Gold Coast and Tweed Coast Property Market Update
Gold Coast and Tweed Coast
The Gold Coast real estate market has rebounded strongly compared to 12 months ago. Sales volumes for January 1 to April 30 have increased 30% compared with the same period in 2013.
According to our research, the price bracket spread reveals that 89% of sales are for properties less than $750,000. The following table breaks up the brackets:
2014 year to date:
|Price Bracket||% of sale volume|
|0 – $300,000||22%|
|$300,001 – $500,000||48%|
|$500,001 – $750,000||19%|
|$750,001 – $1,000,000||5%|
|$1,000,001 – $1,500,000||4.1%|
Over the same period, the greatest growth in volume of sales has been between $500,000 and $750,000 as follows:
2014 year to date:
|Price Bracket||% increse of sale volume 2014 vs 2013|
|0 – $300,000||30%|
|$300,001 – $500,000||27%|
|$500,001 – $750,000||36%|
|$750,001 – $1,000,000||11.5%|
|$1,000,001 – $1,500,000||4%|
While the stronger sales volume is building confidence prices have not grown in all suburbs. Our Valuers have given a snapshot of the territories of the Gold Coast they specialise in below.
Overall, the general feel in the Tweed region is a positive one. Market conditions have been quite strong in the area since the beginning of 2014 and there seems to be a lot more positivity in the air.
There also appears to be more buyers in the market actively seeking residential property, being both investors and owner-occupiers. This is because of the record low interest rates and the relatively cheap housing prices.
The under $500,000 price bracket across the board is the best performing sector in the Tweed market. Local agents advise of very strong buyer demand for both houses and units under $500,000, often selling properties within a week of listing. We have seen the coastal areas such and Kingscliff, Casuarina, Cabarita Beach and Pottsville experience increases in value since the beginning of the year.
The market in the Tweed region could be described as somewhat overheated. It will be interesting to see what happens to the property market if interest rates were to rise at the end of the year. We may see a slowdown in buyer activity and possibly a slight decrease in value levels in those coastal areas which are currently ‘running hot’.There are definitely areas of the market which should be treated with caution. A prime example of this is the land market in Casuarina and Salt which is currently flying. We have seen an increase in land values of up to 20% from 18 months ago. If interest rates were to rise, I predict this market to slow considerably.
M1 North Western
Confidence seems to be on the rise in the region. Sale prices since the start of the year are showing growth, particularly in the sub $500,000 price point for both new and existing dwellings. Owner-occupiers are becoming more impatient and worried about missing out on a preferred property hence we often see premiums being paid. For investors, particularly those from interstate the Gold Coast market is representing comparatively good value hence it is in hot demand. Agents are reporting sales generally within seven to 14 days. In a growing number of instances properties are being sold prior to being listed on the internet.
Notably, the sub-$350,000 price point in Tamborine Mountain is showing signs of mild decline, the reasons for which are unclear. The market has suffered significant declines since the GFC and was starting to show promise, however lower value sales are demonstrating a softening at the lower end.
Anecdotally, the market appears to be at risk of peaking too quickly with a steep downward curve. With interest rates being at low levels, purchasers are given a false sense of confidence. As employment and infrastructure remain fairly weak it is difficult to comprehend what is underpinning the rise in prices other than low interest rates. The worry is that history will repeat itself when interest rates firm again.
While lifestyle properties are currently very popular resulting in strong prices, this market is at risk of significant fluctuations should rates rise. Areas such as Wongawallan, Maudsland and Willow Vale have seen steady growth particularly in land values, however this has the potential to be short lived.
Northern Gold Coast
The overall feel of the property market is quite buoyant and has continued to improve throughout 2014.
The property market under the $850,000 price point is on the move on the Gold Coast. Paradise Point, Southport, Labrador and Ashmore are the areas that have shown the most improvement in the past five months, with these suburbs having a general positive feel about them. The unit market is moving in a positive direction but at a slower pace. Overall the property market in the $850,000 and under is on the move in a positive direction but has begun to level out in the past two to three weeks on the northern central Gold Coast.
I think the growth in the property market is sustainable to a degree, but will fluctuate in the coming years.Hope Island vacant land market needs to be treated with caution as the market has jumped up by 25% in some cases in the past 14 months, as illustrated by the sale below. The growth cannot be sustainable at that level:
- 2209 Taromeo Ct, Hope Island. Under contract for $900,000, April 2014. The lot previous sold in February 2013 for $720,000 reflecting approximately a 25% increase.
Overall the market on the northern central Gold Coast is trending in a positive direction with increased sales volume and price increases at this mid-year point. People should consider that the Gold Coast property market is volatile.
Market activity continues to be strong in the more central areas of the Gold Coast, particularly for residential property below the $1 million level. Real estate agents are commenting that a shortage of stock levels is creating some urgency in the marketplace and in many cases properties are selling within a week of being listed for sale.
Detached housing in suburbs such as Broadbeach Waters, Isle of Capri, Sorrento, Benowa and Robina is currently highly sought after and buyers looking to purchase in these spots will need to be prepared to make quick decisions or they will miss the opportunity. There is also an increasing trend where the buyer is paying list price just so they don’t miss out and do not want to waste time knowing that there are many other buyers prepared to negotiate quickly!
Sales activity for waterfront property in Broadbeach Waters and Sorrento has been very strong in the past couple months and there is no sign of demand and market activity easing anytime soon. Value levels have risen quite sharply in the past six to 12 months and buyers should be cautious that it may be difficult to find a property where they negotiate hard on the price.
“The entry level price for an older style 3-bedroom dwelling with canal frontage in Sorrento appears to range between $650,000 and $700,000.”
Again, agents have reported that there have been quite a few canal font properties which have been auctioned in the past month and selling under the hammer. As for waterfront property in Broadbeach Waters, buyers will most likely find it difficult to secure any detached housing with canal frontage below the $600,000 as an entry level price. Buyers are also showing confidence in the market over the $1 million level in Broadbeach Waters which was not that prevalent in early 2013.
The unit market in the central areas of the Gold Coast continues to be steady and investors will more likely find a bargain buy in this sector at the moment rather than buying a detached house. There appears to be a good selection of stock available in all price ranges.
Central and Northern Gold Coast
Over the past 12 months the number of first home buyers in the central Gold Coast is fairly moderate however we are aware of first home owners buying to the western suburbs and generally to the cheaper estate pockets such as Parkwood, Helensvale, Arundel and Coombabah. We are also aware of some entering into the market by buying lower end units in the Southport and Labrador area. A typical first home buyer may have a price point of circa $175,000 to $400,000. However an investor could have a price point of say $500,000 or even $1 million plus in some cases.
In the northern Gold Coast first home buyers are leaning towards house and land packages. A strong market has made existing homes less affordable and this has made building more attractive. A typical price point for a first home owner building on the northern Gold Coast would be $380,000 to $430,000. As per usual it depends on the estate, the land size, house size, etc. but a 4-bedroom, 2-bathroom house on a 450 square metre lot in a new estate would be priced at $400,000. In the past few years first home owners have been better off buying an existing home but due to a stronger market many first home owners are leaning towards building.
The unit market in central areas close to the beach has been subdued for a number of years with a recent firming in price levels. This appears to be driven mainly by investors. In this market under $350,000 first home buyers are competing with the investor with agents reporting the investor is wary of higher body corporate fees which drive down the net return on investment. Stand-alone housing in the central areas (such as Mermaid Waters, Broadbeach Waters, Bundall and Benowa) has firmed in recent months for entry level housing rising from the high $300,000s to very low $400,000s into the mid to high $400,000s with first home buyers being driven out to the more outlying suburbs such as Nerang, Gilston and Carrara where it is still possible to get a home for under $400,000.
First home buyers are competing with the investor market, however typical investors often have higher points price points. Generally the central Gold Coast is becoming quite heated and is now a sellers’ market with properties selling quickly and buyers competing to secure deals. This is currently putting significant upward pressure on values. Investors are clearly winning with many not having to get finance pre approval (i.e cash buyers, foreign and interstate buyers).
It should be pointed out that a lot of interstate and Chinese buyers are buying house and land packages on the northern Gold Coast for investment purposes. Sydney buyers are taking advantage of their increased equity in a strong Sydney market and purchasing in a cheaper Gold Coast market, compared to Sydney. While this is placing upward pressure on demand, local buyers can still enter this northern corridor market due to building costs been fairly stable and land values in this area only increasing marginally. There is enough englobo land and new estates getting developed in the northern corridor to cater for the increased demand from both first homebuyers and investors.
In summary, investors are winning the race in central Gold Coast but in the northern corridor we believe first home owners are still competing with the inflow of funds from investors.
In Gilston there have been recent increases in activity for house and land packages both to local first home buyers and non local investors. In general the non local investor is paying more both for the land and for the building contract. For example two sites in the same estate recently sold. The first was to a non local investor who for $476,500 purchased 146 square metres of living area in a 4-bedroom; 2-bathroom house with double garage on a sloping 600 square metre block. The local for $473,000 purchased a more level 700 square metre site with a 213 square metres of living space, 4-bedroom house with double garage without landscaping or fencing. In this instance the local was a clear winner. However the land cost was higher due to non-local investor activity.
First home buyers are fairly active throughout the Gold Coast, however the confidence and expectations have taken a hit in recent times due to the strong market. For example take a standard 4-bedroom, 2-bathroom house in a suburb such as Ashmore or Parkwood. If this sort of property was placed on the market about 12 months ago for say $450,000, then you would expect moderate interest with maybe one or two offers 5% below the asking price in a one to two month period after listing. Now however one could list that same property for $475,000 and you would expect a lot of interest with multiple offers very close to the asking price within two to three weeks of listing.
First home buyers are defiantly still in the market place but due to upward pressure on demand and prices some have been priced out of the market or are waiting for things to cool off.
While grants help first home buyers and those that build, we believe that under the current framework the values of typical grants are often lost by over inflated developer land sales. However the grants available do assist first home owners and without them we would see a fall off in demand in places such as the northern Gold Coast where many first home owners are now buying and building.
The first home buyer market will be stimulated by greater employment opportunities and higher salary levels in the area (i.e. improvement in local economy).
- Open up grants to existing properties;
- Raise the grant;
- Axe stamp duty charges.
We have seen first home buyers joining or syndicating together to buy their first property to try and help raise more funds to buy completed product as they compete with investors and drive prices up.
With house and land packages, the first home buyers are opting for less in the contract i.e. they might choose to supply the appliance at a cheaper price, or opt out of the fencing or landscaping or floor coverings, etc. to reduce the initial cost to get into the market and aim to complete these items over time.
Southern Gold Coast and Tweed Coast
Across the southern Gold Coast suburbs investors are favouring the higher yield low to medium end units towards the beachside suburbs around the $200,000 to $400,000 mark.
First home buyers are generally wanting a house at entry level around the $350,000 to $500,000 mark on the western side of the highway in locations such as Reedy Creek and Elanora. Both investors and first home buyers have been active in the northern NSW coastal subdivisions within Kingscliff, Casuarina and Pottsville. The rental returns are steady and the lifestyle (excluding the commute) is family and beach orientated. Both completed homes and house and land packages are similar in price to Coomera which has the same commute time to work but is 30 minutes from the beach.
First home buyers appear more active at present. This is possibly a result of pent up demand while nervously observing the market and looking for the bottom with the market being depressed for so long, this recent spike in sales we have experienced has persuaded them to jump in and join the wave of activity.
The media has contributed in creating this recent jump in the market with a lot of talk about the market turning. However across the southern Gold Coast suburbs, signs indicate that this jump over the last few months is slowing down.
The run of short weeks, Easter and school holidays may again lead to a build up of sales for May which is generally the busiest valuation month we experience.
Among other drivers of the market, the strengthening Brisbane property market has influenced the Gold Coast property sector with investors looking to the Gold Coast for a good investment that is set to strengthen.
Demand for most residential asset classes has firmed, however, it is apparent many property owners who are re-financing have expectations that values have increased. Unfortunately this is not the case in most bar the inner sought after suburbs, and in part, is a result of public mis-interpretation of sometimes overly positive media and/or agent information.
Interestingly there has been a decline in property listings which has created increased buyer demand and on occasion, offers over the listed price. Prospective buyers have less power to negotiate the listed price while agents are experiencing shorter marketing periods. Agents also report that in some instances vendor are increasing the asking price of their properties mid-campaign which is jeopardising potential sales.
The first home buyer market (houses sub $500,000) is particularly active at the moment where it is not uncommon for properties to sell within 24 hrs of being on the market, and with multiple offers. These vendors are then upgrading to the $500,000 ++ range and this is putting upward pressure on the higher price brackets.
The Gold Coast rental market is tightening and the Real Estate Institute of Queensland figures show vacancy rates have fallen from 2.2% in September 2013 to 1.9% in December 2013. This is mainly due to the strong population growth and job growth in the construction and tourism industries making new accommodation high in demand. The upcoming Commonwealth Games have also created new jobs within the infrastructure industry.
Local agents are reporting that they are seeing signs of strengthening demand for residential housing in the central areas of the Gold Coast and sales activity has improved considerably over the past six to 12 months. It appears that a lack of listed stock and increased buyer activity is putting upward pressure on property values in some locations.
Some of the areas which seem to be fairly sought after or could be considered as ‘hot spots’ at the moment are Burleigh Waters, Broadbeach Waters, Isle of Capri and Benowa. Residential dwellings in these suburbs have traditionally always been in good demand, however, at this point in time, local agents have noted that opportunities to purchase a home are quite limited for buyers and it is quite evident that demand is heavily outweighing supply. Due to the strong interest in these areas, it almost appears that finding a ‘bargain buy’ might be quite difficult.
In general, most property classes from Mermaid Beach to Main Beach have improved in demand recently with the exception being detached housing over the $1.25 million level and highrise units over$850,000. Buyers seeking property in this price range seem to have more time to assess the market and conduct out their own research prior to entering negotiations.
From an investment perspective, investors are preferring to purchase affordable units in the beachside locations. The typical entry level for a second-hand 2-bedroom unit can range between $250,000 and $350,000 within Surfers Paradise. The market for new units has struggled over the past few years but seems to be stabilising due to the limited stock available now.
The options for investors in the northern boating/Broadwater suburbs are many and varied, limited only by the borrowing capacity of the individual investor. Most property classes are experiencing good levels of demand with the only exception being higher density development of lowrise and mediumrise apartments around Hope Island, Paradise Point, Hollywell and Runaway Bay. There is some hope for these types of units, however, stock levels remain uncomfortably high.
The looming completion of the Gold Coast light rail and recent opening of the new Gold Coast regional hospital has focussed the attention of many investors around the hospital precinct (which is also to contain the upcoming Commonwealth Games athlete’s village) and along the route of the light rail. Astute investors have been paying up to $300,000 to $350,000 for duplex units and $425,000 for modern townhouses and villas in these areas. Housing is being purchased in a wide price range depending on age and quality, generally up to $500,000. There may some cheaper properties still available however most vendors are well aware of the growing demand and are able to achieve good prices.
Second home buyers have a good choice of property depending on their requirements. Most growing families needing room for children etc., if looking for a bigger yard and a more bedrooms will have to be prepared to pay between $450,000 to $700,000 for a detached house built from 1990 onwards in the Coombabah-Hollywell-Runaway Bay areas. Cheaper and older housing is available in Labrador-Biggera Waters-Southport areas with more emphasis needed on potential renovation and/or extensions. For more well healed second home buyers, Hope Island offers good quality housing for a price.
The housing sector is currently outperforming the unit sector within the affordable Northern M1 Gold Coast to Brisbane Corridor.
A good example of this is a semi-modern dwelling in Eagleby is expected to achieve a price range of $300,000 to $330,000 with a rental range of $360 to $390 per week. Agents have also experienced dwellings above the $500,000 price range starting to trade up within areas such as Eagleby, Mount Warren Park and Beenleigh.
Sale contracts sighted indicate that first home owners are purchasing dwellings in the $350,000 to $450,000 in Oxenford, Maudsland, Upper Coomera, Eagle Heights / Mount Tamborine and undertaking new builds to the same levels mainly in Upper Coomera, Oxenford and Willow Vale. Interestingly the new builds tend to be on smaller lots (circa 400 square metres and smaller).
In the second home buyer market, acreage is very popular with existing homes generally achieving $550,000 upwards depending on land contour, dwelling size, condition and extent of ancillary improvements eg pool, tennis court, paddocks, dressage arenas, stables, dams, bores. Those purchasing land on which to build see blocks typically ranging from $350,000 to $500,000. Once dwellings and ancillaries are added to the land purchase extent values can comfortably top $800,000 plus. For standard dwellings, those upsizing tend to be spending $530,000 plus now, with recent sales showing circa $630,000 which would have been unheard of even 18 months ago.
Investors are demonstrating a preference toward re-sale, secondhand properties. This price point ranges from the early $200,000 to circa $450,000. Townhouses and villas are more affordable (body corporate levy dependant) but re-sale duplexes and dwellings appear more sought after. Many of the investors are from outside the Gold Coast with a perception that the value for money appears to be significantly better than in their markets. Locals tend to shop for the more affordable duplexes and dwellings inside the M1, so closer to employment and the beaches.
Generally speaking, prices are growing steadily at present, however, all buyers should not feel pressured to “buy or miss out”. Making a poor choice out of haste is not the way to go.