Current Gold Coast Property Market Overview

Residential
The Gold Coast market remains buoyant and is still the strongest residential property market in southeast Queensland.
Underlying uncertainty about interest rates, which have been on the decreasing and are expected to lower somewhat over the course of calendar 2008, did little to dampen buyer enthusiasm which over the past 18 months has generated solid prices for Gold Coast properties. Demand remained strong in all categories and, in all price brackets, indicating that considerable upside potential remains despite the gains that have been made over the past two years.

I have come across plenty of research that predicts South East Queensland’s residential market will continue to witness reasonable activity but at a reduced level from last year. Whilst the threat of inflation as well as the international credit crisis still looms on the horizon, a stable if not steady market performance over 2009 is forecast for South East Queensland due to the current strong fundamentals in the region, these include positive net migration, low unemployment and strong local economic conditions.

The Australian economy is underpinned by low unemployment, high immigration, a stable trade union environment and moderate interest rates, which are not high by historic standards. The only real problem is liquidity and this affects new property development and re-financing of existing facilities. New projects on the drawing board are likely to be postponed until project funding can be accommodated. The extent of price reductions from recent economic turmoil will vary on locality and price range. Prime locations such as inner city or beachfront, with prices around $500-700,000 should not see much change, however in fringe locations and higher price brackets there could be reductions in the order of 10-20% (Midwood Report, 2008).

The next uplift in the property cycle is expected in 2010 and the size of this lift is expected to be in the order of 30-40%. This should over correct the reductions we are seeing now. In the long term, property values in South-East Queensland increase at approximately 8%pa. This has occurred over a long period, dating back to the 1960’s.

Residential Market Impacts. (General residential)

• Supply/demand and rental fundamentals remain strong and prices should hold up especially for products sub $450,000
• Biggest impacts is from interest rates
• Business confidence has softened and sentiment in most markets has been impacted.
• There is minimal evidence to reflect these impacts, apart from a slowing of sales.

Industrial Property

Supply of new industrial projects across the Gold Coast region has continued to increase with
217,000 sq m anticipated to contribute to the market as part of 49 new projects. Most of the new supply identified is contained in the Yatala Enterprise Area and M1 corridor, however over the next 10 years precincts such as Northern NSW and areas located near Gold Coast Airport at Coolangatta are expected to provide a greater contribution to the industrial needs of the region.

Some of the larger projects anticipated to add supply to the Gold Coast industrial market are located in the Yatala region with two 20,000 sq m high tech storage warehouses currently under construction in Insight Logistics Park. A Factory and Batching Plant have DA Approval in Ormeau and a number of smaller warehouse / office projects are in various stages in Gaven and Arundel.

Throughout the Gold Coast region, growth in prime net face rents over the last two years has been comparatively strong peaking in 2006/07 with a 15.08% increase on the previous year.

The current average for prime net face rents is $103 / sq m however the forecast over the next five years suggests that average rents could rise to $134 / sq m with growth of 5.50% per annum on average over this timeframe. Uplift of 11.45% is anticipated during the 2007/08 financial year before moderating through to 2011/12. It is expected that rental growth will remain stronger within industrial regions such as Molendinar and Arundel due to their proximity to major commercial nodes and limited supply of rental property to the market.

As previously indicted, the relative health of the property industry is closely correlated to the condition of the national, regional and local economies.  Interest rates have a particularly strong impact on property investment.      

Micro Factors:
Access: transport, amenities
Location: general locality
Position: noise factors, views.
Services: public utilities
Site Characteristics: size, shape, frontage, topography.