‘Quite insane’: How much you need to buy in Qld suburbs

Shock figures show homebuyers looking to get into the Queensland market with less than $32,000 in savings are now limited to just 18 suburbs – only one of which is in Brisbane. SEE COST BREAKDOWNS

Shock figures show homebuyers looking to get into the Queensland market with less than $32,000 in savings are now limited to just 18 suburbs – only one of which is in Greater Brisbane.

Analysis of PropTrack AVM figures by tax experts MCG Quantity Surveyors found the affordability crisis playing out with vast upfront amounts required to buy a home across Queensland now – the lowest of which was $22,702 for a house in Mount Morgan near Rockhampton.

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That covers a 10 per cent deposit, lenders mortgage insurance and stamp duty for an owner occupier, with eight of the most affordable suburbs under that criteria in Townsville, four in Central Queensland, five in Cairns, with only Kooralbyn in Logan-Beaudesert making the $32,000 cut-off in Greater Brisbane.

Buyers would have to save $888 a month for three years to amass the $32,000 in savings needed to buy a unit in Kooralbyn with a 10pc deposit, but for a 20pc deposit, that amount surges to $53,238 for owner occupiers and $58,001 for investors.

Houses in five Brisbane suburbs are now firmly out of reach of almost all homebuyers, requiring 10 per cent deposits above $200,000 in New Farm ($263,178), Ascot ($237,313), Hamilton ($224,167), Bulimba ($203,147) and Pullenvale ($200,041) – with prices still escalating by as much as 11 per cent a year.

Mike Mortlock believes it is still possible for most people to buy property if they adjust their expectations to meet market circumstances.

Mick Mortlock of MCG Quantity Surveyors said “it’s always been difficult to purchase a home but there are some areas around the country where the (house price) multiples over income are quite insane”.

He expected massive change in buyer behaviour in Queensland over the next few years where some suburbs were already seeing the price differential between houses and units hit a million dollars.

“The price point is likely to change purchasing behaviour because it just makes houses much more out of reach,” he said, with renters particularly hard hit. “It’s very, very difficult to save any money given the unprecedented rise in rents we’ve seen over the last little while.”

But Mr Mortlock said there were ways to do so. “Everyone has to sacrifice to get into their first property, that really hasn’t changed for 100 years in Australia”.

The first myth to knock over, he said, was that everyone needed a 20 per cent deposit.

“There are some stamp duty exemptions and government schemes where you can have as little as a 5 per cent deposit. It’s all very well to have the 20pc (deposit) just to avoid the lenders mortgage insurance, but most people aren’t afraid of LMI, they just want to get into the market.”

Mr Mortlock said there were “opportunity costs of not being in a market that might be accelerating whilst trying to save that extra (20pc) deposit”.

Secondly, he said, it was possible for most people to buy property as a rentvestor, using rent to boost repayment capacity rather than continue to dream that their ideal property will one day become cheaper. “It won’t,” he said.

Arjun Paliwal of InvestorKit believes there is still strong growth ahead for SEQ.

Buyers agent and InvestorKit head of research Arjun Paliwal said affordability was not expected to ease in Queensland, with places like Townsville, Toowoomba, Greater Brisbane, the Gold Coast and Sunshine Coast among his red hot zones for growth.

“Greater Brisbane is one of only two cities gaining residents from other parts of Australia (the other being Perth),” he said. “While demand has declined over the past year, supply strains have continued, and inventory levels have trended down. As Australians continue flocking to this region, demand will strengthen bolstered by recovering consumer confidence. We expect healthy growth in the coming year.”

He said Townsville – which has seen rapid growth as investors snap up affordable homes for rent in the past few years – has “extremely limited inventory, under two months’ worth of stock” which means prices have held strong.

The affordability crisis has prompted the rise of funding businesses such as Longview’s Buying Boost which CEO Evan Thornley said bridged deposit gaps for buyers in return for a percentage of future capital gains.

He already has a dozen contracts signed up across Victoria and New South Wales, which range from providing a $50,000 deposit to over $200,000 to homebuyers – with around 200 homes expected to be bought across those two states as well as Queensland with a massive $30m kitty.

See the latest PropTrack Home Price Index

“The reality is that house prices are growing faster than incomes and they have 400 for years,” he said. “People thinking that somehow that trend is going to change are sadly mistaken. That means over the next generation, more people are going to not only need a mortgage, but they’re going to need extra money from somewhere else – that’s just the nature of Australian house prices and that’s why things like Buying Boost are going to become commonplace.”

“It doesn’t really matter if somebody else wants to share the upside in your home so long as it’s your home, we all want the dignity and security of having our own home.”

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