Gold Coast November 2017

The month in review: Gold Coast

By Herron Todd White
November 2017

Southern Gold Coast Property Update

Overall, the rental market is quite strong and in general is still improving in line with the overall residential market. Most property managers across most sectors are reporting limited vacancy and generally increasing rental amounts with tenant changeovers. Demand continues to be stronger for more popular localities such as Burleigh and Coolangatta.

In Burleigh, demand for townhouse type properties in the under $450,000 price bracket is strong with more demand than supply, which is also the case for duplex style units in the $450,000 to $600,000 price bracket. The rental market for houses in the $600,000 to $1 million price bracket is solid, with local property managers reporting a quick turnover of between one and two weeks if properties become vacant. One property manager has four dry block properties rented at between $1,000 and $1,100 per week in the Burleigh area. Generally speaking, rental returns are less for properties closer to the beach, however those properties generally have higher capital growth.

The above scenario is repeated for suburbs such as Palm Beach, Tugun and Coolangatta.

In Varsity Lakes and Robina there could be a risk of oversupply of rental units which would lead to a decrease in rental returns. In 2016 and 2017 there has been a significant number of new medium to large unit developments with a lot of investment product.

Central/Northern Gold Coast Property Update

The trend of limited vacancy and rising rents has continued across the corridor over the past six to twelve months. Employment centres of the Southport CBD, the Gold Coast University Hospital and Griffith University precinct as well as stage 2 of the light rail construction have ensured that demand for rental properties remains high. Detached housing in the central areas close to these employment centres such as Southport, Labrador, Molendinar and Runaway Bay are seeing strong demand from hospital and university professionals, students and their families. Property managers in the area report many properties having multiple inspections and applications being received from the first open for inspection. This has weighted the market in favour of landlords who are able to demand higher rents. In desirable suburban locations such as Runaway Bay, Biggera Waters and Hollywell close to the Broadwater, landlords can now expect to achieve above $650 per week for an average 4-bedroom home.

Canal front prestige homes in the central and northern corridor experience a higher degree of competition with a smaller pool of potential tenants and a comparatively higher number of properties advertised for rent. Rental increases in this segment have been modest over the past six to 12 months with rental rates of over $1,000 per week difficult to achieve. Many landlords within the Hope Island and Helensvale prestige markets have found better returns with short term and holiday rentals. A variety of property managers offer this service and report currently strong demand from tourists visiting the Gold Coast and theme parks. If tourism or short term rental demand were to decrease in this segment there may be an increase in the number of prestige canal front homes available for permanent rental. This would put further downward pressure on rental values in the segment.

The unit rental market in central areas such as Southport remains strong despite increasing competition from the completion of new developments. For example, on site property managers in Southport Central (a three tower high-rise development in central Southport) report increasing rents over the past twelve months with strong demand even though unit values within the complex have only seen modest price increases. Twobedroom apartments within this development with recent sale prices between $430,000 and $480,000 can expect to achieve weekly rents of above $550. Improved transport links and upgrades of nearby retail centres appear to have had a positive affect on desirability for this market segment. The completion of stage 2 of the light rail and the future release of the Commonwealth Games Village apartments onto the rental market present a future risk to rental values with a large increase in stock available and the completion of a major construction project possibly influencing demand.

There has been a recent increase in available units and townhouses for lease in the Hope Island area with the completion of multiple new developments. Currently, agents are reporting strong demand from tenants for this new product and incentives are not currently required.

North-Western Gold Coast/Southern Logan City Property Update

The rental market has remained fairly stable over the past six months in the north-western growth corridor of the Gold Coast and Southern Logan City. There have been a number of reports of increased interest from younger families in the rental market for houses and townhouses in these locations. Tenants are seen to be seeking out more affordable options in the further removed developing estates of Logan City such as Yarrabilba and surrounding localities as infrastructure in these areas continues to grow.

Local agents have reported instances of easing rental prices and longer marketing campaigns necessary to secure tenants in the developing estates of Southern Logan City, with a continuing influx of new stock and a larger portion of investor purchasers entering the market. As a result, the rental market is seen to be weighted in favour of tenants rather than landlords. Inversely, there have been reports from agents in the more central localities of Upper Coomera and surrounding areas seeing greater numbers of owner occupier purchasers rather than investors entering the market, decreasing available rental stock.

Demand for freestanding homes in the sub $600,000 price range has remained relatively stable in the north-western Gold Coast growth corridor with most agents still reporting multiple offers from local owner-occupier interest on listed properties. That being said, there appears to be a cooling in the investor space off the back of stricter lending policy.

Northern Growth Corridor – East of the M1 Property Update

The rental market in the established residential areas of the north-east Gold Coast is generally strong with property managers reporting limited vacancies and multiple offers on rental properties resulting in rising rents over the past twelve months. Local property managers in Eagleby report that the supply of rental properties due to interstate investment has resulted in rental properties remaining stable or slightly improving over the past six to 12 months with a standard 3-bedroom, 1-bathroom, 1-car accommodation achieving $300 to $330 in rent per week and 4-bedroom, 2-bathroom, 2-car accommodation achieving $410 to $440 rent per week.

New investment estates in Pimpama and Coomera have a large number of properties available for rent with some property managers offering rent free periods and other forms of incentives to attract tenants. The ongoing supply of new investment property to the market has resulted in increased vacancy periods and reduced rental income for investors in the area. A typical 4-bedroom, 2-bathroom, 2-car accommodation dwelling located in a predominantly investor estate is achieving $420 to $450 rent per week.

Demand continues to be strong for owner-occupier estates and low maintenance product such as duplex units and townhouse units. Local property managers who actively market this product advise that duplex and townhouse units are in high demand with semimodern 3-bedrooms, 2-bathroom units achieving $320 to $350 per week and new or modern product achieving $400 per week.

Coomera Waters demand is also strong with dry dwellings achieving $550 to $650 per week and waterfront prestige homes achieving $800 to $900 per week with rents increasing from twelve months ago. Owners have advised that better returns for waterfront properties are achieved through Airbnb and other short term holiday accommodation.

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