Gold Coast July 2018

The month in review: Gold Coast

By Herron Todd White
July 2018

North-west Gold Coast and Lower Logan City

A half a million dollars will still easily cover you for a lot of property investment options in the northwest. $420,000 to $450,000 will get you an average quality 4-bedroom, 2-bathroom plus double lock-up garage dwelling with a rental return of $380 to $400 per week. However there has been an issue with the return on the investment with a large over supply in this market and a large number of vacancies. We have a situation now whereby there are so many new properties and with higher than average vacancies, rents promised to investors have been in decline and property managers at times offering significant incentives to rent.

Further to this, a year ago we were assessing proposed dwellings on an as if complete basis from the civil construction stage because all the released land was already sold out. Now when we do these valuations we find that many blocks from the newly released stages are still available, showing that the oversupply is now affecting the developers and also resulting in them slightly reducing their prices.

The better choice for investment option in our view would be established housing which is not subject to the same market conditions as the new developments and just the usual ebbs and flows of the market. We predict this market still has some growth left in the short term but is starting to slow. We further think that if interest rates were to increase, then any market growth will stop in its track and perhaps start to decline.

Gold Coast Hinterland

From a historical perspective, the Gold Coast hinterland has been a haven for those wanting to break away from the fast pace of the Coast’s glitter strip. For these buyers, lifestyle has been equally if not more important than price or convenience. In recent years, as the M1 motorway resembles more of a carpark than a road, the difficult commute along the north to south axis of the Gold Coast has encouraged some buyers to turn their gaze westward into its hinterland localities where commuting is a little easier and the lifestyle slower paced.

Developers have responded with residential estates at Maudsland, Gilston and Canungra that offer 400 to 800 square metre lots with covenants that make a new $500,000 house just possible. Further west, where increased distance equates to lower entry prices, new residential estates around the fringes of Beaudesert make a new $500,000 house an easy bullseye to hit. The potential for housing in Beaudesert to increase in value over the long term will, however, hinge on the success of the broadacre Bromelton industrial estate which is currently in its infancy. Whilst these areas have the potential to offer solid rental returns, any growth in value and rental returns should be steady rather than strong over the long term.

For an investor more prepared to break a sweat and be more involved in the process of house ownership, there may be other more fruitful options to consider. A little closer to amenities and employment centres lie Oxenford and Pacific Pines where the odd detached house can still be snared for under $500,000, albeit with some compromise on age and condition (that is where the breaking a sweat bit comes in). These areas have a history of solid demand from renters and good returns for investors.

For a left field option, Tamborine Mountain may be worth a look. Historically, Tamborine Mountain had a name for eccentric people and diverse, if not, eclectic, housing styles. A popular destination for day trippers and weekend getaways, Tamborine Mountain has in more recent years gained a more mainstream appeal to buyers and renters and property values in recent years have responded. With a strong desire amongst the long standing residents to keep development on the mountain to a minimum, the ability to purchase a house on Tamborine Mountain for under $500,000 may be short lived.

Southern Gold Coast and Northern New South Wales

In this locality, it is now confirmed that the market peak is history and the property cycle has turned from increasing to decreasing.

The best strategy for investing $500,000 would be a duplex style unit (with minimal body corporate fees) in an area such as Miami, Burleigh Waters, Palm Beach or Varsity Lakes. Rental vacancies in these areas remain low and returns are quite solid.

Further south in areas such as Tweed Heads and Banora Point there are still opportunities to purchase housing in the under $500,000 price range, however the type of property available in this price range would likely be in a secondary location, be of a substantial age or in need of repair, which would impact on the rental price achievable and the bottom line.

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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.