Gold Coast December 2017

The month in review: Gold Coast

By Herron Todd White
December 2017

Our predictions from the February Month in Review generally panned out well in 2017 across the entire Gold Coast.

2017 started as it left off in 2016 – strong across nearly all property segments and sales numbers and sales prices both being strong. However, by early to mid-year there appeared to be a general slowdown in sales numbers but with values remaining strong and heated. Real estate agents reported conflicting situations from suburb to suburb and from month to month as sales activity started to become patchy. Generally values stabilised across most of the lower to medium property segments as opposed to the more sought after locations that have continued to improve.

Western suburbs had a noticeable and unpredicted increase in investment from first home buyers.

Central west (Nerang, Carrara, Pacific Pines, etc.) maintained consistent value levels and sales volumes throughout the year, particularly properties below $500,000 and everything priced reasonably selling within a few weeks.

Murwillumbah was affected by the aftermath of Cyclone Debbie with severe flooding in the area in March and April 2017. The caused a bit of a negative stigma in the market with limited transactions since in any flood affected areas, however properties in flood free locations have continued to improve strongly over the year.

The northern Gold Coast growth corridor and southern Logan region steadily improved or was generally stable during the course of 2017. This region provides affordable housing options for first home owners, owner-occupiers and investors, which fuelled the volume of sales over the year. Sales agents active in the rural residential market in the western regions such as Jimboomba and Logan Village reported improved growth and shorter marketing campaigns.

Positive factors included continued low interest rates, interstate migration mainly from NSW and Victoria, first home buyer’s grants, market perception of the impending Commonwealth Games providing some confidence, marginally improved unemployment, shortage of residential vacant land parcels and the light rail system with stages going to Helensvale in the north and plans for Stage 3 to go to Burleigh Heads.

Negative factors included macro events such as US elections creating economic doubt, tightening by the Chinese government on international property investment and oversupply of new and developer units in the circa $300,000 to $650,000 bracket.

There were mixed predications about how the Gold Coast property market would behave over 2017 with some predicating a sharp fall, some predicting stabilisation and others predicting a continued strengthening.

Some of the main property market segments can be summarised as follows:

Vacant residential parcels: There has been a general shortage of good building parcels in most estates. Land sales have been very strong with sales prices reflecting in the order of 15% increases.

Units: ($200,000 to $650,000): Decreased sales volumes with developers now offering incentives and large sales commissions to real estate agents.

General detached dwellings (typical family homes): $500,000 to $900,000: Slowdown in volumes with stabilised price points at increased strong price levels.

Rural residential: A poor performer with low volumes of sales and marginal increase in values. Demand and values for rural residential properties in the northern corridor appear to be improving.

Prestige units: ($750,000 to $3 million). Strong with circa 10% improvement in values.

Prestige market: (i.e. dry, golf course and canal/ water front properties $1.2 million to $5 million): Very strong with circa 15% to 20% improvement in values.

Suburbs with good proximity to Gold Coast beaches such as Palm Beach, Broadbeach, Miami and Burleigh Heads have seen continued strengthening values, as much as 35% over the past three to four years.

Interstate and international buyers continued to be a significant investor component. Chinese buyers appeared to slow down, however seem to be back now with a reported increase in buyers also coming from Vietnam. New Zealand investors are also significant, however perhaps not as strong as in previous years. Most sales seem to be localised investors buying up and improving their own personal homes or improving investment portfolios with first home buyers strongest in the western Gold Coast suburbs.

The biggest surprise is how well the prestige market and beach suburbs are now performing with values pulling further away from lower property brackets and other non-beach locations.

A notable sale was 3 Anzac Parade, Burleigh Heads, which is currently under contract for $1.025 million. This is an older style, knock down house on a medium density zoned site. It previously sold in 2007 for $647,000, resold in December 2016 for $950,000 and has now resold with the sale price representing land value only. The property is suitable for a duplex style redevelopment which has been a very popular style of development for local developers in recent years, however with land prices being so high, the level of profit for the project has been minimised as the cost of the project continues to rise, although the value of the completed duplex units does not appear to be improving as quickly as the land prices.

Large new housing estates such as Yarrabilba have sprung up in the northern corridor. These estates were seen as affordable opportunities for first home buyers and investors with land selling well below the established areas of the Gold Coast. We are now seeing some worrying signs in some of these estates with properties slow to resell and high rental vacancies. An example of a resale was that of 14 Orb Street, Yarrabilba. This property is currently under contract for $372,500, purchased by a local Yarrabilba buyer for less than cost. The property comprises a circa 2016, 4-bedroom, 2-bathroom dwelling with a two car garage of 36 square metres, living area of 149 square metres and outdoor area of 26 square metres. It is situated on a regular shaped 400 square metre, level block with no significant views. The land was purchased in March 2016 for $167,000. The building contract in 2016 was $220,000 (total land and build cost of $387,000). The property was listed on 11 September 2017 for $380,000. The sales agent reported that only three people viewed the property during the marketing campaign.

There have been some conflicting signals with the market becoming heated in some segments and stabilising in most other areas and brackets. The confidence in the prestige market appears to be what will lead the way as we go forward.

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