by Jarna Baudinette MPP reflects on the 2011 property market and asks, what does 2012 have in store?

Ever since the GFC hit we’ve been hearing about how comparatively well Australia’s economy has managed to weather the recession storm. But for locals, who seemed to be witnessing free-falling house prices and construction grinding to a halt this year, the land of milk and honey has often seemed a long way off. But was this actually the case in 2011, or were we all just getting caught up in the pessimism?

The first few weeks of this year were eventful, with widespread flooding and the effects of tropical cyclone Yasi devastating much of Queensland. On the Sunshine Coast we were lucky enough to stay relatively dry, but as the majority of our state disappeared under water many local residents were left wondering what long-term impact the floods would have on property prices.

Infrastructure projects have an important role in the growth of property prices

Then in late February the RP Data-Rismark Home Value Index showed that housing activity had slowed across the country, with capital cities Australia-wide recording an average 1.6 per cent decline in values, and regional areas a 1.2 per cent decline. It seemed as though the floodwaters weren’t the only thing drying up – so was real estate activity.

Figures released mid-year were similarly subdued. Data from more than 110,000 residential sales in the first few months of 2011 showed that housing values had continued to soften, falling an average of 2.7 per cent in the period from January to May.

However, in late August property analyst Michael Matusik used his Matusik Missive blog to point out that when translated into an actual dollar value, such drops in the median house price aren’t necessarily as bad as they seem.

“Even Brisbane, with the impact of the recent flood weighing down its property market, has fallen just 2.6 per cent or by $11,600 since January,” Michael wrote. “The Australian share market can fall more than this in a single day.”

But when combined with a noticeable mid-year lull in the construction and property sectors, these figures had many Sunshine Coast residents concerned about the region’s long-term economic prospects. As MPP reported in February, the flow-on effect from local development has a huge impact on the Coast’s financial health, with the industry comprising nearly 20 per cent of the region’s gross domestic product.

Many of our tradespeople were still heading south to Brisbane or west to the mines in search of regular work.

The State Government clearly agreed that a healthy building industry was crucial for the south-east region, introducing the Queensland Building Boost Grant as part of the state budget for 2011-12. Designed to “assist housing affordability, increase housing supply and support employment in the housing construction industry”, the boost offers $10,000 to help Queenslanders build or buy a new home, and up to $17,000 for first-home buyers to do the same, in the hope of luring wary buyers back into the market.

While industry analysts such as Michael Matusik were quick to point out the boost scheme’s flaws, and uptake has admittedly been slow, the fact remains that the government is offering cash incentives for Queenslanders who buy new property until January 31. Combined with relatively low interest rates and the most affordable prices in the local market for years, this means optimum buying conditions for those ready to make a purchase early in the new year.

In fact, in November the Real Estate Institute of Queensland released figures suggesting the Queensland property market was making a comeback. In the September quarter residential sales were up 17 per cent compared with the June quarter, with sales under $350,000 jumping 27 per cent as buyers took advantage of affordable prices. While median house prices had again softened slightly, and “the continuing patchy economic conditions mean sales remain significantly below long-term historical averages” across the state, the Sunshine Coast recorded a strong growth of more than 20 per cent. REIQ managing director Dan Molloy said these numbers were good news for real estate.

“We can certainly take some heart from these results, which show that our market is on the mend after a very difficult year,” he said.

So while it has undoubtedly been a challenging year for property, the forecast is far from doom and gloom. When MPP spoke to a number of local industry and government leaders in June they cited this year’s Office of Economic and Statistical Research report, which shows the Sunshine Coast remaining the forth-largest local government region in Queensland for the next 10 years, as fuel for measured optimism about our future. In 2011 work also began on several major new development initiatives, which will bring scores of jobs to the Sunshine Coast and hopefully help the local economy to grow – and thrive – in the years to come.

One of these developments is the Coast’s new hospital precinct. The council, national developer Stockland (which owns the land) and Queensland Health have been partnering on the project since 2007, and after a lengthy and often controversial planning process soil was finally turned at the Kawana site this year. The precinct, which Sunshine Coast Council CEO John Knaggs told MPP will be “a game changer for the Sunshine Coast,” is the largest health infrastructure project in the southern hemisphere and is set to introduce $3.5 billion into the local economy.

Situated on a 20-hectare site on the corner of Lake Kawana Boulevard and Kawana Way, the precinct will incorporate the 200-bed Ramsay Private Hospital, expected to open in late 2013, and the Sunshine Coast University Hospital, which will open with 450 beds in 2016 and is projected to expand to 738 beds by 2021. There will also be additional medical facilities to the tune of 20,000 square metres of commercial space and 15,000 square metres of conference space, a town centre and a transit precinct.

This means the hospital precinct will soon become the Coast’s biggest employer (with 11,000 construction jobs and 3500 health staff), which will have a flow-on effect to the local property market and will be instrumental in stabilising our economy.  

Other major development initiatives such as Reed Property Group’s Emporio in central Maroochydore will also start to bring life back to our property market. In March Sunshine Coast Council gave Emporio the green light, allowing construction to begin on the first of nine buildings, incorporating a blend of residential apartments, commercial office space, and hospitality and entertainment precincts. Stage one is on track for completion in March, and Chardan’s neighbouring Sunshine Cove development is also in full swing, with the first residents already settled in their new homes.

These developments form part of the Coast’s new principal activity centre (PAC), and the future of another key part – a 53-hectare slice of land owned by Horton Park Golf Club – was the focus of intense public debate across the first half of the year. The Maroochydore site has been the subject of a heated ownership struggle ever since state and council planning designated it as part of the PAC five years ago.

After rejecting the council’s initial offer of $39 million for the land, the club seemed in danger of ending up homeless, with the council having stated that it intended to take vacant possession by the end of the following August.

This didn’t happen, and on October 28 Sunshine Coast Council and the Horton Park Golf Club entered into the Horton Park Golf Course Resumption Agreement 2011, the key terms of which include $42 million agreed compensation to Horton Park Golf Club for the council’s acquisition of the land, the council taking ownership of the land by early 2012, and Horton Park Golf Club continuing to occupy its current site under a peppercorn rental agreement until June 30, 2014. A spokesperson from the council says this provides the “opportunity for the club to make an orderly and timely transition to a new, state-of-the-art golf facility over a period of just under three years”, and “opens the way for the council to continue planning and investing in creating the Maroochydore CBD”.

In April tensions arose at the southern end of the Coast, this time between the State Government and the council, when the state-owned Urban Land Development Authority released its 50-page draft scheme for the Coast’s biggest greenfield development site at Caloundra South. The UDLA proposal focused on housing sustainability, affordability and accessibility, with up to 50,000 people expected to move into approximately 20,000 dwellings by 2045, and an estimated 15,000 jobs to be created across a number of mixed-use precincts incorporating retail and commercial centres.

Back in 2010 the council applied to the Supreme Court for judicial review of the decision to hand over control of the 2310-hectare site, owned by Stockland, to the ULDA. The council’s initial response to the draft scheme was dismissive, with planning councillor Russell Green saying the draft contained only “vague promises” for the area’s future. Despite this, the draft scheme was approved by the State Government in October and is currently in effect.

While it has been a challenging year for property, the forecast is far from doom and gloom

Sunshine Coast Council has also been making its own plans. In July the council sent its Sunshine Coast Planning Scheme, which is the result of two years of investigations, to the State Government for review. The scheme provides new rules and conditions for all types of development on the Coast, and Russell Green told MPP it was designed to clarify the process, defining “preferred land use and building outcomes and types of applications, the processes to go through, [and] the constraints or other elements associated with that land”. The scheme is being presented to the community for public input before it is officially adopted.

When that happens, it will be consulted for new development in areas like Palmview, which at 926 hectares is the region’s second biggest greenfield site. In late 2010 the council’s structure plan guaranteed $600 million worth of infrastructure, with the area intended to house more than 17,000 people by around 2025. Investa Property Group has an approved plan of development with the council to start processing the first 850 of an anticipated 8000 applications for new residential housing lots.

On November 1, while most of the nation was trying to figure out which horse had won the Melbourne Cup, many home owners were also awaiting an announcement from the Reserve Bank of Australia, which was tipped to alter interest rates for the first time this year. The cash rate had remained unchanged at 4.75 per cent for 12 months but in November it was lowered by 25 basis points to 4.5 per cent, and again in December to 4.25 per cent, marking the first consecutive month-to-month drop since early 2008.

The move was welcomed by home owners and industry groups, with the REIQ saying a reduction “will ease the burden on home owners and prospective property buyers slightly”. The institute also called on lenders to pass on the savings, and for the RBA to take further action in the new year.

The first demand has already been met, with the major lenders choosing to pass on the full reduction to consumers, but we’ll have to wait until February to see what the RBA does next. On the whole, predictions for 2012 have been cautiously optimistic, and with local and state government elections slated for next year it’s certain there’ll be change in the air.

If the Coast’s healthy list of ongoing developments is anything to go by, there’ll also be construction cranes in the air, and REIQ chair Pamela Bennett says this new infrastructure could be key to improving our market situation.

“Infrastructure projects also have an important role in the growth of property prices,” she says, adding that “improved infrastructure provides improved services for local residents” and “plays a key role in creating local and regional employment opportunities.”

Projects such as the hospital precinct and Caloundra South are set to do just that, and so anyone on the Sunshine Coast with the slightest interest in property can hopefully look forward to a brighter 2012. Watch this space.

A quick guide to the Coast’s biggest development projects

KAWANA HOSPITAL PRECINCT

Set to be Australia’s biggest hospital precinct, it will introduce $3.5 billion into the local economy and will comprise:

• The 200-bed Ramsay Private Hospital, due for completion in late 2013, and the Sunshine Coast University Hospital, set to open with 450 beds in 2016 and expand to 738 beds by 2021.

• Additional medical facilities including 20,000 square metres of commercial space and 15,000 square metres of conference space.

• A town centre with residential homes and education, entertainment and community facilities, and a transit precinct with 77,200 square metres of mixed-use space including accommodation, retailers, a tavern and more.

CALOUNDRA SOUTH

The Urban Land Development Authority had its draft scheme for the Coast’s biggest greenfield development site approved in October. On 2310 hectares, the site will be home to:

• Up to 50,000 people living in approximately 20,000 dwellings by 2045.

• A number of mixed-use precincts including retail and commercial centres, expected to generate around 15,000 jobs.

MAROOCHYDORE PAC

The catalyst for an estimated 10,000 jobs, the new CBD is set to include:

• 150,000 square metres of new commercial floor space and 65,000 of new retail floor space by 2031.

• Around 4000 new homes, including mixed-use developments such as Emporio and Sunshine Cove.

• Community facilities such as a regional arts and entertainment centre, a transit plaza, regional library, public amphitheatre and civic plaza and urban open space.