Gold Coast property recovery tipped from 2015 as house prices bounce back, but unit prices slip to lowest in a decade: Prodap Report
The Gold Coast property market is expected to begin its recovery from about 2015 in line with a seven year recovery cycle, according to Prodap Report author Bill Morris.
Morris expects a recovery in both house and unit prices as demand starts to exceed the supply of new housing stock and as significantly discounted liquidation unit stock is finally absorbed with the added boost of preparations for the 2018 Commonwealth Games boosting employment.
The lastest Prodap Report finds that the established housing market on the Gold Coast recovered strongly over the first three months of the year, but apartment prices continue to fall and are approaching their lowest average prices in a decade.
According to the report, the average Gold Coast house price rose from $515,941 to $554,263 (7.4%) in the March 2013 quarter, matching average prices in Brisbane ($550,000), despite a 27% drop in the volume of house sales. The average price was recorded from a sample of 589 sales.
The increase reversed a 4.5% fall over 2012 and an 8.4% fall over 2011 and 2012 combined.
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“This house price movement is significant because it is the first evidence of a new uplift since the GFC related crash in 2008,” says Morris.
Morris says there is a regular cycle in the Gold Coast housing market of seven years between upturns, and the last upturn occurred in 2006-07.
“The seven-year cycle is a structural market phenomenon which occurs in most unregulated property markets in Western countries, but at different times depending on local factors,” he says.
Morris also expects preparations ahead of hosting the Commonwealth Games in 2018 will “massively boost employment opportunities on the Gold Coast, creating upward pressures on rents and therefore residential values”.
“This combined with record low interest rates that are likely to reduce even further, creates a number of catalysts, to drive a lift in residential activity and prices,” he says.
In contrast the unit market fell by 3% in the March quarter, based on 895 settlements following falls of 11.3% of the past two years.
The average unit price of $419,724 is the lowest since June 2003.
Morris says this reflects significant discounting of liquidation stock, particularly in central Surfers Paradise high rise apartments.
“In other words, all the price growth which occurred between 2003 and 2007 has been nullified by the Global Financial Crisis,” says Morris.
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The rise in house prices is good news for the Gold Coast as a whole, where houses make up 60% of the local government area dwelling stock.
But in Surfers Paradise, apartments account for three quarters of all housing stock and the market has been in decline since about June 2008 coinciding with a big dip in sales volumes.
The most recent Midwood Report on the Queensland market recorded only 19 high-rise apartment sales over the November quarter, a 70% plunge from sales figure a year ago with 705 high-rise apartments available for purchase on the Gold Coast, which at current sales rates would take close to a decade to clear.
“Oracle and Soul are only recently in receivership and the liquidators have yet to mount a solid marketing campaign and price list,” said Morris in the November quarter Midwood report.
"Apartments in Oracle, Soul and Hilton are being sold at 30% discounts," he said in an update to Property Observer.
Morris expects a price boom in the Gold Coast occurring in 2015 at the same time as sales of vacant land and house and land packages exceeding the release of new lots and house and land packages.
Prodap anticipates that in 2015/16, 3,000 residential lots and 1,500 townhouses and packaged housing will be released onto the market, more or less matched by demand.
Prodap anticipates townhouse and duplex sales exceeding supply of new stock over the course of 2013.
