Alongside its capital Brisbane, Queensland’s broader south-eastern housing market has popped up as a potential bright spot in an otherwise fairly flat medium-term outlook for Australian property prices.
BIS Shrapnel’s Residential Property Prospects, 2015 to 2018 report forecasts price growth of 13% on the Gold Coast over the three years to June 2018.
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While the report also cautions that anticipated interest rate rises and new building throughout this period will slow things down slightly, local economic growth, event-related tourism and renewed enthusiasm from sellers is set to drive a pick-up in activity.
The Gold Coast is in the midst of major infrastructure projects as it prepares to host the Commonwealth Games in 2018.
The G:link light rail, which links Griffith University’s Gold Coast campus toBroadbeach, has been open to the public since July 2014, adding to a network of local buses and train routes connecting Gold Coast to Brisbane and beyond.
Pacific Fair Shopping Centre is currently undergoing a $670m transformation that will see it become the largest mall in Queensland.
The site of the former Gold Cost Hospital in Southport is also being redeveloped, while Broadwater Parklands, a master-planned community space that includes the new Gold Coast Aquatic Centre, is in its final stages.
Meanwhile, the $1bn mixed-use Pacific View Estate, green-lit to be built in the Gold Coast suburb of Worongary, has the potential to contribute up to $3.2bn to the local economy as well as create 3,500 houses and apartments and more than 2,700 jobs, according to figures quoted by the Queensland Government.
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“There’s lots of activity going on around the coast – plenty of infrastructure going in or being upgraded that will benefit us after the Games have finished,” says Tony Coughran, buyers’ agent with VFM Property Advisors.
“My advice is to buy in and around the key infrastructure projects and areas, as well as one of the many popular schools here.”
A slow and steady return to growth?
Coughran summarises Gold Coast property values as being on a “gentle, sustainable incline that’s not out of control”, driven at the more affordable end by investors, first home buyers and existing residents looking to upgrade.
Overall, house median values were up 4.8% in the 12 months to March and unit prices up 3.9%.
This level of growth is “especially significant considering [the Gold Coast market’s] lacklustre performance since the financial crisis, when both capital growth and sales volumes across the region were declining”, says CoreLogic RP Data.
At the individual suburb level, however, property price trends over the 12 months to 31 March have been somewhat mixed.
House and unit median prices in Surfers Paradise, for example, have actually fallen. So too have unit medians in Southport, based on the CoreLogic RP Data figures. Southport houses, on the other hand, have seen healthy increases in value, as have units in Broadbeach.
Coughran believes the city has been “feeling the supply pressures. There is a shortage of quality stock on the market and vendors are holding out selling their properties with the hope of capitalising on expected growth.”
Earlier this year, Louis Christopher, managing director at SQM Research, similarly commented on a rise in the number of real estate listings in the region, but noted the likelihood of this including sellers finally putting their properties up for sale after waiting years in an underperforming market.
BIS Shrapnel’s latest report also corroborates the idea an “extended period of weak construction” and subsequent undersupply in the Gold Coast market are starting to flow through to some moderate residential property price growth.
Diverse price points
As of 31 March, median Gold Coast suburb prices range from $315,000 for units inSouthport up to more than $1.1m for houses in Surfers Paradise.
Median house prices for the city overall sit at $515,000 and $365,000 for units.
And those medians are in the middle of a very wide affordability spectrum. A one-bedroom non-beachfront apartment in Surfers Paradise, for example, sold in July for just $168,000, while at the upper end a seven-bedroom riverside house also in Surfers went in March for $6.6m.
“Properties below $500,000 are in the highest of demand,” Coughran observes, saying first home buyers are taking advantage of stamp duty concessions up to this level.
“We’re also seeing a bit more movement in the $500,000–$1.2m range, slowing after $1.5m”.
A recent report by The University of Sydney China Studies Centre, in conjunction with KPMG and Knight Frank, identified the Gold Coast as a “new destination where Chinese high net worth investors and developers are looking to”.
Coughran argees Chinese investors are “creating another unforseen level of interest in the Gold Coast market”.
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Not all about the units
The Gold Coast is well known for its many high-rise apartment buildings situated only a few hundred metres back from its famous coastline. And the combined Brisbane–Gold Coast market continues to offer the highest gross rental yields for units of all the capital cities, according to CoreLogic RP Data.
But Coughran is keen to highlight “the Gold Coast isn’t all just about high rises and off-the-plan apartments. There’s plenty of other good ‘second-hand’ stock, such as established houses, duplexes and boutique townhouse developments with low or no body corporate fees, that I believe should be considered”.
The supply for such properties, he says, isn’t likely to outweigh the demand for them, as it may with brand new high-rise units.
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“If you do decide to buy brand new [or off-the-plan], make sure you always do your due diligence. Find out if the developer has the land title, if their financial position is sound and the appropriate permissions and certifications are in place. Ideally they will have already delivered quality developments,” Coughran says
By Sam Butler