Townsville first home buyers struggle as investors target cheap properties

The stampede of southern investors snapping up Townsville’s cheap properties, ahead of first home buyers, has been confirmed by a new report. Read the details.

Investor Stephanie Brennan outside her new apartment – one of six properties she has purchased.

A new report has confirmed the surge of southern investors targeting Townsville’s affordable properties, to the detriment of first home buyers trying to break into the market.

One of the largest independent property valuation and advisory groups in Australia, Herron Todd White (HTW) revealed in its month in review report for March that Townsville was at the “rising market” stage in the property cycle.

Townsville-based HTW valuer Hayden Lynam said they had seen a large increase in investor activity throughout the region which has “really ramped up in the latter half of 2023 and continued into 2024”.

“Most investors appear to be from southeast Queensland, New South Wales and Victoria and utilising buyers’ agents to secure the property,” Mr Lynam said.

“There does not appear to be a particular area that is being targeted but price range is a key factor with properties in the $300,000 to $500,000 price range being sought after.”

Herron Todd White March report for Houses Queensland Property Market Indicators. Picture: HTW.

Mr Lynam said this put the investors in direct competition with first homebuyers.

Coupled with the city’s shortage in housing stock, he said it was driving up prices in this range.

“Property type does not appear to be of concern in the investor market with single unit dwellings, units, duplexes and flats all on the list,” he said.

Herron Todd White valuer Hayden Lynam. Picture: Supplied.

“Gross yields across the board typically fall within the 5.5 per cent to 7.5 per cent range with competition in the market leading to tightening yields, although we do note that with vacancy rates hovering at about one per cent and property managers advising a large number of applications for each available property, rents are continuing to increase.”

He noted that homebuyers weren’t competing for duplexes and flats, leaving investors to battle for these property types.

Herron Todd White March report comparison for rental vacancies, new houses, and stage in the property cycle. Picture: HTW.

Defence Housing Authority (DHA) leased properties were also being snapped up quickly by investors.

“After the announcement in 2023 that the new Apache Helicopters will be based in Townsville as of 2025 and that approximately 500 personnel will be moved to Townsville to support this, we do not expect the need for DHA properties to dwindle in the short to medium term and expect that the need will be ramped up in the very near future,” he said.

Herron Todd White March report for Units Queensland Property Market Indicators. Picture: HTW.

HTW chief executive Gary Brinkworth said there was simply too little supply to meet current and growing demand, due to the economics of producing new housing.

“There are too many pockets across this country where the cost to deliver a new home to market makes little sense if a developer expects a reasonable return on their investment,” he said.

“We need to either see prices increase by 20 per cent, or development costs reduce by 30

per cent if we want to incentivise developers toward creating more housing.”

Originally published as Townsville first home buyers struggle as investors target cheap properties