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A real estate expert has predicted Townsville property prices will soar in coming years. Picture: Suppplied

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The Townsville property market is tipped to see a price boom in coming years as a growing population competes for dwindling supply while new builds fail to keep up with demand.

Craig Stack, Knight Frank senior partner Townsville and Mackay said he predicted Townsville would soon see one of the highest price growths in the Australian property market.

“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,” he said.

“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.”

According to Knight Frank, Townsville is expected to have 23,000 extra residents by 2031, with around 9200 extra properties needed – or 1150 per annum – to cater for demand.

Craig Stack, Knight Frank senior partner Townsville and Mackay. Picture: Supplied

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Mr Stack said even as the population increased, fewer new houses were being built in the region, resulting in a housing shortage.

“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,” he 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 per cent.”

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According to Knight Frank data, the average cost of a new build and land in Townsville is $620,000, while the median price of an existing home is $420,000.

“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 homebuyers are opting for existing real estate over new builds . Picture: Zak Simmonds

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Mr Stack said Townsville was also seeing strong demand for rental properties, while both unit and house rents increased by 10 per cent in each of the past two years.

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

“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 per cent, according to the Real Estate Institute of Queensland Vacancy Report for December 2023.”

Mr Stack said while he expected to see rents shoot up, the market was still affordable with the median rent for a three-bedroom house sitting at $450 per week, according to Residential Tenancies Authority data.