Gold Coast February 2017

The Smartline Report – February Edition

The month in review: Gold Coast

By Herron Todd White
February 2017

The outlook for 2017 is very positive with the majority of agents reporting a great start to the year with limited good quality stock listed for sale. The new estates in the growth corridor to the northern and north-western end of the Gold Coast continue to release land and increase prices and there is more talk in northern New South Wales of the larger estates coming to the market this year. So let’s take a look at the different predictions by locality:

Northern Gold Coast
Overall, excluding external economic factors that could negatively affect property values, 2017 is predicted to track much the same as 2016 for the northern Gold Coast and Southern Logan property markets. Strong infrastructure investments including the recent upgrade of Exit 54 and the scheduled commencement of construction of Westfield’s Coomera Shopping Centre should ensure that demand from both investors and owner occupiers remains strong.

With the abovementioned infrastructure in the suburb of Coomera, naturally Coomera would be a suburb that could be worth watching throughout the year. Property types vary from semi-modern 2-bedroom units starting in the mid $200,000s to prestige canal front dwellings achieving prices up to $1.8 million. Coomera Waters is the premier estate in this suburb and is favoured by owner occupiers. Rental demand is likely to remain steady to strong with the construction workforce required to complete the impending shopping centre likely to look for accommodation nearby. Additionally, the adjoining suburb of Pimpama is likely to experience a flow on effect.

Pimpama is largely dominated by investment stock, with many new estates either under construction or nearing completion in 2016. With such large quantities of rental properties coming on to the market there is a chance of an oversupply if the new stock is not leased within a reasonable letting period. Unfortunately, the majority of these house and land packages are sold to investors at rates above market value, which in turn can lead to the purchaser experiencing a loss if the property has to be sold. With there being very little difference aesthetically between these investment properties, prices can drop significantly if a large number are to come on to the market at the same time.

Southern Logan experienced a large increase in investor activity in 2016, largely due to the entry level price point of properties. Again, providing the economy continues to tick along at a reasonable pace, this investor interest is likely to continue. A single unit dwelling priced in the high $200,000s is always going to look appealing to a Sydney investor where the average house price is over $1 million. Additionally, Southern Logan is starting to gain traction with owner occupiers who have been priced out of suburbs closer to Brisbane, which is likely to continue throughout 2017 as Brisbane property prices continue to perform well.

North-West Gold Coast & Southern Logan
The north-west Gold Coast and southern Logan area is one of the largest growth areas within south-east Queensland with a number of satellite cities now gaining momentum and newer residential estates moving in to a more mature phase with established infrastructure, schools and local amenities.

The growth area of Upper Coomera continues to be underpinned by the investment and interstate market with these buyers accounting for the majority of vacant lot purchases and house and land sales. This market saw vacant land prices increase during the second half of 2016, with larger lots coming on to the market, which hadn’t been offered in this area for some time. Over the coming year, this market should be treated with caution as these prices may be reaching their peak.

The Government increased the First Home Buyer’s Grant to $20,000 during the latter part of 2016 which encouraged more construction activity, however with price levels increasing in this area, it is becoming extremely difficult for first home owners to purchase or build new product and are we are seeing these buyers moving further west to the satellite cities of Yarrabilba and Flagstone at Jimboomba.

Second hand product in the M1 growth corridor remains strong. Although sales and pricing are not growing as rapidly as the new product market, we believe this market will remain stable over the coming year.

The Beenleigh and Edens Landing locality has seen an exponential growth in sales volume over the past six months specifically. Prices have increased steadily as the majority of purchasers are local owner occupiers or savvy investors who are aware of the market.

Agents in this market are expressing concern about the lack of supply in the Windaroo and Mount Warren Park locality, which will drive sales to record prices in the coming months. We may also see patches of this area redeveloped to respond to the demand.

The western growth estates of Yarrabilba and Jimboomba are continuing to develop land and register lots at large volumes. The on-site agents at Yarrabilba were reporting up to 50 lot sales per month and they see this not falling off this year. Again, this will become price sensitive as the estate matures and purchasers have a choice between the options of buy and build or buy established.

Rental vacancies in Yarrabilba are high as tenants get to the end of a lease term and move to a new house for the same or cheaper rent. Owners are being forced to reduce rents but even then it is difficult to secure a long term tenant. We see this becoming an issue particularly with the investment market within the estate.

The Flagstone estate at Jimboomba has had a period of activity and facilities coming on board this year include the medical centre and major sports field. There is extensive work being carried out on the bridge which is due for completion in the coming months. The future passenger railway line will generate increased demand over the next couple of years as the commute to the Brisbane region is easier and this will underpin demand.

Gold Coast West
It is expected that prices will remain steady for at least the first half of 2017 primarily due to low interest rates and limited stock levels. Agents continue to report low levels of available stock and vendors being unsure when to list their property as they try to pick the top of the market. Due to strong demand, the $450,000 to $650,000 dwelling market in Carrara, Nerang, Oxenford, Pacific Pines and Maudsland will be worth watching to see if prices increase albeit mildly. Equally the $300,000 to $450,000 townhouse, villa and duplex market in Oxenford, Pacific Pines and Maudsland is expected to remain strong.

Carrara and Nerang are generating interest due to infrastructure being constructed for the Commonwealth Games. The suburbs of Oxenford, Pacific Pines and Maudsland continue to benefit from additional and improved roads and commercial development adding greater convenience and amenity for residents.

The rural residential markets in and around Tamborine and Beaudesert continue to experience steady rates of sale although prices have not increased greatly. Lifestyle and additional employment opportunities in and around these areas continue to underpin demand.

Older pockets of Nerang and Highland Park remain comparatively affordable due to perceived social stigma and proximity to train lines and the M1 motorway.

As always the higher price point dwelling and rural residential properties over $850,000 that saw sharp rises over the previous one to two years ought to tracked to ensure that value levels are sustained. Land values should be also be tracked.

Discussions with agents reveal that stock levels will be the main issue for 2017. It is expected however that values and confidence will remain steady provided no significant fluctuations in interest rates or unemployment occur. Growth as witnessed in 2015 and 2016 is not expected.

Southern Gold Coast/Tweed Shire
Overall, it is predicted that the residential property market for the Southern Gold Coast and Tweed areas will continue to improve slightly throughout 2017. At present, it is quite common for a property to be sold within its first three weeks on the market and more often than not, properties are attracting multiple offers from multiple parties within this timeframe. This shows demand is currently outweighing supply which in turn is pushing values upwards. Prices and values have been on an upward spiral since 2012 and this looks set to continue unless demand steadies and the supply of properties to the market increases.

Housing in affordable locations such as Murwillumbah and Elanora have seen dramatic increases within the past six months and are showing no signs of levelling any time soon. Entry level housing in Murwillumbah has increased from approximately $300,000 to around $325,000 to $340,000 within the past six to nine months. Elanora has also seen an increase in entry level housing from $475,000 to $550,000 since the beginning of 2016.

Palm Beach has been a strong performer for the past three to four years and also looks to continue to improve with a number of new residential developments planned along with new restaurants, cafes and bars to be opened in 2017. An entry level house in Palm Beach is now mid $600,000, whereas the same style of product could have been purchased for mid $400,000 at the bottom of the market in 2011 and 2012 showing an increase of possibly up to or around 150%. This market continues to perform strongly and there are no signs of it easing off. If anything 2017 has started stronger than the last six months of 2016.

Other than new residential developments coming on line, there is not a great deal of infrastructure planned for the southern Gold Coast, however there is talk that the plans to extend light rail to the airport are being brought forward which will more than likely have short term negative effects with roadworks, road closures and resumptions, however long term it will benefit and complement the area by connecting the airport and central and northern areas of the Gold Coast with a lot more ease than available at present.

Find out more information and to chat with a local Gold Coast Mortgage Broker.

www.smartline.com.au

Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2016. Australian Credit Licence Number 385325

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