Are Toowoomba House Prices Falling?
COVID-19 has had far-reaching economic impacts.
So it’s no surprise that like the rest of the country, Toowoomba’s property market suffered a small dip in the first half of 2020. But, as we wrote in our last market report, we believe the market is on track and so these headlines could be seen as a little misleading.
So what’s the story behind the recent media reports about property prices falling in the Garden City? We take a look.
The first half of 2020
2020 got off to a good start for Toowoomba’s property market. But when COVID-19 started having an impact on our economy in March and April, we saw buyers and sellers begin to take a ‘hold fire’ attitude. Many who were looking to enter the market or sell their home instead chose to sit back and see how conditions would play out. As a result of this low confidence, there were few new listings and stock levels began to fall.
Then, in May, we saw the market start to rebound. By June, normal activity had resumed, albeit in tighter than normal conditions.
Since then, more listings have been coming onto the market and we’re noticing some of the buyers who held off earlier in the year now actively looking. We’re also seeing new buyers enter the market for the first time.
The dire headlines
Despite this, in July news headlines appeared saying that the median house price in Toowoomba’s suburb of Rangeville fell by 23% from $543,000 in January to $418,000 in April. According to Finder.com.au, this meant that Rangeville saw the second-largest price fall in all of Queensland.
Finder.com.au said that it reached this conclusion after examining 227 Queensland suburbs that had achieved more than 20 sales and had a population of more than 1,000. It also said that of these suburbs, 41% had suffered declining prices between January and April.
But should we really be that worried about this data?
We’d argue we shouldn’t be too concerned. The reality of today’s market really depends on which data you use and how you analyse it. No other data we have seen supports these same conclusions.
We believe that combining housing and units together also skews the figures because these markets have performed very differently during 2020. We also note that data can be skewed one way or the other when there are relatively few sales.
If we look at CoreLogic data, Rangeville houses experienced a -1.7% decline from $445,000 to $437,500 based on 31 sales. These low numbers show that it is a tightly held market. That said, units in Rangeville did not perform as well as houses, recording a -7.2% drop over the first quarter of 2020.
The data can also be skewed by the timing of sales and what is on the market at that moment. Often, when stock levels are low, there are few premium properties on the market and so the median or average price naturally falls.
We also believe that you can’t really look at one quarter in isolation. While it’s clear COVID-19 has impacted the market over the June quarter, what will the longer-term impact be? After all, over the first quarter of 2020 Queensland house prices experienced an average price rise of 1%. And we’re noticing a trend of more Brisbane and capital city-based buyers actively looking to move to the regions.
Finally, data shows that the average Aussie homeowner is holding onto their property longer than they used to. In 2009, the average tenure was 7.5 years for houses, rising to 11.3 years by 2019. For units, it rose from 6.7 years to 9.6 years.
So a small price drop one quarter is unlikely to affect a homeowner over the longer term.
A closer look at Rangeville
As we highlighted in a suburb profile earlier this year, Rangeville is one of Toowoomba’s most popular areas.
Home to over 8,000 people, it is just 5km from the CBD, filled with parkland and has strong family appeal.
According to realestate.com.au, it remains very popular with potential buyers and receives more than the average visits to online listings. As of 3 August 2020, the median house price is $447,500 and the median unit price is $336,000.
The long term data on realestate.com.au reveals that the median house price has risen from $347,000 in 2011 and is currently just shy of the $448,750 it peaked at in 2015. The median unit price was $307,500 in 2001 and peaked in 2017 at $357,500.
Realestateinvestar.com.au data shows that just less than a quarter, or 23.48% of its residents, are renting. Houses currently rent out for an average of $378 a week, and units $310. And the good news for investors is that the vacancy rate is currently very low, at just 0.74%. Yields are over 4% for both houses and units, making it a great investment opportunity.
What will Spring hold for Toowoomba?
As we enter the traditional Spring selling season, some of the uncertainty that has surrounded our lives during 2020 still remains.
We can’t forecast with confidence that there will be the typical boom in both listings and buyers. But we are confident that the property market is handling the uncertainty well. We’re also confident that Toowoomba will remain a great place to live and work and that the sound fundamentals of the Toowoomba property market will continue to make it a solid long-term investment.
Take advantage of Toowoomba market conditions today
Looking to buy, invest or sell your current home? Talk to the Toowoomba real estate experts and find out how we can help make your property dreams a reality.