Townsville median residential house price growth for existing homes could be one of the strongest in Australia

26 February 2024

Median price growth for existing homes in Townsville is likely to be so strong over the next two years, the city could have one of the strongest growth rates in Australia, according to Knight Frank.

Knight Frank Senior Partner Townsville and Mackay Craig Stack said the strong price growth for existing homes would result from high buyer demand, driven by affordability of this housing type in comparison to newly built homes.

He said fewer new houses were being built in the region resulting in a housing shortage, but demand for all home forms was growing with plenty of people moving to the area to work on new projects such as CopperString 2.0 and the new Townsville Private Hospital.

“The cost of building a new house has grown more quickly over the past two years than the growth in the value of established houses, so due to affordability more people are preferring to buy existing homes rather than build new homes,” Mr. Stack said.

“The increase in the cost of building a new home has exceeded 25 per cent over two years which is far higher than the growth in median prices for existing homes, which was 15%.”

According to Knight Frank data, the average cost of a new build and land now approximates $620,000, compared to an existing home, which is $420,000.

“Continuing strong demand for the low supply of existing housing in Townsville will lead to price growth, and we think the median sale price for existing homes will grow very strongly over the next two years,” said Mr. Stack.

“In fact, the growth in Townsville’s median house price may become one of the strongest in Australia due to the demand-supply imbalance, with demand to grow exponentially as people move to the region to work on major projects commencing in 2024.

“Median prices have grown by five to seven per cent in each of the past three years, but growth rates may be up around 10 per cent next year, especially if interest rates retreat.”

Mr Stack said price rises for existing homes may bring prices more closely in line with the cost of building a new home, which in turn would lead to more new homes being built in the future – and this could see price growth moderate in several years’ time.

Townsville is expected to have 23,000 extra residents by 2031, with around 9,200 extra properties needed – or 1,150 per annum – to cater for demand.

With high tenant demand for housing in the Townsville and the North Queensland region, residential rental growth has been very strong and can only continue to rise, according to Mr Stack. Median weekly rental growth for houses and units has been consistently strong, increasing by 10% in each in each of the past 2 years.

“This gives investors a lot of confidence in the region,” said Mr. Stack.

“We believe rental growth will be very high in Townsville throughout 2024 because of the strong demand for employees, with many companies likely to lease housing on behalf of employees so they can fill positions.

“Vacancy is also very low, currently sitting at 1%, according to the Real Estate Institute of Queensland Vacancy Report for December 2023.”

While prices and rents are expected to see strong growth, the market is coming from a low base, so it is still affordable, according to Mr. Stack.

The median price in Townsville is currently $430,000, while the median rent for a three-bedroom house is currently $450, according to Residential Tenancies Authority data for December 2023.

In response to expected growth in Townsville’s residential market, Knight Frank is expanding its newly established residential team in the North Queensland region.

The team was only established in April 2023, with Tracey Stack – who has 35 years’ experience – coming on board.

Meanwhile, Scott Gillespie commenced with Knight Frank’s Mackay team in January focusing on rural and rural lifestyle sales, along with two sales agents in the Project Marketing team who continue to focus on Townsville and Whitsunday project sales.

“Establishing a residential sales team aligns with our strategic vision to proactively address the increasing demand in the residential property market,” said Mr. Stack.

“We established a team based on what we have seen, and expect to see, in the Townsville and central Queensland markets.”