Investors are playing a key role in the property market on the southern Gold Coast and in the Tweed Shire. We note investors are very active in the sub million dollar market, in particular in beachside locations.
Investors in the market place are a mixture of both local and interstate, in particular from Sydney and Melbourne.
Typical investors are interested in properties with a steady or good rental return with low overheads.
The price points for localities such as Burleigh Heads, Burleigh Waters, Miami and Palm Beach is around $500,000 to $550,000 for established housing. Duplexes and units in these localities are around $365,000 and $400,000.
We believe that investor activity at its current level is not sustainable over the medium term in the property market.
If investor demand did start to drop, it would have negative implications for the market on the southern Gold Coast and in the Tweed Shire as investors are prevalent. The demand for property would slow and prices would likely fall due to more stock being available to purchase.
The types of properties investors have purchased recently include:
• Melbourne investors purchasing a rural lifestyle property.
• Local investor from Bonogin purchasing a townhouse unit.
• Melbourne investor purchasing a unit.
Investors in the costal north area are moderately to highly active, with the typical investor appearing to be mainly international using local builders and smaller project developers.
Investor activity in the central high density beachside locations has traditionally been driven by both local and non local investors. Lately we are seeing an increased amount of non local and particularly Asian investors, who are prevalent on new product.
New residential stock which fits criteria for Foreign Investment Review consideration and approval seems to be appealing overall to these investors on Hope Island, as this location is pre-approved for Foreign Investment Review.
General housing stock in and around the Southport CBD and spreading into Labrador and Ashmore are also appealing to these investors.
In central Surfers Paradise, investor activity is steady to strong with the a sub $500,000 price point seeing the most activity. However, high body corporate fees and property outgoings are deterring investors. For example Unit 26, The President, at 29 Northcliffe Terrace, Surfers Paradise sold in May 2015 for $358,000. This is a circa 1973, 2-bedroom, 1-bathroom unit of 86 square metres. It is an absolute beachfront development comprising 30 units on a parent site of 1,533 square metres. The agent reported that due to the high underlying land value, rates were circa $5,000 per annum plus the body corporate fees of approximately $150 per week made the unit unviable for many potential investors.
Investors are looking for larger dwellings on larger parcels with Residential Choice classification that can be split for higher density development such as duplex and triplex development.
The most intense demand however appears to be for residential estates close to the Southport CBD or highly regarded established precincts such as The Southport School (‘TSS’) location and areas with Broadwater proximity.
Investor activity away from the beach side locations is stronger than previously, with villas and townhouses in larger cluster unit developments in the more outlying suburbs having seen some increase in price levels from low to mid $200,000s up to high $200,000s.
Local owner occupier buyers are competing with local and interstate investors in these outlying suburbs for freestanding houses. Pacific Pines which was developed through the 1990s and 2000 has seen healthy increases in price levels over the past 18 months with entry level now circa $380,000. This locality is well serviced for schools, shopping and transport, appealing to both investors and owner occupiers alike.
General sales for duplex and triplex parcels reflect values of $190,000 to $240,000 per dwelling site in the Southport CBD area.
In more prestigious areas such as Paradise Point this range is running at $275,000 to $325,000 per dwelling site.
Interstate buyers are purchasing new units, however, typically at levels above local market price points. Student accommodation has slowed with a recent and apparent slight drop in values. We have not seen any activity on flats, however these are perhaps more tightly held.
Despite recent rate rises signalled by Westpac which may affect the larger city markets, values on the Gold Coast are still comparatively low and appealing to interstate and foreign buyers. There is still room to improve as Gold Coast was hit very hard after the GFC.
Investors in this area are very active indeed and have been very predominant in this area for nearly a year. The majority of investors are Sydney buyers and to a lesser extent Melbourne buyers for established housing. The new housing is targeted by a mix of interstate buyers from all over Australia and Chinese buyers.
Established housing investors are mostly active in Eagleby and Beenleigh areas with price points around $240,000 achieving circa $320 per week rent or 6.93% yield.
New housing investors are mostly active in Pimpama and Ormeau where the price point for a typical 4-bedroom, 2-bathroom, 2-car house on a 400 square metre lot is between $460,000 and $480,000 achieving circa $420 per week or 4.55% yield.
Investors in the upper north area are far less active in the townhouse and duplex unit market, accounting for only a very small percentage of sales. We are of the opinion that investors prefer housing due to historically stronger capital growth compared to units.
We believe that the investor activity is sustainable in the medium term with interest rates currently at record lows. Sydney investors can’t stay away in particular with the median house price in Sydney over $1 million. This shows that these investors can buy four houses for the price of one Sydney house.
Whenever banks tighten lending policy it will have an impact on the market, but how much impact is a case of let’s wait and see.
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.