Gold Coast April 2018

The month in review: Gold Coast

By Herron Todd White
April 2018

North West Region

The numbers affecting the property market are difficult to determine. In recent months, investors have started to come back into the market with increased sales. The consensus among valuers and agents alike is that the pick up is due to some relaxation in investment lending by the banks where previously they tightened up significantly on their lending policies.

By far the most popular property option is a new build on a small residential block. The people buying these properties mainly comprise of two types – interstate investors and owner occupiers working in the Gold Coast or Brisbane area or both. With this in mind, the employment sector and industry types have minimal impact on this market.

We note that the entire north-west has a number of developing estates and with the rate at which they have been developed in recent years there is now a large oversupply of new properties in the market. This makes finding tenants an issue which in turn is having a direct impact on rents and investment property returns. As you go further west the oversupply becomes worse until you reach Yarrabilba, then further west at Flagstone is not as bad. This oversupply situation also shows that whilst you pay a premium for a new house, the second-hand market is more severely affected, with sale prices for a second hand home heavily discounted from the original new house and land cost.

Gold Coast property

Given what we’ve seen in this market, the more sound investment option for an owner occupier who expects their property value to grow would be the second-hand option.

Southern Region

The southern Gold Coast and northern New South Wales property market have remained strong during the first quarter of 2018. Local agents have continued to report strong levels of demand with shorter selling periods, reduced stock availability and upward pressure on sale price levels. We note an increase in buyer interest in the area, particularly in the lower price ranges for units and houses. We notice an increased presence of younger owner-occupier families in some areas of the Tweed Shire which can provide a more inexpensive alternative to some central Gold Coast suburbs nearby. This may see the area become less susceptible to volatility from interest rate movements. With new estates emerging around the Terranora and Cobaki Lakes area, we will begin to see a further influx of investors which may negatively impact rental returns as a result of increased supply. With continuing population increases in our coastal localities, the southern Gold Coast and New South Wales area look set for continued growth amongst owner-occupiers and investors alike.

Central Region

Examples of the numbers that influence this region are employment, migration, vacancy, interest rates and credit availability. Upgrades to infrastructure (public and private hospitals, light rail and Commonwealth Games and tourism-related construction) have increased demand from both potential buyers and tenants in the central region. Suburbs well located to access these employment hubs have seen strong growth in rents and prices across all market segments. Some instances have seen rental properties jump 10% plus from the previous lease when placed on the rental market. Large groups and multiple applications are common at most open homes.

Vacancy is currently very low and it is likely due in a large part to migration to the area driven by employment opportunities.

The strong and growing rental returns for properties in the central region make them attractive to the investment market, however, tightening of credit availability and potentially higher interest rates on investment loans have begun to restrict the number of investors in the attached dwelling market in the area. Anecdotal evidence from agents notes that owner occupiers and first home buyers have increasingly featured in the buyer profile for this type of property.

Currently, numbers published show higher and increasing levels of interstate migration. Many may be attracted to the employment opportunities and perceived competitive property prices. This currently still ensures that reasonably priced homes in the central region will generally sell in less than three months and often less than one month.

The limited available vacant land for new home construction has seen two recently released land estates in the area experience strong sales.

The main employment sectors in the central region, tourism and construction, as well as health and education, should continue to attract migration to the area in the immediate future. The completion of the Commonwealth Games in April may pose a risk as the directly related employment comes to an end.

Another risk to continued growth is potential interest rate rises. Recently published figures have highlighted that mortgage stress is beginning to increase on the Gold Coast. Any upward change in interest rates is likely to increase both mortgages under stress and general demand.

North East Region

The key numbers that influence the north-eastern Gold Coast region are upgrades to infrastructure, employment opportunities and cheap rent or housing compared to other regions of the Gold Coast. The continuing development of new dwellings and infrastructure has had the effect of increasing demand for vacant lots and new product, as a new house and land package, duplex unit or townhouse is proving a more attractive option to some sections of the market, particularly first home buyers who want to benefit from the increased incentive programs.

The recent new and proposed infrastructure includes upgrades to the motorway exit 54, two new schools at Coomera, sports precinct at Pimpama, Coomera indoor sports centre used for the Commonwealth Games, aquatic centre, Pimpama Junction shopping centre, Pimpama Village shopping centre, tavern, fast food outlets, service stations, proposed hospital and a Westfield shopping centre. The ongoing investment in the area has been able to create new jobs in many different fields with housing still affordable. The market for this class of property is still underpinned by strong investor buying activity with the majority of new land and house packages in certain estates being sold to investors. The ongoing supply of new investment properties into the market has kept the rental rates steady for the past 12 to 18 months and reduced rental yields for investors in the area.

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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.