REIQ local expert Damian Raxach.
REIQ local expert Damian Raxach. Contributed

Open market for Fraser Coast investors

A DROP in listings could end up leading to property price growth on the Fraser Coast.

The latest Real Estate Institute of Queensland's Market Monitor report has revealed median house prices in the region increased by 1.1 per cent to $318,600 in the June quarter.

Although the median-term performance of the unit market in the region had been poor with prices falling about 3.8 per cent, in the past 12 months it had started to turn around with a 2%, to $255,000.

According to the REIQ the annual fall in listings volumes, for both houses and units, triggered a large reduction in stock on market and put some upward pressure on prices.

Potential investors looking to capitalise on recent growth in the Fraser Coast property market need to know what they are after according to experts.

REIQ'S Damian Raxach said it was important for people seeking investment properties to come prepared.

"Are you after high yields and a good return or capital growth? Because in Hervey Bay those two are mutually exclusive unless you get extremely lucky,” he said

"As a buyer, future investment isn't something to focus on and lose sight of what you want and need for your home.”

According to property valuers Herron Todd White's October report, an advantage of buying and renovating older homes around the area is to secure a good location.

These locations are generally the beachside suburbs of Point Vernon, Pialba, Scarness, Torquay and Urangan close to the Esplanade.

These areas are predominantly fully developed with little vacant land available.

"Brand new homes will be great for depreciation and tax benefits but it is not going to give you capital growth,” Mr Raxach said.

"Whereas older homes on Cyprus St and Cunningham St near the Esplanade will give you great capital growth but hardly any yield.”

Herron Todd White reported the affordability of new house and land packages around the Fraser Coast makes buying older less appealing, despite interest in buying old homes to renovate slowly increasing over recent years.

Investors are reportedly generally looking to purchase run down dwellings, fix up and turn around within an 18-month period, hoping to capitalise on a rising market.

Whereas owner-occupiers generally purchase and renovate over a longer period of time to a higher level of quality.

The lack of available land in close proximity to the beach is the main driver, however another advantage of purchasing a renovator is that the cost of replacing some of these larger, older homes can be significant.

Prices within 500 meters of the Esplanade, but not on the Esplanade, for older dwellings requiring renovation varied from $280,000 to $450,000.

The price variations include factors such as land size, structural condition and dwelling size.

The Hervey Bay market appears to have a price ceiling in certain locations and if purchase and renovation costs in these locations exceed this price point, a return on investment may not be achieved.

Mr Raxach said investors coming from other places where unit living was more common were responsible for some of the market rise.

"The unit prices are statistically increasing but as a agent in the local market, we are still struggling to sell units,” he said.

"People who live regionally to begin aren't used to live in units and would prefer a house with a backyard etc.”

Fraser Coast holds the record for longest days on market for units, at 113 days, out of all the areas analysed in the Queensland Market Monitor.