The month in review: Gold Coast
By Herron Todd White
In our lazy $500,000 edition of 2015, we opened with… “Across the southern Gold Coast and in northern New South Wales there are opportunities for investors and owner occupiers to purchase property. The areas with the greatest demand are Burleigh Waters, Miami, Palm Beach, Elanora, Salt and Casuarina. The suburbs previously mentioned are well located to amenities and the beach. The areas should offer reasonable growth if held for the long term.” This has certainly proven to be true. Prices within each of those suburbs have increased strongly over the past 12 months, albeit most of the growth was in late 2015 as opposed to recent months.
We have split the Gold Coast to give a broader perspective from our professional valuation staff as follows:
Central Gold Coast
Purchasers are spoilt for choice along the coastline suburbs for properties under $500,000, however, they’d better like units. Houses within five kilometres of the beach typically sell for over $500,000. The options will vary from new 1-bedroom to old (1970 to 1990) 2- and 3-bedroom walk-up units and 3- or 4-bedroom townhouses (1990 to 2007).
Buyers need to be aware of body corporate costs, sinking fund balances and any extraordinary works programmed.
In this price bracket, 2-bedroom units at Mermaid Beach would be a property our valuers recommend due to the beach being no more than 150 metres away, Pacific Fair’s recent upgrade and the lively café and bar scene.
While there are many options available to purchasers with $500,000 to spend in the northern corridor growth suburbs of Pimpama and Coomera, if looking to invest money of my own, I’d be looking at more central Gold Coast areas in close proximity to the beach. This is partly due to the vast amount of new stock currently being developed or scheduled for development, as well as the over inflated prices charged for house and land packages which are the most common property type in this area.
If one was adamant about investing in these suburbs, it would be suggested to purchase a circa 2005 to 2010 built 4-bedroom, 2-bathroom dwelling in Coomera in close proximity to the proposed Coomera Town Centre. These properties typically sell for circa $400,000. This is generally less than the as new purchase price of the combined vacant land contract and building contract and offers reasonable value for money. The completion of the Coomera Town Centre would potentially see an uplift in values in the closely surrounding suburbs.
Western Central Gold Coast
With $500,000 to spend, the suburbs of Carrara, Nerang, Pacific Pines, Oxenford and Maudsland are well worth consideration. At circa $500,000 one can purchase a 3- or 4-bedroom, 2-bathroom dwelling with double lock up garage on a 500 to 800 square metre residential allotment. Most homes in this price point will be around ten to 15 years old and in reasonably close proximity to amenities, public transport and the M1. The older dwellings may also have swimming pools. In the suburbs of Oxenford, Maudsland and Pacific Pines properties may be located in secondary or older estates.
Rental returns for these properties generally range between $420 and $550 per week with local agents reporting a tight rental market. Values in these areas are expected to increase over the long term although not acutely. Strengthened land values appear to be underpinning sale prices. Local agents continue to report a shortage of listings. Anecdotally, transaction numbers appear to have slowed, possibly due to tightening in conditions for investors (ie. increased interest rates for investors).
Modern duplex units in Pacific Pines, Oxenford and Maudsland comprising 3-bedrooms and 2-bathrooms tend to be selling in the high $300,000s to early $400,000s showing a steady increase. Making these properties attractive to owner occupiers and investors alike is the virtual lack of body corporate and attractive rental returns. Rental returns tend to reflect $350 to $420 per week depending on age, condition and position.
It is expected that under current market conditions, the above property types will continue to hold their value and increase. If and when interest rates rise, property values may weaken potentially reducing price point entry by 5% to 10%.
Last year’s predictions performed per expectation albeit investor numbers have softened. People may be holding back from buying until the federal election although it remains to be seen how much change there will actually be.
Northern Coast (Hope Island/Helensvale)
$500,000 will buy an investor or home buyer a decent product. Duplex units and townhouses sitting in the rough range of say $280,000 to $440,000 have been showing good capital gain. Low rise units have not been performing as well as other property market segments. $500,000 will buy a decent single detached dwelling in good areas (three sales examples provided).
Positive areas to watch are Holywell, Parkwood (west side) and Coombabah.
Values have recently improved with rent to purchase ratios going into decline. Values are now back to and above the market peak of 2007 (prior to the Global Financial Crisis). There has been a bit of a market slow down possibly attributed to the upcoming federal election.
Detached dwellings still appear to be a better investment than units with agents reporting investors buying dwellings for land banking purposes in areas such as Labrador and Southport.
These areas have possibly peaked for shorter term consideration. Investors in this case are looking for properties with higher density development potential for example duplex approved sites with dwellings that provide some holding return.
Looking back at last year’s predictions for Hope Island and Helensvale this area soared in land values. 18 months ago vacant land sales were slow and few. Now there is a vacant land shortage for residential sized allotments. Detached dwellings in this area have increased by as much as 20% (valuer’s estimate).
Southern Gold Coast/Tweed Shire
With $500,000 to spend, areas such as Banora Point near the Queensland and New South Wales border will appeal to both investors and owner-occupiers for reasonable value product. There are a number of small lot houses and detached duplex units in the area which sell in the $450,000 to $500,000 range which were constructed circa 1995 to 2005 and provide accommodation generally of 3-bedrooms, 2-bathrooms and a two car garage. Rental properties are scarce in Banora Point and always very sought after according to property managers in the area. Improved market conditions and value levels have lowered the yields available, however rents have also improved in recent months.
If one was adamant about investing in Banora Point, I would suggest that a single level, low set duplex unit with 3- bedrooms, 2- bathrooms and two car garage in the $400,000 range would be a good investment. There is an elderly population in the Banora area with low maintenance product being highly sought after and the rental returns are generally slightly more attractive to an investor than that of a high set dwelling.
Typically, a 3-bedroom, 2-bathroom attached duplex unit with a value in the vicinity of $400,000 would achieve a rental return of $430 to $450 per week.