Suburb spotlight: Toowoomba
Located in south-east Queensland and 127 kilometres west of Brisbane CBD, Toowoomba is Australia’s most populous inland non-capital city with a population of over 100,000, according to ABS statistics.
In the last year it has grown to be "the strongest-growing region of all of Queensland," according to Australian Property Monitors (APM) senior economist Dr Andrew Wilson. He foresees that activity there will remain strong over the next year or so.
This can be attributed to Toowoomba’s geographical location as a gateway to the Surat Basin resources and mining areas.
However, he has his reservations about Toowoomba being labeled a 'hotspot'.
"It was the most affordable of the region, driving everyone to Toowoomba as there’s higher yields there. Because of increased investor activity, it has been highlighted as a hotspot – but the curse of the hotspot could lead to an oversupply of investment properties, pushing down rents and yield," he told Property Observer.
At the moment, Dr Wilson thinks Toowoomba is tracking a similar outcome to Gladstone, with one clear difference.
"The only differentiation is that there are no similar large urban areas as an alternative living area near Toowoomba. In Gladstone, people could live in other areas where it’s cheaper. It sees a lot of drive-in, drive-out workers, some driving in from as far as the Sunshine Coast," he said.
As for the similarities between Toowoomba and Gladstone, Dr Wilson believes that in areas with an oversupply of investment properties, there needs to be investment in the area or population growth in order to maintain the returns investors require.
"Surges in investor activity tend to oversupply the market. It will follow an adjustment process in the medium term as we see in Gladstone," he said.
In the short term, Dr Wilson has seen an acceleration in activity in Toowoomba, and believes it will remain as Queensland’s strongest-growing region in the following months to come.
Ray White Toowoomba principal Andrew Carter thinks Toowoomba’s property market is at the beginning of its recovery.
"We’re at the start of an upwind; we’ve been recovering quite quickly on sales volumes. The number of sales have now recovered to long-term averages," he told Property Observer.
He noted that property prices are starting to trend upwards. This could be due to a new town plan being put in place in that encourages infill development, which has had significant impact on land valuation in certain zonings.
While Toowoomba has often been compared to Gladstone, Carter thinks the two are vastly different.
"Toowoomba is the largest inland city. Gladstone is much smaller than Toowoomba. Traditionally, Toowoomba has been supported by the agricultural industry which is still there. All that’s happened adds another dimension to the commercial spots of Toowoomba as a centre," he said.
Toowoomba’s vacancy rate was 1.3% as of September’s end, but Carter emphasises that the area has historically had a low vacancy rate.
"We haven’t necessarily had surging rents like you would expect. We haven’t seen circumstances where there is bidding for property where people have to pay significantly above the asking rent in order to secure the property," he said.
From a commercial perspective, Carter thinks Toowoomba still needs some population growth and optimism.
In addition, Carter does not think Toowoomba has reached a point of oversupply.
"Traditionally, Toowoomba is a very conservative place, not prone to boom or bust movements [compared to] other markets. It’s not the Toowoomba way. I can’t see any evidence that we are in a boom/bust environment. It will still provide very solid investment growth for people going forward," he said.
He added that Toowoomba will see its infrastructure strengthen with the addition of Australia’s first public airport next year, as well as the Toowoomba Second Range crossing.
"These are major infrastructure projects. If you look at the major fundamentals of investments, investing in Toowoomba is fantastic," Carter said.
McLean Property Toowoomba owner Lynn McLean has lived in Toowoomba all her life. She echoes Carter’s sentiments that the market is doing well.
"The property market in Toowoomba is firing, the enquiry level is high especially from investors. This enquiry is largely from interstate buyers and I often hear complaints from local buyers who miss out on a property, they say they were not quick enough. The enquiry and sale level has definitely increased from this time last year," she told Property Observer.
In addition, McLean says there is a shortage of available land at the moment in Toowoomba, which has slowed the supply of development sites for both units and houses.
In her years of experience, she has seen Toowoomba’s property values protected by the city’s different markets, including the rural sector.
"Over the last 23 years of investing and selling real estate in the Toowoomba market it has become obvious that Toowoomba is one of the few cities in Australia which offers a very safe environment for investing," she said.
With a slowdown in supply, she has seen rental returns go beyond dollar for dollar, which indicates demand outstripping supply.
"As vacancy rates fall the rents go up and of course the investors are happy, but affordable rent starts to disappear," she added.
She notes that all markets are built on supply and demand, and she foresees demand outstripping supply in both the rental market as well as properties for sale.
Lastly, she reiterates that it is a good time to invest in Toowoomba at the moment.
"There has never been a better time for investment in this region. The new airport, the range crossing, the planned rail system, the city centre redevelopment and the Charlton Wellcamp Enterprise Centre are all indicators of enormous confidence in the region," she said.
