Investors and developers are buzzing in excitement as the city finally gets out of its rut.
Australia’s most famous beach town is finally seeing a property market outlook that matches its sunny climate again. Industry reports released mid this year predicted a price growth for Gold Coast at 13% over the next three years to June 2018. This is the light at the end of the tunnel for the city, which saw its economy hit rock bottom during the Global Financial Crisis (GFC) of 2008 to 2009. Tourism, its biggest industry was hard hit; consumer sentiment plummeted and the property market suffered. Besides tourism, its other major industry, construction, only added to the problem by providing an oversupply of properties. Despite having a 3.1% population growth in the decade between 2003 and 2013 that was higher than the national average of 1.7%, Gold Coast was the worst performing market in Australia. Prices fell by about 50%; it was possible to purchase properties for as low as one third the replacement cost, which was similar to prices of the 1990s. Inventory could remain unsold for months, and sometimes, even years.
The city has been on a slow recovery since then, and a pick-up in activity has been observed recently. The median house price has increased 4.8% year on year to the March quarter this year, while median unit price saw an increase of 3.9%. Property sales also increased by 5% to 20,079 for the year ending May 2015, the largest in the state of Queensland and 27% above the five-year average for the region.
This is in part propelled by the ongoing infrastructure projects as the city spruces up to host the 2018 Commonwealth Games. The G:link light rail opened in July this year was built primarily to link Griffith University’s Gold Coast campus to Broadbeach, but has also inadvertently expanded the network of local buses and train routes that connects Gold Coast to Brisbane and beyond. Pacific Fair mall, one of the city’s most important retail locations, has undergone an AUD 670 million upgrading that has transformed it into the biggest shopping centre in Queensland. Another highly anticipated project is the new Gold Coast Aquatic Centre being built in Broadwater Parklands, the beach-side community space that is currently in the final stages of construction. These developments will continue to benefit Gold Coast’s economy even after the Commonwealth Games.
Supporting the population increase that is likely to result from these developments is the AUD one billion mixed-used Pacific View Estate to be built in the suburb of Worongary. When completed, the development will consist of 3500 residences for around 10,000 residents, and is expected to create more than 2700 jobs, contributing AUD 3.2 billion to the local economy. Also adding to the supply of residences are smaller, scattered properties that observers believe have been previously completed, but are only being put up for sale now as vendors waited for the revival of an underperforming market.
Of course, there is always the possibility that reality may eventually not prove as rosy as these predictions indicate. Anticipated interest rate increases, as well as the constant addition to supply with new units being built will likely dampen the rise in prices. Performance is also not constant across various neighbourhoods. Houses in Southport, for example are performing better than the units, while units in Broadbeach are doing better than those in Surfers Paradise. Experts believe, however, that the push from economic growth and the Commonwealth Games is likely to ensure a net growth, even if subdued. Compared to Sydney and Melbourne, Gold Coast’s growth is expected to be a controlled, sustainable one.
For those interested in investing in the city, it is difficult to pinpoint exactly what and where to buy. With overall median house price at AUD 515,000 and median unit price at AUD 365,000, Gold Coast is no doubt more affordable than Sydney and Melbourne, and comparable to Brisbane. Correspondingly, the city’s return on investment is also better. However, that overall median is a summation of a very wide affordability spectrum across different suburbs. Case in point: the median price for units in Southport is just over AUD 300,000 while that for houses in Surfers Paradise is over the million dollar mark.
Driving demand are the properties up to the AUD 500,000 mark, popular with existing home owners looking for an upgrade and first-time home buyers who are likely taking advantage of stamp duty concessions for more affordable properties. There is also a reasonable level of demand for homes between AUD 500,000 and AUD 1.2 million but it tapers off sharply beyond 1.5 million. Insiders are of the opinion that a lot of the demand comes from Chinese investors, who are showing an unprecedented level of interest in Gold Coast.
And it’s not just the Chinese buyers who are coming to Gold Coast. China’s top developers, too, are attracted to the tourist mecca. A great example is the AUD one billion Jewel Project, backed by the Wanda Group, which is owned by China’s second richest man, Wang Jianlin. The developer is so confident that it has actually broken ground before a single unit is sold. Also looking to bank on the Chinese tourist dollar is Banyan Tree, which has paid for a big land bank to construct its first hotel in Australia – a foray that definitely represents a strong indication of unprecedented confidence in Gold Coast.
Those looking to buy can’t go wrong with a property near any of the above mentioned infrastructure developments geared towards the Commonwealth Games. Properties with a view are definitely a good choice, of course, with Gold Coast’s highly coveted and very famous coastline. For those willing to step away from the well-trodden path, experts recommend looking at resale properties, or “secondhand stock”. The advantages of these homes include the lack of corporate body fees as well as less competition from other buyers, because the current demand for them is lower than that for brand new apartments.