EXPERTS are hailing Queensland’s Sunshine Coast as the hottest place in the nation to invest in property right now.
A lack of housing, a tight rental market and a rapidly growing population mean supply is failing to keep up with demand in the region – creating perfect conditions for investors.
Leading real estate industry figure John McGrath said the Sunshine Coast presented one of the best opportunities for capital growth because of its liveability, affordability and future economic prospects.
“From an investment point of view, where in Australia right now can you invest your dollar and get better returns than the Sunshine Coast or southeast Queensland?” Mr McGrath said.
” I don’t think there is a location that’s going to offer better investment growth in the future.”
His views are echoed by prestige property agent Tom Offermann of Tom Offermann Real Estate, who claims the Sunshine Coast “is on the cusp of the highest growth period in its history”.
“This is being driven by a raft of infrastructure projects that are delivering exceptional lifestyles, which in the past required some compromises for people coming from big cities,” Mr Offermann said.
The region is in the midst of an infrastructure boom, with billions of dollars being invested in upgrading and creating new facilities.
Work is underway on a new runway at the local airport, which is set to become international by 2020, and a new hospital and health precinct has recently been established.
“These are game changers,” Mr Offermann said.
“Astute property investors who recognise what is happening, and take action to secure the best located property they can afford, will reap the rewards of their foresight.”
Local agents say the region is crying out for more investment properties to cater to the needs of the increasing population.
According to demographer Bernard Salt, the Sunshine Coast’s population of around 298,000 residents is set to rise to 550,000 in 23 years, which will require more than 100,000 new homes to be built.
The latest Real Estate Institute of Queensland figures show the rental vacancy rate on the Sunshine Coast is just 1 per cent, with Caloundra having the tightest vacancy rate in the state at just 0.5 per cent.
It’s good news for investors, who are currently achieving healthy rental returns of around 5 per cent.
In its recent report, Herron Todd White noted an increase in investor activity in the Sunshine Coast market, with the sub $350,000 unit and townhouse sector particularly popular.
“It’s not uncommon to see townhouses selling for $220,000 attracting a rental of $280 per week – over 6.5 per cent gross return,” the report said.
For investors looking to capitalise on the growth in the region, McGrath Real Estate founder John McGrath said now was the time to get into the market.
“I think there is a great opportunity, in particular right now, because we’ve seen Sydney and Melbourne have shown unprecedented growth over the last five or six years,” he said.
“Now those markets have come to a plateau and a lot of people are going to be saying; ‘Do we take our profits and reinvest them, or, in fact, do we move up north and get better value for money?’
“So, I think right now there’s a terrific window of opportunity where people can capitalise on the immense growth we’ve seen in the southern states.”
Reed & Co director Adrian Reed the increased international access the new airport would provide would likely change the profile of buyers in the Noosa region.
“We’re currently seeing an increase in Australian expats buying back into the market, but if accessibility becomes easier, we’re expecting a more aggressive upward trend in high-end premium property,” Mr Reed said.
He said that lending restrictions and the impact of the banking royal commission had had little impact on the region’s prestige market.
“The vast majority of deals I’m doing at the top end of the market are cash,” he said.
“They’re self funded retirees who’ve already sold their principal place of residence.”
Owner/builder Paul Saunderson, who is selling his home in Noosa Heads through Peter TeWhata of Tom Offermann Real Estate, said the local market was “out of control at the moment”.
“There are houses getting knocked down and new dwellings being built everywhere,” Mr Saunderson said.
He said the contemporary, four-bedroom, three-bathroom property at 20 Sanctuary Ave, Noosa Heads, which he lived in with his wife and two children, was attracting strong interest from interstate and overseas investors.
“It’s a good investment opportunity because it’s been valued as holiday letting, which is anywhere from $6000 to $10,000 a week during peak season,” Mr Saunderson said.
Jamie Smith of Century 21 On Duporth in Maroochydore said he’d never seen so much activity in the Sunshine Coast property market, with strong interest from both local and interstate investors.
Mr Smith said many investors were looking to buy in the less expensive suburbs, where new housing developments were popping up, such as Caloundra, Sippy Downs, Birtinya and Mountain Creek.
“It’s definitely unprecedented in terms of what we’re seeing on the Coast,” he said.
But Mr Smith said investors who were not already in the market needed to act fast.
“If you were here three years ago, you could have bought between $400,000 and $500,000,” he said.
“Now you’re looking at anywhere from $600,000 plus, so it’s definitely changed a little bit.”
SUNSHINE COAST SUBURBS FOR BEST CAPITAL GROWTH
Suburb Property type Median price 12 month change in price
Minyama House $1.31m 45.8%
Kenilworth House $399,000 40%
Yandina Creek House $820,000 32.3%
Beerwah Unit $375,000 25%
Mount Coolum House $676,200 23.2%
Mapleton House $543,250 21.3%
Mudjimba House $739,500 20.7%
Peregian Springs Unit $475,200 18.8%
Battery Hill House $579,500 18.4%
Montville House $707,500 17.9%
More Sales Than Listings in Residential Market
Dwelling sales continue to surge across Australia against low listings levels. In the three months to July, Corelogic estimates there were around 171,100 sales.
This was 53.4 per cent higher than what has typically been seen this time of year for the previous five years.In the same period, there were just 121,200 newly advertised properties for sale in the three months to July.
This has taken the sales to new listings ratio to recent highs nationally, at 1.4 over the three months to July.
The sales to new listings ratio is calculated by dividing the number of sales that have taken place over a given period by the number of new listings added to the market over the same time.
For the past decade, the ratio has averaged 0.9, suggesting for each listing added to market there was just under one transaction that took place.
When the ratio is 1, it implies buyer demand and advertised supply is balanced.
A sales to new listings ratio of 1.4 suggests strong selling conditions, as there is more than one transaction taking place for every new unit of supply in the same period.
The sales to new listings ratio has averaged above 1 since June, 2020.
Dwelling sales to new listings ratio, national
Each of the capital city markets currently has a sales to new listings ratio of greater than 1, ranging from 2 in Adelaide, to 1.1 in Darwin.
Capital cities with imposed lockdown restrictions through July saw a particularly strong uplift in the ratio, which may be a result of a disproportionate number of vendors postponing the start of a selling campaign amid lockdowns.
Multiple factors can explain the surge in sales relative to low listings levels from mid-2020.
On the demand side, these factors include:
Low mortgage rates
Increased buyer demand has stemmed from continuously falling mortgage rates.
Despite concerns of an earlier-than-foreshadowed lift in mortgage rates, RBA data shows average new home loan rates for owner-occupiers fell 12 basis points through the first half of 2021 and 18 basis points for investors.
Mortgage rates are one of the most important determinants of housing demand and in the current climate, where GDP is once again expected to decline, the RBA will likely facilitate a low rate environment for longer.
A savings windfall
As social consumption declined through lockdowns, and household financial support was increased, household savings peaked at 22 per cent of household income in the June quarter of 2020, which was above the-then decade average of 7 per cent.
Combined with a range of incentives for home purchases introduced through 2020, increased savings levels may have bolstered borrower deposit levels, triggering additional sales since the onset of Covid-19.
Savings rates remained elevated at 11.6 per cent through the March quarter of 2021, which have supported sales volumes through the first half of this year.
Incentives for first home buyers
Last year saw the introduction of multiple first home buyer incentives, from the first home loan deposit scheme before the pandemic, to various state-based grants and concessions, along with incentives for the purchase or construction of new or off the plan property.
Dwelling sales to new listings ratio, capital cities
First home buyer purchases would go a long way in explaining the current supply and demand dynamic.
This is because owner-occupier purchasers who already own property would presumably list their existing home around the time they are purchasing a new one.
First home buyer activity, on the other hand, creates additional housing demand without adding new advertised stock to the market.
The chart below shows the volume of secured home loans for first home buyers, which shows an extreme uplift in first home buyer activity.
First home buyer loans recently peaked at 16,260 in January 2021, which is almost double the series average of monthly first home buyer loans secured (8731).
Though first home buyer loan commitments have since trended lower, they remained 58.8 per cent above the series average through June.
In the same way that first home buyer purchases increase demand without adding to supply, investor purchasing activity has also trended higher since mid-2020.
Unlike first home buyer activity, investor purchases are not slowing down.
Through June, there were 18,625 secured home loans for investor property purchases, which is a 74.8 per cent increase on commitments in the same month of 2020.
Number of FHB owner occupier loans secured monthly
On the supply side, new listings stock was persistently low through 2020, as a lack of mobility and extended lockdowns across Victoria saw fewer Australians list their home for sale.
Through 2021, new stock added to the market has actually hit levels that are on par with previous years.
In the four weeks ending July 4, Corelogic counted around 38,000 new listings added to the market nationally, which is actually higher than the five year average level.
However, recent lockdown conditions have seen new listing counts slip back below the historic average, with Sydney in particular recording a -17.3 per cent drop in new advertised stock during the past four weeks.
Part of the reason listings have remained low through lockdown conditions is the assistance offered to home owners seeing hardship through Covid-19.
Mortgage repayment deferrals and household income support have kept distressed sales from hitting the market, and have more broadly been a factor in keeping housing market conditions stable.
However, it has also contributed to a persistent seller’s market, which is reflected in the high sales to new listings ratio.
The ratio may ease in the coming months as advertised supply moves through the normal seasonal spring uplift and buyer demand is limited by extended lockdowns, and affordability constraints.
Article Source: www.theurbandeveloper.com
Why Sherpa’s Scaling Up on Gold Coast
What’s in a name? Plenty for Gold Coast-based Sherpa Property Group, according to chief executive Christie Leet.
Sherpa is ramping up its development pipeline with the acquisition of two new sites, in Biggera Waters and Burleigh Heads.
The two deals build upon recent sales success and extend the group’s workbook on the Gold Coast to $250 million.
In this TUD+ Briefing, Leet explains how the company approaches projects and its philosophy, why the Gold Coast is it’s home ground and the significance of that name.
Leet said not long before moving to the Gold Coast from the Whitsundays, he had been to the Mt Everest base camp, and saw similarities between the work Sherpas do and the role of developers.
He said that like the Sherpas of the Himalayas, his company aims to do the heavy lifting for the end user.
Leet said the Gold Coast had underlying factors that made it a strong market, including high employment, strong migration, and an availability of sites for projects.
“We’ve established what we want and what we do, and when you do that, projects come to you,” he said.
“That’s what happened in both cases with the Biggera Waters and Burleigh Heads projects—they came to us.”
Leet said looking beyond the coastal strip had paid off for Sherpa, and that by working up a model for development away from the coast, they’d been able to make the most of these two opportunities.
He said there were locations on the Gold Coast of value and interest away from the beach.
“The northern Gold Coast, along the Broadwater, is exceptional,” he said.
Forecasting property prices and what affects property in 2021, 2022 and beyond
What’s the outlook for the Australian property markets for 2021 and beyond?
This is a common question people are asking now that our real estate markets are up and running again after virtual auctions and sight unseen purchases took place in 2020.
News from the biggest banks and Australian economic experts are predicting house price growth across almost every segment of the market.
Those I spoke to, and who have released forecasts of their own, are predicting property price growth of 12 per cent per cent – 20 per cent per cent across Australia this year. They expect the trend will almost certainly continue until the end of 2022.
Historically low-interest rates and FOMO (fear of missing out) have driven dwelling prices to record new highs – but we’ve only recently surpassed previous 2017 peaks, which means double-digit price growth is on the horizon for many areas around Australia in 2021.
AMP Capital’s Shane Oliver in particular said, “the forces that have driven average Australian capital city property prices well above trend and well above price-to-income ratios seen in comparable countries over the last two decades may be at, or close to, having finally run their course.”
We’ve taken a look at a handful of the state capital property markets, how they’ve performed since COVID hit, and what is being forecast to the end of 2021.
Brisbane’s house prices remained resilient over 2020 when other markets were impacted by the economic impact of COVID-19.
Now, moving forward, the Sunshine State will shine with strong demand for homes, particularly in lifestyle areas, likely to deliver double digit capital growth over the next 12 months.
Brisbane apartment values have increased 2.7 per cent over the quarter, in line with 6.2 per cent in the year to date.
Median apartment values have hit a high of $419,143.
Several of the economists I spoke to including Terry Ryder and Westpac’s Bill Evans tipped housing prices to surge 20 per cent between 2022 and 2023.
Hotspotting’s Terry Ryder clarified that 89 per cent of suburbs across Brisbane are seeing price growth and was tipping it to become Australia’s property leader in the coming months and years.
It’s also worth keeping in mind the Brisbane 2032 Olympics which will positively impact property values now and in the future.
Overall, experts forecast property prices will rise roughly 16 per cent by 2021’s end.
Canberra’s property market has been described by many as a “quiet achiever” with dwelling values reaching a new peak after growing 14.2 per cent over the last year.
Considering a large percentage of Canberra’s population is employed by the government or industries supporting the public sector, Canberra’s property market has not really felt the effects of the coronavirus recession like other capital cities did.
Due primarily to the ongoing apartment developments popping up across Canberra, like those from Geocon, unit values are up 1.3 per cent this month, making up a large chunk of the 2.8 per cent price growth this quarter. Apartment prices are up 6.5 per cent in the year to date.
Median apartment prices are currently $520,900.
Moving forward, the Canberra property market will continue to enjoy solid but slower property price growth, due primarily to slow population growth.
Overall, experts forecast property prices will rise roughly 17 per cent by 2021’s end.
Perth’s long-awaited recovery was interrupted midway by COVID-19 but now Perth’s housing market is back on a recovery trajectory, with home values posting a 7.5 per cent increase in the year to date.
Perth continues to be the most affordable capital city for houses in the country and this along with a record-low mortgage rate, improving economic conditions and government incentives has set it up for strong price growth this year.
This has also seen strong benefits for the apartment market which has been neck and neck with houses and even outperformed them this quarter, seeing 2.3 per cent growth compared to 1.5 per cent. Units were up 0.6 per cent for July, while houses saw growth of 0.3 per cent.
Apartment values are up 6.8 per cent since January achieving a median price of $404,257.
Overall, experts forecast property prices will rise roughly 19 per cent by 2021’s end.
How does my property impact the economy?
Real estate affects the economy because it makes up a large portion of individual and business wealth across economic sectors.
When real estate prices rise, wealth increases, so individuals and businesses are more likely to borrow and spend.
This can be seen in recent times with the average Australian savings account decreasing ~$7,000 from May to April as prices start to spike, however this can also be largely attributed to a reducing fear of COVID-19
When your home rises in value it increases the overall value of the economy. When real estate prices rise, wealth increases, so individuals and businesses are more likely to borrow and spend.
What’s causing the rise in home prices?
The primary factor causing the current boom in home prices are the continuing low mortgage rates and low interest rates.
Plus with Australia’s excellent response to Covid 19 transmission seeing business reopening well and an increasing optimism for the economy there is much less fear around COVID-19.
With fewer homes for sale and first time home buyers and owner occupiers (those buying a property to live in it) dominating the market, they are currently the ones driving up property prices the most.
However as incentives like those from the HomeBuilder Grant and First Home Buyer Grant taper off it is expected that we will see a massive uptick in investor spending on property as they compete with owner occupiers and first home buyers over the super competitive interest rates.
It is predicted that Investors will drive the market well into 2022 and perhaps even 2023 depending on other conditions that influence interest rates like the cash rate.
How does the Cash Rate influence the Interest Rates on my loan?
You often hear about it in the news, the monthly changes in the Cash Rate, but what is the cash rate and how does it affect you?
In essence the Cash Rate which the RBA meets on to decide once a month (currently 0.15 per cent) changes how much money banks can lend to you.
So when the cash rate is extremely low – close to zero – as it is currently, banks can and are encouraged to offer lower interest rates.
That means when the Cash Rate is low, Variable and Lock-In Interest Rates are low so your mortgage is cheaper!
This can save you hundreds to thousands of dollars a year depending on the value of your home.
With all that covered, every expert I talked to predicts that the cash rate will not decrease any time in the next 2 years and most experts expect the cash rate to increase in 2023 or later.
However three of the Big 4 banks have already started hiking interest rates across the range with Westpac the only one yet to start showing upward movement. It’s a sign of the times with a number of other banking and loan institutions also increasing interest rates across a wide range of home loans.
How does the government affect property prices?
Legislation is also a factor that can have a sizable impact on property demand and prices.
Tax credits, deductions, and subsidies are some of the ways the government can boost demand for real estate for as long as they are in place.
Some recent examples of this include the HomeBuilder Grant and the First Home Buyers Grant.
Being aware of current government incentives can help you determine changes in supply and demand and who and what will be affecting property prices.
An example of something to look out for is the percentage of properties purchased by FHB’s (First Home Buyers) soaring to record highs recently. Although this still remains the case, it wont forever and certainly is not predicted to last into 2022.
Article Source: www.urban.com.au
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