- Tags: Gold Coast Property, Property Investment, Property Trends
Believe it or not there has been a marked downturn in the number of sales taking place not only nationally, but also locally in our southern Gold Coast market. Just as the extent of the rise in turnover from Q3 2014 is hidden in published annual figures, so is the extent to which the retreat to the Q2 2016 level is pushing prices.
It looks more and more likely 1200 sales will be where it will settles.
In our case it isn’t because of any lack of buyers - just the opposite in fact. It is a lack of properties coming onto the market for sale which is driving this.
The decision to sell is a complex one and although the strength of the market is a factor, one way or the other there are also other dynamics in play. To understand why people are not selling or, in other words, why supply is low, it’s important to understand why they do sell. The main reasons are: - Upgrading
- Downsizing
- Cashing in
- Financial distress
- Divorce
- Deceased estate
The last two factors typically don’t change significantly over a relatively short period, they are reasonably steady. This leaves the other factors listed above which mean we are seeing fewer people upgrading, downsizing or cashing in on strong price growth, and there are fewer sales driven by financial difficulty.
Why aren’t people selling right now?
Fewer people have been selling over the past 12 months, and given the relative ease of accessing finance, the apparent difficulty of re-deploying capital is the main reason cited. For example, there is evidence in some quarters to suggest that listings go up when interest rates rise. Does that mean people seek to sell because they can no longer afford their mortgage payments, or are they selling because economic conditions are generally better and they feel confident about upgrading?
Lack of supply
There hasn’t been a lot of building in the area over the past few years. This supply means that people are holding property for a longer time because they don’t have as many choices.
For downsizers, moving to cheaper accommodation is not always an attractive option. The average hold period now for a house in the 4221 postcode is more than 11 years and for unit it is more than 8 years.
There is also the realisation as Gold coast development has crept further west and north that property in the area particularly on the eastern side of the M1 is irreplaceable.
In many cases, a new large Palm Beach townhouse costs more than an older brick and tile house.
With all the infill development projected in the SEQ 25 year plan I for one cannot see this trend changing.
by David Hamilton
Rising Property Prices and Slowing Sales on the Gold Coast
palmbeachfn.com.au November 2016 First National Palm Beach 15 Palm Beach Ave Palm Beach, Queensland 4221
Phone:
07 5559 9600