By Herron Todd White
North Gold Coast
The investor market has dropped off due to COVID-19. Agents are reporting that the most probable buyers for most property types are homeowner buyers. Reportedly investors are generally more pessimistic about the short to medium term property market and are mostly playing a wait and see game.
One leading sales agent has reported that it is very difficult to sell properties that have longer term tenancy agreements as the current buyer demographic is homeowners who require more immediate vacancy.
However, the market is currently strong, and properties marketed with sensible vendor expectations are selling very quickly. This applies to family style, single detached dwellings and duplex and townhouse style units. Many sales are showing a slight increase in price points and value. Sales agents are reporting a lack of sales stock saying that many owners are also waiting to see what will happen and not prepared to make a move under uncertain market conditions. It appears that the lack of supply and low interest rates are putting upward pressure on values. Nevertheless, this has also resulted in the volume of sales being lower than expected. This generally reflects the pent-up demand suppressed during the COVID-19 lockdown and reduced stock levels.
Latest sale prices have shown only a slight improvement over the COVID-19 lockdown period for this corridor (Coomera to Eagleby) but do not indicate any significant rise in value over the past 12 months.
Developers are enjoying a resurgence in demand for land and building packages, especially from first home buyers who are rushing to take advantage of the subsidies offered by the government. There are, however, developers who reportedly put their land prices up as soon as the government announced the new $25,000 stimulus. Total subsidies for first home buyers on new properties are reportedly as much as $60,000, however much of this property stock is overpriced in the first place compared to the resale evidence.
Well priced estates such as Gainsborough Greens are selling fast, also assisted by the future construction of a new railway station, which will be within walking distance of the latest stage. Sales in the other estates in Pimpama and Ormeau (east of the M1) are also on the rise but not at the speed that Gainsborough Greens is selling. This could be also due to Gainsborough Greens offering larger sites of 400 to 600 square meters which provide future owners with a reasonable size back yard as well as privacy and sunlight. The lot prices of between $240,000 and $310,000 are also a big advantage over the other estates that sell for the same price but with smaller blocks of less than 400 square metres.
The rural residential market is also strong with evidence that buyers are seeking a lifestyle property from which they can work due to the work from home trend accelerated by the virus.
The rental market is changing with some property managers reporting that long term tenants are shifting between properties trying to secure lower rents or better value for money.
There seems to be a lot of mixed messages with regard to the impact of COVID-19 and prudent purchasers should undertake extensive research in their chosen market prior to buying. Generally speaking, buyers are taking advantage of low interest rates, consolidation of debt and even downsizing to reduce debt. Notwithstanding this comment, there are also a number of buyers who see this as an opportune time to move up the property ladder while money is cheap and if they have maintained stable income throughout the pandemic, banks are often willing to increase debt levels.
One of the largest concerns for the Gold Coast area is potential unemployment post JobKeeper and the slowdown in both the macro and micro economies. These issues are heightened by the Gold Coast’s dependency on tourism and we may see a surge of forced sales on the Gold Coast that will eclipse the tragic 2012 market capitulation period which interestingly took four years to filter through after the Global Financial Crisis broke.
The property market will again shift to a very strong buyer’s market. The Gold Coast’s strongest positive influence is to come from a southern migration as the Gold Coast continues to offer a very desirable and comfortable lifestyle at a relatively affordable price compared to many large cities.
Gold Coast Central
After a couple months of subdued activity due to COVID-19, there has seen a slight lift in the central Gold Coast residential property market over the past month. Local agents are reporting improved levels of demand, with most buyers seeking property priced under $600,000. Overall, the general sentiment is that there is still an air of confidence in the market across most price brackets. Price levels within the beachside suburbs to the south of Surfers Paradise are holding particularly well, mainly due to a lack of stock on the market. A large majority of sale transactions within the past month appear to have been local owner occupier or local investor purchases, with very few out of town investors.
Whilst investor demand in the Gold Coast central area appears to have softened considerably, some agents have noted that with a spike of COVID-19 cases recently re-emerging in New South Wales and Victoria, buyer enquiry from interstate for holiday style units has marginally picked up but overall demand is still way down. The Gold Coast tourism industry has suffered greatly due to the COVID-19 pandemic and subsequently returns for investment units have been adversely impacted. A few on-site holiday resort managers have reported extremely poor occupancy rates over the recent school holiday break and are hoping for a positive turnaround over the Christmas period. Some recent reports have also suggested that there is some volatility in the rental market with an increase in permanent rentals available and overall unit rental values are beginning to slide. Tenants appear to be willing to shift to another property in order to secure a lower rent and properties that have previously been offered for short term accommodation are moving towards the longer term guaranteed income stream that a permanent tenant offers.
Investors who are ready to jump into the market should specifically be looking at the family style detached dwelling, townhouse or duplex unit product option at the moment. Demand for this product is fairly strong and stock levels have been low which has resulted in values remaining stable, and in some cases, we have seen some marginal improvement depending on the location. Given that there are forecasts for a downturn in the local and national economy, investors seeking to buy right now should only consider these options if it will be a long-term investment proposition.
Gold Coast South
The residential market of the southern Gold Coast and northern New South Wales region remains solid overall with some strong sales results over the past month. The majority of properties are attracting good levels of enquiry and demand and time on market seems to be averaging three to four weeks. All agents are reporting a shortage of listings and there is a lot less volume of sales compared to 2019. In particular there have been some strong sales results on the Tweed Coast that have been difficult to support based on comparable sales.
Burleigh and Palm Beach have also seen some sales in excess of value levels achieved for comparable properties in the past 12 months, such as 7 Tawarri Crescent, Burleigh Heads which is reportedly under contract for $2.415 million. The property is a good quality new home on a 536 square metre dry block. Located in the Koala Park precinct of Burleigh Heads, this is a new build in close proximity to Tallebudgera Creek and the beach.
A number of agents and newspaper articles have reported that there is a surge in demand for acreage type properties away from the hustle and bustle. One of the main reasons for this demand is that more people can work from home. The attraction is the space provided by acreage living and purchasers are now spending more time at home, not just due to the lockdown recently experienced, but also the restriction on travel.
After the opening of the Queensland border there has been a reported surge in demand from southern buyers for Gold Coast and Tweed Coast property, which is anticipated to continue.
Most agents are reporting very limited demand from investors. Rental amounts have generally decreased over the past four months and vacancies have increased, therefore making property less attractive for investors.
Speak with a Gold Coast Mortgage Broker today.
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.