Hervey Bay Property Market… wHats going on?
When we started buying in the Hervey Bay (which is part of the Fraser Coast LGA), at the end of 2016 our research indicating buying established 3 or 4 bedroom houses at or below the median house price, with a minimum block size of 500sqm, up to a maximum price limit of $320,000, was the go, and that’s what we did.
Area wise, we ended up targeting Eli Waters, Point Vernon, Urraween, Torquay, Urangan, Pilba, Kawungan and Wondunna, which all centered around the main part of Harvey Bay.
The last thing we were chancing were good yields. If we bought a property for $310,000, we could expect to get $330 – $350 per week, putting you right in the 5% yield range, which is the way we like it.
Why is 5% yield a good target to aim for?
If you’re borrowing everything, purchase price, stamp duty, inspection fees, the lot, a 5% yield, in the current interest rate climate, means your property will be cashflow positive.
Fast forward 5 years to 2021 and the market is absolutely cranking in Hervey Bay.
This week we jumped on the phones and called some of the local selling agents we’d worked with, along with the property managers we currently use in Hervey Bay and boy did we get some great information about what’s been happening in their market.
Rents and Rental availability
Between 2016 and 2018 vacancy rates remained stable around the 2% range. But they started dropping from December 2019, really picking up the pace from March this year. Currently HB is going through a massive rental shortage with vacancy rates now at or close to zero.
The rental market has been solid over the past five years, but because of the shortage rents have really kicked up this year. Using one of the properties that we purchased for $246,500 back in 2016 as an example…this rented for $300 per week when it settled. According to our property managers in the area, this same property now would easily get $380+ per week.
Housing availability in HB is getting that bad, there is a town meeting the week starting 24/07/21 with council members, local business leaders, and concerned residents, so they can go over plans to try and get on top of it. But with wait times as long as 12 months to get a builder, and an Australia wide shortage on building materials, I’m not sure what they will come up with.
Prices and market conditions
Speaking with the agents, they all were saying the same thing as the property managers…not enough properties to sell, and a list as long as their arm of people wanting to buy. Properties that get listed sell within 7 days, and if a buyer is looking for a cooling off period or a finance clause, the agent just moves on to the next buyer that’s ready to go. If you’re not cashed up, or at least pre-approved, buyers are not even getting as look in.
One of our owners decided to take advantage of the current climate and sell one of their properties. We picked it up for them back in February of 2017 4 bed / 2 bath / double garage that we got for $307,000. It’s on the market for offers over $399,000 at the moment, but the selling agent looking after the sale said she’s expecting this property to sell around $450,000 plus easily…a very nice return for just 5 years of owning the property.
What are the reasons?
Some areas of Australia have been affected quite negatively during the covid lock downs, but not Hervey Bay. Employment opportunities are strong, and because HB is in a bit of a bubble, even their tourism industry is going well.
There is so much migration from the southern states into the area the pressure on the rental and sales market has never been higher:
In 2016 the population was 53,671, at the end of 2020 it had grown to 57,781, now Hervey Bay is on track to surpass 102,000 by 2026. A doubling of the population in 10 years!
Because of Covid, we’ve worked out we don’t need live near where we work. Working remotely has taken off, and people are getting out of the cities choosing lifestyle and family over working for the man. Regional locations have become very popular, and places like the Fraser Coast and Hervey Bay are where people are looking.
If you own a property in HB, what do you need to do?
- Check when your lease is up for renewal.
- Diarise 2 months prior to your lease expiring and contact your property manager and ask them for a rental review.
- Get your rent increased. The market may dictate a number higher than your tenant can afford, so what do you do?
- Negotiate with the tenant and see what they can afford. Then you have a decision to make, do you want them to stay and at what cost?
- If your plan is to sell and capitalise on your gains – contact us to chat about it and we can put you in touch with a good agent to work with.
- If you want to invest further – contact us and we can get a valuation underway for you and start accessing the new equity.
If you didn’t buy with us in this area, that’s okay, there is still time to get into another location.
We are still buying for clients in our latest area, well under the median house price, with yields well into the 5% range, so give us a call on 029544 5554 or email us @ sales@wheregroup.com.au
Points for reference and information of interest.
