Six - eight months in there is no doubt that the Gold Coast recovery continues. It is also true that no two recoveries are the same.
This one may not be as strong or sustained as the last one although I recall worrying in 2003-4 whether it was all over only to see it continue, albeit with a bit of a hiccup while Latham looked like he had a chance.
The following are some abbreviated observations from Michael Matusik
, a real estate commentator with huge experience.
Much of his observations are borne out by our own experiences in the southern Gold Coast area where the market for 2 bedroom units and small townhouses is very strong. We do not see much price resistance for houses until about the $550-600,000 mark.
“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.
- Need to build 5,000 new dwellings each year
- Just 2,500 approved last year
- Past oversupply now absorbed
- Very little new housing supplied via small infill builds
- Unemployment is 5.7% but was 7.4% in 2011 & 9.5% in 2001
- Gross rental yields for houses 4.4%; 5.2% for attached dwellings & 5.1% for apartments
- 18,000 residential sales this financial year
- Our forecast is for 22,000 sales during fiscal 2015
- 10,000 resales on market & falling
Low affordability is forcing many renters & owner-residents to accept more compact housing & 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 & 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 & 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.
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 & vacant allotments.”