Sale volumes and overall demand took a battering in the first quarter of the year impacted by record rainfalls, Cyclone Yasi and to a lesser extent the floods in south east Queensland. Demand and sale volumes rebounded in the second quarter of the year with the data to August 2011 indicating that the volume of sales are trending at levels slightly above a similar time last year, however the median sale price has reduced.

The winners in the market throughout the year were cashed up buyers. These buyers were a mix of owner occupiers and investors with strong purchasing strategies of making ‘silly’ offers and being unemotional enough to walk away unless they are getting it for a perceived ‘steal’.

Some investors have been seeking a certain level of security offered by government leases, with increased interest in both NRAS (National Rental Affordability Scheme) and DHA (Defence Housing Authority) property. In these circumstances buyers have been willing to pay the premium for the DHA product or accept the NRAS terms for the investment certainty.

The losers in the market were Magnetic Island and inner city units. Price fracturing in these sectors bought about by developers going into receivership saw product being offered to the market at significantly reduced prices or on ‘make an offer’ terms. The volume of this product has placed downward pressure on unit stock that is not under forced sale circumstances being offered to the market.

The secondary level lower socio economic suburbs and the first home buyer markets were also big losers during the year. The volume of product on the market under forced sale conditions in these areas coupled with mortgagee in possession stock resulted in driving prices down.

On a positive note, the residential rental market has tightened further throughout the year to be trending at under 3% with upward pressure being placed on rental rates. Rental rates for both houses and units are trending at rates slightly above those in 2010.

Source: Herron Todd White