Why this tropical city has the hottest property market in the country

An unsuspecting regional hub located 1300 kilometres from the closest capital city has become the fastest growing property market in Australia.

Not only is it outperforming on property prices, but it’s also been identified as one of the top ten lifestyle locations in the country.

So, what makes the North Queensland city of Townsville such an appealing prospect for families and investors?

The latest PropTrack Home Price Index shows national property prices have risen 4.9% over the past year. Townsville’s annual growth rate is more than triple that at 16.7%.

It follows a theme of regional outperformance, with the regions currently growing at a faster rate than the capital cities. The only capital city location to make the top 10 list for annual price growth was Adelaide’s south, which grew 10.7% over the year.

Since 2020, Townsville home prices have jumped more than 80%, with most of the growth occurring in the past two years.

Property prices went backwards in the five years before that as rising unemployment drove up mortgage arrears and rental vacancy rates.

Prices have come off the boil in the past few months, but there are many reasons why the Townsville property market will remain strong.

Affordable lifestyle location with good job prospects

Three key factors are underpinning the tropical city: Jobs, affordable homes and lifestyle.

In recent years Townsville has undergone a significant transformation with billions invested in revitalising the city, including a major sporting stadium that was opened in 2020. Along with increased defence jobs, a pipeline of renewable energy projects, water supply and infrastructure projects is attracting new workers to the region.

Housing the growing population has been a sticking point, with the shortage of homes driving up home prices and rents.

But even after the recent price growth, homes in Townsville remain among the most affordable in regional Queensland.

The median home price remains below $600,000, well down on the national median of $827,000.

In the suburbs of Vincent, Garbutt, Heatley and Rasmussen home values have jumped by as much as 30-40% in the past 12 months and still remain around $500,000.

Yet when it comes to lifestyle, Townsville ranks in line with some of the most prestigious markets in the country.

A new report released by MCG Quantity Surveyors gave the city a perfect score of 20/20, based on four key lifestyle factors of beach access, natural environment, urban amenities and family-friendliness, overlayed with long-run price metrics.

MCG Four-Pillar Lifestyle Index

The thinking is these locations that “have it all” draw sustained demand, command premium prices and post steadier growth in the long term.

In terms of lifestyle offering, the report puts Townsville in the company of Sydney’s ultra exclusive eastern suburbs and northern beaches – despite homes costing a fraction of the price.

When the top 10 was ranked by price, Townsville was in first place with a median house price of $567,000.

The yield factor

With housing affordability at an all-time low, investors searching for the elusive combination of growth and yield have been setting their sights on regional Queensland.

Townsville’s growing population and a lack of new housing supply has seen vacancy rates fall and rental prices surge.

It’s a similar story across many parts of the country, but the affordability factor makes Townsville particularly attractive.

The region has been identified by many property insiders as an investment hotspot, including its inclusion on the annual realestate.com.au Hot 100 list two years in a row.

Compiled by a panel of industry experts, the Hot 100 identifies locations across the country tipped to outperform based on various growth drivers.

Anecdotally, real estate agents in these areas have seen an influx of activity from interstate investors and buyer’s agents, which is likely to continue as affordability constraints limit opportunities.

While markets move in cycles, the fundamentals are there for the tropical city to remain strong for the long term.

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