Gold Coast and Tweed Coast Property Market Update3D New Highway ViewAn interactive 3D video has been put togehter by the NSW Roads and Traffic Authority and is giving the community a chance to see what the $359 million Banora Point Hwy upgrade will look like when complete - Watch the 3D video October 2011
Time to trade up? or is it the opposite?DEBT REDUCTION is now the primary focus when it comes to decision making for a second home buyer on the Gold Coast. Before the Global Financial Crisis (GFC), it was all about upgrading (luxury) and upsizing. Typically, a second home buyer is a young married couple (age 30 – 45) with a small family looking at upgrading from a small three-bedroom home or unit into a large five-bedroom house. These buyers were also choosing building a new house over an existing house and bigger over smaller. However, due to the GFC, the second home buyer market is being more mindful of current economic uncertainty and is opting to decrease debt. They are most likely buying older/existing dwellings and renovating, or purchasing near new homes that are selling well below replacement cost rather than build new (unlike four years ago). The typical property being purchased by these types of buyers are detached dwellings that are well located on 600 – 1000 square metre allotments being priced around the $450,000 to $600,000 bracket. TRADE UP - In considering the desire of home buyers wanting to trade up in the current market, we first have to consider when they purchased their existing home to determine how much available equity they have to assist them in upgrading to a better location/property. Buyers of second homes looking in the current market may not have as much equity as they think they do. Did they buy their first home pre-GFC or post-GFC? Those first home buyers who purchased during the early 2000’s and held that property until now have probably had a chance to ride the market roller coaster to their advantage, ie. the market decline post-GFC may not have eroded too much of the equity gained from the earlier part of the decade when increases in market values were the norm. If choosing to sell now in the hope of picking up a cheap second home, these buyers would be in a position to take a step up the property ladder and upgrade their home or suburb. In contrast, buyers who purchased their first home post-GFC are probably in a more precarious position. Plateaued or in some cases, declining, property values post-GFC would have left many of these first home buyers with little or no equity to play with. Any upgrade for these buyers would come at the cost of lowered price expectations/affordability and/or relying on additional borrowings along with accessing savings or cash reserves to upgrade to a second home. What is more likely is that those first home buyers who purchased post-GFC may look at deferring their decision to upgrade until their own equity/financial position improves. The obvious knock-on effect of this is that in the current market there may be fewer buyers looking for their second home, bringing about further softening in market conditions. Those buyers who can afford to upgrade to a second home have a good opportunity to purchase from a good selection of stock and from a good bargaining position. BUT, the increase in stamp duty in Queensland which was introduced in August 2011 has impacted on the upgrading market (second home owners market). For contracts entered into from 1 August 2011, no concession is available to those buying an established home who have owned property before. Example: * Purchase Price = $400,000 Stamp Duty: Before 1 August = $5,250 After 1 August = $11,825 * Purchase Price = $600,000 Stamp Duty: Before 1 August = $12,850 After 1 August = $20,025
Housing previously out of reach in the $500,000 to $600,000 price range may now be “gettable” at prices 10% to 15% lower. For example, an original 1980’s brick house, three or four bedrooms with pool would now be available for between $450,000 and $500,000. Twelve to 18 months ago, the same style of dwelling would have realistically sold between $500,000 and $575,000. These would typically be found in the established suburbs of Banora Point, Elanora, Burleigh Waters, Miami, parts of Robina, Benowa, Ashmore, Southport, and Paradise Point. Similarly, good quality villas in Paradise Point which a year to two years ago would have made $600,000 to $700,000 are now achieving $550,000 to $650,000, with a relatively large amount of new and near new stock available. Suburbs within the Gold Coast to Brisbane corridor have witnessed a number of second home buyers choosing to re-finance and renovate their existing home as opposed to selling and trading up. With house prices at their current levels, the majority of owners have realised that they won’t sell for the price they are hoping for, so they instead to choose to do some alterations and sit tight for a few more years.
THE RESULT - Overall, if you can afford to buy, now is a good time to look at upgrading to a second home, bearing in mind that investing in property requires a medium to long term perspective, and buying for short term gain/speculation carries greater risk. September 2011
General market conditions across the Gold Coast are very tight. Only those properties where the vendor is willing to meet the market are selling. There is generally an oversupply of similar properties listed for sale. Feedback from locals within the property industry indicate that the market may not yet have bottomed out which is concerning potential buyers. Our opinion is that we are bumping along the bottom similar to the late 1990’s and that properties will sell within a wider value range depending on the circumstances of the vendor. Gold Coast Central and Southern: The established suburbs from Paradise Point to Palm Beach generally attract good rental demand due to their proximity to employment, schools, large retail centres and the beach. The available properties range from basic studio units to luxury waterfront mansions. Accordingly rents will range from $200 to over $2000 per week. Solely with your investor hat on, it is the small fish that are very sweet. The small studio and one bedroom units sell for between $160,000 and $250,000 and yield up to 6.5% gross - but do not bank on huge capital growth. In strong markets, these properties are still at the bottom of the rung. The other end of the scale would be penthouse units which will attract $1700 per week against a value of $3 million. Body corporate fees could be as much as $40,000 per annum so the rental return is halved and resulting yields may be only as much as 1.6%. Prestige housing fares slightly better for the same value range at circa 2.5% to 3% gross. The bulk of the market however is house properties valued at between $400,000 and $600,000. These would be likely to return in the order of $400 to $575 per week or approximately 5% gross. This price bracket is attractive to both owner occupiers (first and second time buyers) and investors, so when the market turns, there is greater competition and prices rise. It could also be that as owners buy rental properties, the supply available to tenants decreases and rents will rise. Gold Coast Northern Corridor: Since the beginning of 2011, residential house prices within the northern corridor of the Gold Coast have dropped sharply. Even though housing has become more affordable in these months, property managers and selling agents have reported that many people are still opting to rent rather than buy. In addition to the falling house prices, negative press could encourage people to rent, particularly if the stories focus on increasing mortgage default rates. There is a large amount of investor stock within this region all aiming at attracting the rental market. Feedback from property managers is that rental enquiry is slow to steady Local property managers are concered about the amount of house properties available ‘for rent’ within Upper Coomera. A typical single level, four-bedroom brick home within Upper Coomera was considered to be the easiest to rent out. However, there is quite a large supply of these style homes available at present. Typical rents are currently ranging between $370 per week to $390 per week. In better market conditions, rental values range between $380 to $410 per week for these four-bedroom homes. Values range from $360,000 to $410,000 which equates to a gross yield of 5.2% to 5.4%. Net yields would be circa 3.5%. Example of investor house that would rent for $400 per week House properties priced over $450 per week within the northern corridor are the most difficult to rent. Property managers report that these properties require extended marketing as this segment has been very limited in recent months. With more houses being built within the corridor, times will be more challenging for investors as this will increase competition in the search for tenants. Tweed Heads: The far northern coastal region of New South Wales has seen considerable softening in value levels of residential property over the past six to twelve months. This has prompted the return of investors into the market, both locally and interstate. At present levels, positively geared properties are few and far between in this locality, however returns have been improving with property values softening more than rents. At entry level, it’s possible to buy a 20 year old, twobedroom, one-bathroom lowrise unit in Tweed Heads West for $180,000 which has a body corporate fee of $20 per week. Typical rents for this type of property range from $200 to $250 per week depending on the condition of the property. A property with a value of $180,000 and returning $225 per week shows a yield of approximately 4% once outgoings are removed. This yield is typical for affordable, modest properties, whilst the yield for standard houses ($380,000 to $420,000) is similarly 3.75% to 4.25%. Looking forward, we believe value levels may soften in the short term as mortgage stress is felt by more people and mortgagee in possession sales continue to pull prices down. Overall, it is a bumpy road along the bottom of the market and returns to investors will improve in the next six to twelve months, especially if interest rates are lowered. August 2011
The Gold Coast residential property market, across the board, continues on its depressing downward path. It does not appear that we have yet reached the bottom of the market. From $200,000 units to prestige beachfront property, value levels have continued to decline since the start of 2011, in the order of 5% to 20%. We are in a buyers market whereby the majority of sales that are occurring are because of “forced” circumstances, continuing to push value levels lower. In some cases, we are seeing selling prices back to 2003/2004 levels. In the central southern region of the Gold Coast, the BEST PERFORMING SECTOR is the $400,000 to $650,000 housing market, in areas such as Burleigh, Broadbeach, Mermaid, Robina and Varsity Lakes. In this market sector, there has generally only been a 0% to 5% decline in value level since the start of 2011.  We are still seeing some poor resul The WORST PERFORMING SECTOR of the central southern Gold Coast region is the lowrise, highrise, townhouse, villa and duplex unit market. In particular, investment type property in large unit complexes with a high proportion of rental units, have seen a 10% to 20% decline in value levels since the start of 2011. A two bedroom unit in Varsity Lakes has just sold between $255,000 and $260,000. A similar unit s In the current market, a lot of investors have negative equity Gold Coast Property Market Research Report - Courtesy of RP Data. July 2011The RP Data Research Team have recently compiled an 18 page report on the Gold Coast that covers topics such as the city's market overview, median house and unit prices, rental yields and more. We value your service with us and would like to offer you this report to give you further insight in to your local city market. The report covers the following topics:
Download your free report now [327KB].
The Light rail is coming to the Gold Coast |
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Business leaders have spoken about high-density developments springing up around the light rail, which is expected to open mid-to-late 2014.