Population the key driver of values in Nth Qld

Posted on 7/06/2007  
Population growth has a measurable impact property values, according to valuation firm Herron Todd White (HTW).



HTW says in the May 2007 edition of The Month in Review that its research into sales in Cairns over the past 16 years shows that the most important factor driving the residential property market is the level of population growth.


It says up to 60% of the variability in new land and unit sales can be attributed to changes in population growth. “Interest rates have an effect, but they are very much a secondary consideration,” HTW says.


“Every time our population growth rate increase by 0.25 percentage points – e.g. from 2.5% to 2.75%, land sales will increase by about 45 blocks per annum. However, a 0.25 percentage point increase in interest rates will reduce the demand for land in Cairns bu only five blocks per annum.


“The population growth rate increasing by 0.25 percentage points will increase new apartment sales by about 30 per annum, while a 0.25 percentage point interest rate rise will dampen the demand for new units by about 10 per annum.”


HTW says the most important driving the buoyant Townsville market is the level of population growth. “Up to 50% of the variability in new land and unit sales can be attributed to changes in population growth,” it says. “Although we don’t like interest rate increases, their influence on property market activity in Townsville-Thuringowa is fairly small.”


Both Cairns and Townsville enjoy strong population growth and both have healthy property markets, in contrast to South East Queensland.


HTW says the median house price for Cairns rose 12% in the year to February 2007 to reach $339,000. Unit prices rose 16% while the median price for a new residential allotment jumped 39%.


In Townsville the median house price rose 17% to reach $316,000, while prices for residential allotments increased 37%.


HTW says of the Townsville market: “Sales turnover is almost instant for properties on the market under $250,000 and very rapid for those priced in the $250,000 to $350,000 bracket.”



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