy but then this is just one sale.

I have no properties in Townsville nor am I likely to be buying there in the near future but thought this may be of interest to some.

Regards,
Chris.

 

[jacks1071]

I had a chat with a Buyer's Agent today who has recently returned from a trip to Townsville. He suggests there are limited opportunities in Townsville at the moment and goes so far as to say that prices have gone "ballistic", yet rental yields are still low (4.5% - 5.2%) even though vacancy rates are around 1%.

He gave an example of a unit in North Ward that was listed for $269,000 and the selling agent advised him it had been sold last week for $321,500! Sounds like a buyer's feeding frenzy but then this is just one sale.

I have no properties in Townsville nor am I likely to be buying there in the near future but thought this may be of interest to some.

Regards,
Chris.

Townsville is still heaps cheaper than Mackay - I think there is pleanty of room for CG up there.

 

[Mal123]

I am a first-time poster so here goes:

I have just started looking at investing in Townsville (this week) so I am very early on in my research. I lived up there when I was in the Army in the mid-90's and I'm told it has modernised HEAPS since then. I am looking at suburbs slightly out of the city (around Kerwan) which are still close to their own large shopping complex (Willow Shopping Centre) but are far enough away from CBD (c. 10-15 mins drive?) that the prices are slightly lower that CBD.

There are some newer developments which are further south than Kerwan (can't remember the suburb names) but they are still viewed as too far out in Townsville terms (20-30 mins from the city and the beach).

Hoping to glean lots more info in the coming weeks and will share as much as I can.

Mal

 

[Doncossack]

Mal,

Ive got an IP in Annandale which has experienced some good GC over the last few years but I was under the impression that the steam was running out.
As I'm currently living in Moscow I'm only relying on word and mouth and the internet so I may be wrong but will be interested on what your research concludes Mal.
Anyone on the forum currently living there care to comment???(Richard)

Don

 

[Bricks & Mortar]

update

Don,

Not living up there, but we do have a duplex in Kirwan.
Seems there has been a bit of Capital Growth, we recently had ours revalued and it came back at conservative 300k from 245k purchase in 2004.
Previously we'd be lucky to get a 3% rise PA.
We bought more for yield than than CG so It was a pleasant surprised.
Rents don't seemed to have jumped up any especially considering the vacancy is really low, maybe it's just that our place (needs a reno.)

Our friends recently sold their IP in Townsville and got maximum dollar
so if you contempating a sale you'll probably get more than what you'd expect.

 

[Sleeper]

Wrote a fairly lengthy reply to this but got logged off when I went to submit.

I'm a bloody slow typist. Will dictate to one of the kids next time

Will try again when I have some more time.

 

[RichardC]

Mal,

Ive got an IP in Annandale which has experienced some good GC over the last few years but I was under the impression that the steam was running out.
As I'm currently living in Moscow I'm only relying on word and mouth and the internet so I may be wrong but will be interested on what your research concludes Mal.
Anyone on the forum currently living there care to comment???(Richard)

Don

Townsville is still "healthy". Properties are still selling and renting. It's just not as good as it used to be.

And the city has just too much going on for it slump.

So many irons in the fire:
We're not a tourist destination but we get our share on the way through.
We're not a mining town but a lot of miners live here and we are a base for many contractors.
The mines feed our three metal refineries.
We're not a sugar town but we are a service centre for the industry.
They don't grow cattle here but we have an export meat-works.
All these industries feed a busy port which, possibly uniquely in Oz, imports metal concentrate (nickel) for refining.
It's a rail town.
A big army base.
A base hospital.
The James Cook Uni.
Australian Institute of Marine Science.
A big state and commonwealth public service payroll.
The Bhole Plains industrial estate is thriving.
There's more but I think you get the picture.

The city is becoming worthy of the tag "city" and is reaching a critical mass which will ensure organic growth.

I'm not about to predict any capital gain figure for the next year but I am confident we will do better than the capital cities (Perth ex).

If it suits your investment style the rental agents are screaming for "corporate" rentals ie nice apartments fully furnished, down to the cutlery and flat screen TV. I think they are offering guaranteed rental.

 

[see_change]

If it suits your investment style the rental agents are screaming for "corporate" rentals ie nice apartments fully furnished, down to the cutlery and flat screen TV. I think they are offering guaranteed rental.

Interesting , does mean units on the Strand ?

When we bought , there were lots coming up for sale , but the property managers were saying they couldn't see the demand for them ....so we ( and other people ) were avoiding them ...

Our little house in Heatley has probably gone from about 155 to around 240 -250.

I'd agree with Thommo that fundamentally Townsville has the stongest base of north Q'land cities . Interesting that speculating in Rocky has done as well, if not better and Mackay from all reports has done better still. Shows you that fundamentals arn't everything ( certainly in a shorter term period )

See Change

 

[harrywyborn]

Townsville

Hey,

Should have bought bloody a hand full of properties in townsville when i lived up there and when they were only 100K. Ha bloody hindsight.

 

[matt-t]

Nth & Sth of Townsville

I was up in Townsville last year for a look around and liked the feel of the Ayr.

Does anyone have an opinion as to whether the towns South such as Ayr and Home Hill would be like for potential growth.
Ayr had ann growth of 24% in the last year with Home Hill having 27%. Maybe they`ve peaked over the top already?

What about up North around the Halifax areas, 19% growth?
These places have a low entry level too (100-200K).

I am thinking I might buy up here as my launching pad into the ptoperty market. I have only ever bought 2 PPOR`s to do up and sell off so not too on the pulse to where I should start off.

All opinions appreciated thanks

 

[RichardC]

What about up North around the Halifax areas, 19% growth?
These places have a low entry level too (100-200K).

Halifax may have modest prices but it has much to be modest about.

It would be too small to have statistically reliable data, (got two pubs in town, three over the river and another couple at Lucinda and Dunganess tho) would be coming off a very low base, gets cut off by flood for days on end (at least when we used to have wet seasons) and could only appeal to refugee retirees from the high priced cities and to fishermen in tinnies who like to chase barra and crabs.

You wouldn't need to stump up much extra cash to buy in Forrest Beach but it's still hard to come up with a good reason why one would (apart from the name). I don't know why the Herbert Valley is such a backwater, but it is, and likely to remain so.

 

[AdamW]

Hi all,
I have quite an interest in Townsville and have to agree with Richard that it appears to have loads going for it.

In Nov 04 I bought an off-the-plan unit in Blue on Blue on Magnetic Island. This is due for completion in a few months and a similar unit is on sale for $100K above what I paid. The idea of a corporate let for this unit interests me.....

In Dec 04 I bought a house on a big block in Garbutt for $155K. I would imagine that a similar block with development potential now would be worth about 50% more than that.

I am now building a duplex on the back of the Garbutt house and it should be finished in around 2 months. I'm keen to do similar small devs in Townsville if I can find the right block at the right price.

Only real negative has been construction costs - far above my original budget. The duplex has cost >$360K in construction costs alone, plus architect and council fees on top. But they look real nice Back up there on Friday to check on progress...

Adam

 

[Mal123]

Update on research

Well - research has been slow but here's what I have found re. properties in Townsville:
I have 2 options as I see it:
1) buy an older (30yr old) property in Heatley/Vincent (8km from CBD) for around $250 - rentals are around $270pw for this. For that price you get a 3br aircon high-set house with DLUG underneath on around a 600M2 block. A buyers agent has described this sort of property as a "renting machine".
2) buy a newer (2-6 years) lowset brick house in Kirwan for around $300 with a rental of about $410. 3-4 Br house, 2 bath, DLUG.

ANALYSIS OF MY OPTIONS (feel free to chip in here with advice since I'm only new to this stuff):

1) a 30yr old property has very little depreciation left so tax benefits are lessened. however, 8km from CBD is an excellent location and land is scarce (no parks to build over the top of from what I can remember!!!) so CG will probably be good.

2) Kirwan is close to shops (Willows Shopping Centre) and a newer building means better depreciation. Land is still fairly scarce out that way, although the town does seem to be spreading west, so future CG seems likely.

Aside from that - I don't know. The buyers agent I am looking at charges a $7k flat fee, regardless of property cost. that seems steep to me - am I correct or is that reasonable in today's market.

Love to hear your thoughts.

 

[see_change]

1) a 30yr old property has very little depreciation left so tax benefits are lessened. however, 8km from CBD is an excellent location and land is scarce (no parks to build over the top of from what I can remember!!!) so CG will probably be good.

.

The 30 year old property in Heatly sold for about 155 - 165 in 2003 ( ? early 2004 , can't remember exactly ... ) , and maybe about 120 at the bottom of the cycle . ( that's what we paid for ours - 155 but got a good deal , Bank valuation came in slightly higher ) . At that price ( purchase ) with purchase costs on 100 % financed , and after rates / expenses are deducted it's still negative cash flow. On current purchase price it will be consistently cash flow negative . Minimal depreciation. There was a period of ? 7 years prior to the current boom when prices when sideways.

Not sure what's happening with rents. Need to check up with pm .....

I think Townsville has more going for it than the other North Q'land City in terms of infrastucture and a diverse economy.

How much more capital growth in the current cycle ? Dunno.

If I was going to buy a first property , I could think of worse places to buy it.

Thommo ,I'd be curious to know what's happening at Ingham . It had serious problems with vaccancies. Has the sugar industry picked up the market up there ?

We havn't used a buyers agent , and were able to get a good deal from Sydney. If you do your reseach , decide on where you want to buy ( have a look around ) and contact the agents on a weekly basis , you should be ok.

I know some agents are happy to deal with some BA's , but I know in rocky one agent won't talk to some as they've stuffed him around in the past . Do you have to do your DD on the BA's and see if agents are happy to work with them ... mmm

See Change

 

[Doncossack]

2) buy a newer (2-6 years) lowset brick house in Kirwan for around $300 with a rental of about $410. 3-4 Br house, 2 bath, DLUG.

Mal,

Thanks for the update.

I think $410 a week rent is a tad high. My research suggests between $300-350. How did you come up with this figure?

 

[Mal123]

Ooops - did I say $410? Sorry - that was a typo. I meant $310 (which would seem to fit with your own research Don).

Apologies if I got anyones hopes up!!!

 

[RichardC]

Ingham is a real problem, Seech. Sugar is it's only industry and they employ less people each year. I think the Lucinda loading facility has been abandoned and there is no side effect from mining. The only person it could appeal to is a retiree who loves fishin'.

Even the commercial fishing at Dunganess would be doing it tough since so much of the reef has been put off limits.

I doubt you could buy a house for $300k and rent it for over $400 in Townsville. Just noticed your correction to $310 Mal, which be close.

Front page of today's paper says Sir Mick Curtain is about to open an iron ore mine just west of here which will neccessitate the re-building the Townsville to Greenvale rail line. Maybe they'll even ressurect the Three Rivers Hotel. LOL

There's Thiess Brothers camp on the banks of the Star
Where men from all nations and walks of life are
And it's funny to listen to the stories they tell
Every night 'round the bar at Three Rivers Hotel

Slim Dusty

 

[RichardC]

Today's Bulletin reports research by PRD Nationwide that Townsville expects growth of 2.8% PA approx which equates to 4390 people or 1600 homes.

Sounds about right to me. But Sgt Schultz knows more'n me.

 

[sandrandave]

Also in Ingham you have to be careful you are not buying a place in a flood prone area (which is a lot of places). Not even sure abou tthe beaches near Ingham. Perhaps a holiday home there would be nice. Though prices have gone up a lot there recently. And yes Ingham is relying on only sugar, which had a good price this year, and would be even better if they can get all the cane off... tis a bit wet. It may rely a tad on tourism too. DH and his family grew up in Ingham and I have lived there are 5 years, and there is a lot of talk that there will be heaps of people buying there so they can fly in/fly out to the new mine that will be opening west of Tville.

As for Townsville, I just cant seem to see it stop any time soon. There are a lot ov develpment going on. cruise ship terminal, Riverway Project, Willows shopping expansion, new shopping place neaer the Northern Beaches adn all the other things Richard C mentioned.

sandra

 

[Mal123]

Social info for Tsv

I just thought I would add a really good resource I just found re. the social makeup of the Townsville region:

http://www.townsville.qld.gov.au/about/atlas/contents.asp

It's the TSV council site and there are some great demographic and income dispersion maps. There is also a link to future projects such as the Townsville Ring Road that will eventually bypass TSV but which has also given Condon (south of Kirwan) greater access to the south of Townsville.

Take some time to surf thru the site - lots of info.

Still keen on Kirwan and looking for a 3 Bed 2 bath for 250-300K.

Wish me luck...

Mal