Sydney investors sometimes being outsmarted by locals in Gold Coast property purchases: HTW
First home buyers are defiantly still in the Gold Coast market place but due to upward pressure on demand and prices some have been priced out of the market or are waiting for things to cool off.
Meanwhile Sydney buyers are taking advantage of their increased equity in a strong Sydney market and purchasing in a cheaper Gold Coast market, according to the local valuation firm, Herron Todd White.
"While this is placing upward pressure on demand, local buyers can still enter the northern Gold Coast corridor market due to building costs having been fairly stable and land values in this area only increasing marginally," the HTW reported noted.
First home buyers are competing with the investor market, however typical investors often have higher points price points.
"Generally the central Gold Coast is becoming quite heated and is now a sellers’ market with properties selling quickly and buyers competing to secure deals.
"This is currently putting significant upward pressure on values.
"Investors are clearly winning with many not having to get finance pre approval."
The report points out that many interstate and Chinese buyers are buying house and land packages on the northern Gold Coast for investment purposes.
"There is enough englobo land and new estates getting developed in the northern corridor to cater for the increased demand from both first homebuyers and investors.
"Investors are winning the race in central Gold Coast but in the northern corridor we believe first home owners are still competing with the inflow of funds from investors.
"In Gilston there have been recent increases in activity for house and land packages both to local first home buyers and non local investors.
"In general the non local investor is paying more both for the land and for the building contract.
"For example two sites in the same estate recently sold.
"The first was to a non local investor who for $476,500 purchased 146 square metres of living area in a 4-bedroom; 2-bathroom house with double garage on a sloping 600 square metre block.
"The local for $473,000 purcahsed a more level 700 square metre site with a 213 square metres of living space, 4-bedroom house with double garage without landscaping or fencing.
"In this instance the local was a clear winner. However the land cost was higher due to non-local investor activity," the report concluded.
Overall HTW suggested first home buyers were fairly active throughout the Gold Coast, "however the confidence and expectations have taken a hit" in recent times due to the strong market.
"For example take a standard 4-bedroom, 2-bathroom house in a suburb such as Ashmore or Parkwood.
"If this sort of property was placed on the market about 12 months ago for say $450,000, then you would expect moderate interest with maybe one or two offers 5% below the asking price in a one to two month period after listing.
"Now however one could list that same property for $475,000 and you would expect a lot of interest with multiple offers very close to the asking price within two to three weeks of listing."
HTW said while grants were helping first home buyers and those that build, HTW believe that under the current framework the values of typical grants are often lost by over inflated developer land sales.
"However the grants available do assist first home owners and without them we would see a fall off in demand in places such as the northern Gold Coast where many first home owners are now buying and building.
"The first home buyer market will be stimulated by greater employment opportunities and higher salary levels in the area from improvement in local economy.