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Why there has never been a better time to invest in the Gold Coast

Gold Coast

Thinking of investing in property on the Gold Coast?

Local agent Michael Kollosche has some sage advice.

“Throw a dart at anything at the moment, and it’ll do pretty well,” he said.

“The fundamentals of the Gold Coast market are just so strong; there’s probably never been a better time to invest here.”

While prices have been rising steadily – houses in Broadbeach-Burleigh chalked up a remarkable increase of 27.1 per cent last year – everything points to such sterling capital growth continuing.

A raft of ageing baby boomers is now buying second homes on the Gold Coast, cashed-up ex-pats are purchasing in advance for when they’re allowed to return home, and interstate migration is currently at the highest level of the past 15 years, with many Sydneysiders and Melburnians able to work remotely.

Business, in short, is booming.

“And it sounds as if we’re very likely to get the 2032 Olympics; we’re the hot favourites,” says Mr Kollosche of his eponymous agency.

“Of course, we’re also running out of land in the central part of the Gold Coast, so that will force up prices higher still.

“The future is going to be very bright for the Gold Coast, regardless of what happens nationally, and we’ll see strong growth for at least the next five years, possibly 10.”

Prices have certainly been increasing in leaps and bounds, with those for houses in Surfers Paradise growing 13.9 per cent in the year to March, and units by 13 per cent, according to the latest Domain Group figures.

In Coolangatta, houses are up 11.9 per cent and units only a shade less at 11.3 per cent, and apartments in Broadbeach-Burleigh rose by 8.3 per cent.

Such a shiny outlook is now luring investors back to the Gold Coast.

Gold Coast

Prices have been increasing steadily. Photo: Darren Tierney

Buyers’ agent Tony Coughran of Gold Coast Property Advisors recently bought a five-year-old, four-bedroom house on 650 square metres in Gilston, at 4 Moondani Drive, for $735,000 for an international investor.

He rented it out four days after settlement for $780 per week, a 5.5 per cent yield.

“I think the sweet spot for investors at the moment are houses up to $800,000, which are renting out well, and duplexes – with much lower body corporate fees than apartments – for around $500,000,” says Mr Coughran.

“Good locations closer to the water and amenities are a great option, but, in this market, you’ve got to be quick when you find something. We’ve got a lot of people from Sydney and Melbourne now buying properties to rent out, planning to move into them later.”

On the northern boundary of the Gold Coast, Jason Read of Raine & Horne Coomera says family houses are a great bet with parents commuting to Brisbane.

At Broadbeach, Jane Lofthouse at Harcourts says the only hurdle is supply.

“So many investors are looking for somewhere to stay eight weeks a year and rent them out the rest of the time either for full-time rentals or short-stays,” she said.

“Everyone, post-COVID, is now looking for lifestyle.”

 

Article Source: www.domain.com.au

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Gold Coast

Construction Costs Temper Gold Coast Apartment Boom

Construction Costs

Red-hot demand is pushing material supply, construction costs and delivery times on the Gold Coast to its limits.

Apartment sales on the Gold Coast have picked up pace in recent months with figures across 2021 so far outstripping the surge at the end of 2020.

Speaking at The Urban Developer’s Gold Coast in Focus Webinar, a panel of the city’s key research experts, agents and developers discussed the confluence of factors accelerating development momentum.

The city has been in high demand from interstate buyers with elevated household savings, drawn to increased affordability in south-east Queensland compared to rival markets in Sydney and Melbourne.

“It has been the perfect storm with low interest rates, the inability to travel and working remotely fuelling the region’s recent growth,” Lacey Group managing director Adam Lacey said.

“All of these factors bundled up have made the Gold Coast one of the most desirable lifestyle choices for anyone looking for new property in Australia.”

Construction Costs

▲ A number of major Gold Coast development projects have been built along the Gold Coast Light Rail Stage 3 route, now recognised as an urban regeneration spine. 

According to Urbis, which sampled 70 per cent of the Gold Coast market, there were 750 apartments sold in the first quarter of 2021, doubling the sales figures recorded in the final quarter of last year.

There has also been a continued trend in the decreasing scale of projects with the average apartments per project dropping from 100 in 2018 to 70 in 2020.

This has contributed to an undersupply with 6300 dwellings per annum needed per year to support upwards of 15,000 new arrivals.

Currently the city is delivering an average of 3800 dwellings each year, Urbis director of planning Matthew Schneider said.

Colliers International director David Higgins said buyers active in the Gold Coast market were also trending towards larger apartments, seeking two- and often three-bedroom formats predominantly in the city’s southern beaches.

“While this is a mature demographic seeking comfort, with good proportions and amenity, the number one reason driving their decisions is location,” Higgins said.

“Projects conceived by the right sponsors in the right location and targeting this demographic are reaping the rewards and achieving the best results.

“Of the Victorian purchasers, 80 per cent are owner-occupiers and 20 per cent investors, while New South Wales purchasers are similarly split, 75 per cent and 25 per cent respectively.”

Mosaic founder Brook Monahan said there had been a shift towards the mid-market—apartments between $600,000 and $1.5 million—however, the difficulty remained around feasibility with increasing site values.

“There has been a spike in land values but also in construction costs,” Monahan said.

“I’ve never seen prices rise as quickly as they have recently in the past 17 to 18 years.

“When you have land values being brought forward for development sites and construction costs escalating around labour shortages and materials then margins are compressed substantially.

“If people keep designing and delivering premium products, in turn increasing sales rates in order to get their feasibility to work, then at some point in time the market will level out and suggest that there is too much of that product being delivered.”

Forme managing director David Calvisi echoed the sentiment saying that while the on-market acquisition environment had escalated, there was little difference in off-market pricing.

“Construction pricing in the last six to 12 months has experienced a 10-13 per cent spike in escalation which can blow out a feasibility,” Calvisi said.

“Developers who have sold projects 12 months ago are battling builders who are now saying the previous pricing is no longer valid.”

Aniko Group managing director George Mastrocostas warned that the worsening shortage of timber, steel and other supplies affecting the industry would intensify once international borders reopened and foreign investors re-entered the market.

“Most people are predicting at some stage next year we will get those borders open and the federal budget currently is forecasting that Queensland’s population will increase by 86,000 people—effectively the size of Bundaberg,” Mastrocostas said.

“While this is a sizeable number, I actually think we will eclipse this number once the international borders are reopened.

“This will only increase demand, create a shortage of land, and unfortunately for Queensland, reduce affordability.”

 

Article Source: www.theurbandeveloper.com

 

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Opinion

House prices now ‘unaffordable’ for many average Australians

House prices

A sobering report by real estate professionals has said property prices are “increasingly unaffordable” and Australians may never own a home.

First time home buyers are all too aware buying their first pad right now is a struggle.

Now that’s been confirmed by the industry itself with real estate professionals darkly warning large numbers of “average” Australians “may never be able to enter the property market” given the inexorable rise in prices.

That sobering residential reality comes as it was confirmed Sydney house prices had soared. The average house is in the Harbour City is now going for $1.1 million with units at $800,000.

A typical Sydney house is now about $117,000 pricier than it was at the end of February. Industry organisation the Australian Property Institute (API) and tech firm The Search People surveyed almost 600 property valuers across Australia to gauge their attitudes to the property market.

Property valuers conduct detailed inspections of homes, looking at the number of rooms and size as well as a property’s condition to ensure it’s fit to be bought or sold, is priced correctly and if any improvements need to be made to make it market ready.

Almost half think property ‘unaffordable’ for average Australian

The report found 59 per cent of valuers believed the Australian housing market was currently in a bubble. While 55 per cent thought most homebuyers were over capitalising on their purchase.

Most damningly, 43 per cent of valuers said property was now essentially out of reach for the “average” Australian.

“The likelihood of owning a home is becoming increasingly low as residential property becomes unaffordable for the average Australian,” the firms stated.

“Aussies may never be able to enter property market.

 House prices

Almost half of property valuers believe property is unaffordable for the average Australian. Picture: Australian Property Institute/The Search People.Source:Supplied 

“Professional valuers believe Australia’s residential real estate prices will continue to rise despite serious affordability and sustainability concerns,” the report added.

There may be a bubble, but in the short term at least that bubble doesn’t seem set to burst, said The Search People’s Rafe Berding.

“Most respondents believe a boom is set for the Australian property sector, however the majority also believe Australia is currently witnessing the makings of a property bubble.

“A combination of record low interest rates and buyers’ uncertainty of investing in other alternatives is fuelling high demand. This coupled with low supply is driving a ‘fear of missing out’ for many buyers.

“As a result, in some cases, properties are being snapped up significantly above the asking price within moments of being listed,” he said.

 House prices

Property values are predicted to surge, particularly in Brisbane. Picture: Australian Property Institute/The Search People.Source:Supplied 

Sydney, Melbourne, Perth seeing the strongest growth

Almost two-thirds said they saw “continued strong growth” for property values across Australia’s six main capitals in the next six months.

The report said this was a “worrying” trend that would disadvantage many prospective buyers.

More than 60 per cent of those surveyed in Sydney, Melbourne and Perth said they expected prices to rise. In Brisbane, it was even starker with 70 per cent believing a price jump would occur with around 12 per cent of those saying prices in the Queensland capital could go up by more than 10 per cent.

Adelaide is the most affordable capital, but even here more than 55 per cent of valuers have said the only way is up for house prices.

API chief executive Amelia Hodge said the market was firing on all cylinders.

“With record low interest rates, we’re seeing more and more buyers entering the market.

“This is great news for Australians selling property, especially with values on the rise in most sectors and selling times decreasing across most capital cities.”

More than half of those surveyed said Australians should be allowed to access their super to pay for property.

Sydney average house price now $1.1m

Data from property research firm CoreLogic, released on Tuesday, showed prices for all categories of housing rose 3 per cent for the month – one of the largest monthly rises on record.

The median price of a Sydney house is now $1.186 million, while the median unit price is $782,000, according to the data firm.

CoreLogic head of research Tim Lawless said the median house price would likely hit the $1.2 million mark soon – even as early as next month. “It wouldn’t take much growth, it’s nearly there,” he said.

May’s bump in prices was a modest slowdown from March, when values climbed at the fastest pace in 32 years, but the growth still dwarfed price rises across the rest of the country.

Sydney’s price rise was 66 per cent higher than in Melbourne and about 36 per cent higher than the national average.

Mr Lawless said he expected rises to moderate over the coming months as buyers became priced out of the market.

“It will reach a point where fewer buyers can compete,” he said.

Housing supply was also beginning to increase in many suburbs and a further increase would take pressure off of buyers to bid up prices.

A shortage of listings had been one of the biggest drivers of the recent price boom, Mr Lawless said.

Backing up the API report that Perth is set to for a big rise in prices was an analysis by comparison website Finder.

In Perth, property prices were predicted to rise by 8 per cent over the next seven months, adding almost $80,000 to the value of properties, giving them an average value of $609,000.

Australian Bureau of Statistics data from April showed the average deposit needed to secure a mortgage was $106,743 – an increase of 16 per cent since January 2019.

The ACT had the largest home deposit increase since 2019, with the upfront amount required swelling by 24 per cent to $117,790, followed by NSW – up by 23 per cent to $128,469.

 

Article Source: www.news.com.au

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Brisbane

Australian house prices to rise by 15 per cent this year but slow in 2022

Australian house prices

Australian house prices will rise by 15 per cent by the end of the year before slowing to just 5 per cent in 2022, a new Westpac Housing Pulse has revealed.

The quarterly report, released this week, revealed markets across Australian capitals are in a “fully fledged, broad-based boom”.

Westpac senior economist Matthew Hassan said all aspects of the market were showing outright strength, with turnover 30 per cent above the national pre-COVID peak.

Prices are 8.5 per cent above their pre-COVID highs, pushing record levels in most markets.

“Everyone is out there looking for any hint of a moderation to this boom,” Mr Hassan said. “So far, there is nothing really that convincing – auction clearance rates have come off slightly, but we are only talking about 2 per cent or 3 per cent and still running around 80 per cent.

“There is nothing but a slight cooling off from ‘red-hot’ to ‘hot’ at best, and it is not really a sign things are about to turn cold,” he said.

The strength of the market had been surprising, but could not continue at such a fast pace, especially if home buyers could no longer afford to get into the market, Mr Hassan said.

“We’ve been pretty amazed by some of the strength the market has shown throughout 2021,” he said. “We do expect it to slow because you can’t expect such vigorous price gains without people’s ability to service a loan [being affected].”

The Reserve Bank and Australian Prudential Regulation Authority (APRA) would be concerned once property prices rose by 15 per cent, which was why Westpac expected some form of macro-prudential intervention in the first half of next year.

That could include tightening the loan-to-value ratios or a cap to investor credit growth, Mr Hassan said.

“It will be a soft landing really — 5 per cent growth is very gentle,” he said.

Strong price gains were happening across all capital cities, particularly Sydney, during the coronavirus pandemic, setting it apart from other housing booms in Australia.

“In previous price rises two to three cities propelled the gains each time, one cycle was Sydney and Melbourne and the cycle before that was the mining states with one or two cities sitting it out,” Mr Hassan said. “That’s just not happening now because all cities are booming.”

Meanwhile, a Finder RBA Cash Rate Survey of 40 experts and economists, released Monday, revealed the average house price could rise by 21 per cent in Sydney — or $216,300 — in 2021.

Over the next six months, that rise is expected to be about 8 per cent.

Finder head of consumer research Graham Cooke said Sydney’s property market  continued to soar to record breaking levels.

“To put that into perspective, prices rose by just 4 per cent in 2020 and 2019, and dropped by 8 per cent in 2018,” Mr Cooke said. “A 21 per cent  increase would be the highest annual increase for the Sydney property market in recent history, beating the previous record of a 15 per cent rise in 2013.”

2021 price change predictions by state

Capital city Price change prediction June-Dec 2021 Total 2021 price change current and future Average house price December 2020 Total 2021 average price change 2021 Predicted average price change by December 2021
Sydney 8% 21% $1,030,000 $216,300 $1,246,300
Melbourne 7% 15% $806,000 $120,900 $926,900
Brisbane 7% 17% $581,000 $98,770 $679,770
Perth 8% 15% $530,000 $79,500 $609,500
Adelaide 6% 13% $511,500 $66,495 $577,995

Brisbane’s house prices were expected to jump by a massive 17 per cent, or by $98,770, while Melbourne’s were expected to rise by 15 per cent, or by $120,900, by the end of the year.

Perth’s property prices were also expected to rise by 15 per cent in 2021, and Adelaide’s by 13 per cent.

Six-month predictions for Canberra and Hobart saw prices tipped to rise by 7 per cent and by 6 per cent in Darwin, the Finder survey revealed.

While price booms were still predicted for the rest of this year, there are challenges ahead, Westpac’s Mr Hassan said.

The “sleeper issue” for Australia’s property market was the continued closure of international borders to new migrants.

“We have a sharply slower population growth and sharply lower physical demand for new dwellings,” Mr Hassan said.

With HomeBuilder seeing many new homes to be built over the next 12 months, Australia could start to see a rise in vacancy rates.

While Sydney and Melbourne had seen a rise in inner-city vacancies, this was part of the initial “COVID-19 shock,” Mr Hassan said.

“The HomeBuilder balance of supply and demand will see housing shift away from shortages and that could hit next year,” he said.

 

Article Source: www.domain.com.au

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