Toowoomba stabilises in investor driven development HTW
Investors remains active in the Toowoomba residential property market, according to valuation firm Herron Todd White's recent report.
However, the HTW report suggests the last half of 2015 has seen a stabilisation in investor driven development, "perhaps in response to reduced mining activity in surrounding areas.
"Evidence of this is that while the median house price continues to increase, the volume of house sale since the peak at the end of 2013 and start of 2014 has slowly reduced, showing early signs of a softening consumer sentiment across the market."
The report goes on to state that although investors continue to play an influential role in the level of development activity across Toowoomba, development of new units and dwellings on non-traditional small lots built to an average standard with basic to good finishes is concentrated in suburbs such as Glenvale and Kearneys Spring to the west of the CBD.
"The typical investor pool is comprised of mostly out of town investors seeking house and land packages.
"There has been a notable slowing in rental demand and a subsequent decrease in gross yields being achieved for investor product.
"As such, this may encourage the investor subset to reduce risk appetite."
Moreover, the report suggests the tightening of investor lending criteria may negatively impact the Toowoomba residential market in that the construction of new units and dwellings on non-traditional small lots in these areas is near completely reliant on investor and tenant demand.
"This is the case as the nature of these rental dominated estates or precincts is often synonymous with average street appeal and a general lack of maintenance which has traditionally deterred interest from the owner occupier market.
"In summary, it is unlikely that investor activity in Toowoomba will continue to increase at the rate seen in the previous year given the reduced mining activity in surrounding areas.
"However, while Toowoomba’s median house price remains below $400,000, the affordability of investment is likely to continue to attract some level of investor attention."
