Shimmering like a beacon, the Gold Coast market has, for many, become a bellwether regarding the health of the Queensland residential market.
So, how is its shimmer?
Some facts first
- 550,000 permanent residents
- 6th largest urban area in Australia
- Growing by 11,000 new residents per annum
- For every five people on the coast today, there will be eight within 25 years
- One in three properties are rented
- Three out of five rental households hold no children
- 59% of owner-resident households also hold no children
- Yet three-quarters of all dwellings have 3 or more bedrooms
- A quarter of residents rent from family or friends
- Need to build 5,000 new dwellings each year
- Just 2,500 approved last year
- Past oversupply now absorbed
- Median lot size is now 455sqm
- New detached housing development controlled by a limited few
- Very little new housing supplied via small infill builds
- 310,000 locally employed
- New jobs are being created – 5,500 last year
- Unemployment is 5.7% but was 7.4% in 2011 & 9.5% in 2001
- Average family household income is $77,500
- 6.2 income to detached house price ratio; 4.1 for attached dwellings & 4.5 for apartments
- 33% rental income spent to rent a house; 26% for attached dwellings & 28% for apartments
- Gross rental yields for houses 4.4%; 5.2% for attached dwellings & 5.1% for apartments
- 18,000 residential sales this financial year
- Our forecast is for 22,000 sales during fiscal 2015
- 56% moved within last 5 years
- 18% from interstate & 16% from overseas
- 1,200 vacant properties for rent
- Vacancy rate is 1.4%, but rising
- 10,000 resales on market & falling
- Rents rose between $10 & $20 – depending on product type – during 2013
- $230,000 current median land price
- $510,000 detached house
- $375,000 attached dwelling
The Gold Coast has just entered a recovery – enquiry is increasing; so, too, is building activity & sales; return of price growth plus improving rents. In short, a more equal market.
This recovery is likely to be weaker than past ones. Employment growth, whilst occurring – which is a nice change for the Gold Coast – remains weak & housing affordability relatively low.
Low affordability is forcing many renters & owner-residents to accept more compact housing & within this, dwellings of smaller size i.e. with fewer bedrooms.
We anticipate the strongest residential demand for two & tight three-bedroom stock on the Gold Coast in coming years/decade. Therefore investors should consider buying compact housing over more traditional detached product.
As for timing – and all things being equal* – the Gold Coast should remain in the recovery phase of the cycle this calendar year; entering an upswing in the middle of next year & peaking in mid-2017.
Our work shows that almost all of the price & rental growth that takes place over the full property cycle takes place during its recovery & upswing.
So if you are looking at the Gold Coast as a place to buy a residential investment property, then this year is the time to do something. Some really good bargains are available.
But investors, in the main, need to limit their expenditure to under $450,000 for resale or second-hand stock & under $550,000 for newly built or off-plan investment stock.
Our forecasts are for attached dwellings – on average – to rise by up to 8% on the Gold Coast over the next 12 to 15 months. Less price growth is expected for traditional houses & vacant allotments.
At last, the Gold Coast, finally, has got a bit of a shine!
*Assuming more planes don’t just disappear; Putin plays nice with his periphery; The Guv fiddles with his guitar strings & leaves domestic interest rates alone & the Easter Bunny comes as per usual. In other words, nothing big & out of the blue happens.
Matusik
