The Gold Coast: Is it finally its chance to shine?

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
• Sixth 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 three 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 455 square metres
• 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 and 9.5% in 2001
• Average family household income is $77,500
• 6.2 income to detached house price ratio; 4.1 for attached dwellings and 4.5 for apartments
• 33% rental income spent to rent a house; 26% for attached dwellings and 28% for apartments
• Gross rental yields for houses 4.4%; 5.2% for attached dwellings and 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 five years
• 18% from interstate and 16% from overseas
• 1,200 vacant properties for rent
• Vacancy rate is 1.4%, but rising
• 10,000 resales on market and falling
• Rents rose between $10 and $20 – depending on product type – during 2013
• $230,000 current median land price
• $510,000 detached house
• $375,000 attached dwelling
  

But enough showing off.

Some comments

The Gold Coast has just entered a recovery – enquiry is increasing; so, too, is building activity and 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 and housing affordability relatively low.

Low affordability is forcing many renters and owner-residents to accept more compact housing and within this, dwellings of smaller size i.e. with fewer bedrooms.

We anticipate the strongest residential demand for two and 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 and peaking in mid-2017.

Our work shows that almost all of the price and rental growth that takes place over the full property cycle takes place during its recovery and 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 and under $550,000 for newly built or off the 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 and vacant allotments.

At last, the Gold Coast, finally, has got a bit of a shine!

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