Standing on Surfers Paradise Boulevard, amid the incessant buzz of tourists and revellers and some of Australia’s tallest skyscrapers, it’s hard to imagine that in many ways this city has been Australia’s hardest hit urban market for the last few years.
The Gold Coast, often considered Australia’s playground because of the great surf, casinos and outdoor entertainment, has witnessed a downward spiral in prices that has lasted almost the full course of this decade. Nearly all regions of the city have been affected, with fingers pointed at a softening local economy and a high Australian dollar as the culprits.
RP Data figures alone paint a picture of a city property market in a state of crisis. Since late 2010, the city-wide median property value has been reduced by approximately $50,000, implying that just about anyone who purchased real estate at that time is paying off a property that is now worth less than what they paid for.
ANZ head of property research Paul Braddick says that unlike other parts of Queensland, which are benefitting from a high-flying resources industry, the Gold Coast remains weak – not just in the property outlook, but in the wider economic outlook as well.
“The Gold Coast has been witnessing further falls in houses prices as a result of sluggish conditions in its local economy,” he says. “The areas that are heavily dependent on tourists have been struggling most and the problem is that the strength of the Australian currency means that the domestic tourism that would have come there is now just going offshore.”
Yet according to Deloitte Access Economics’ latest Business Outlook report, there could be salvation on the horizon. The report points to the construction of a new $1.7bn, 750-bed hospital as a much needed boost to the job market, as well as another, potentially bigger, project – provisions for the 2018 Commonwealth Games.
The impact of the games
The fact that the Commonwealth Games will give the Gold Coast a much needed injection to the arm is hard to dispute, but determining the strength of that injection and how it will filter into the property market is another matter.
Residex founder John Edwards believes there is enough evidence to suggest that sporting events do have a positive impact on local housing markets. Looking at information gathered before, during and after the 2000 Sydney Olympics, Edwards says that around 64% of the suburbs in the Olympic Corridor outperformed the median growth rate for the city as the Olympic precinct was being developed.
Following the announcement of the Olympics, “the majority of higher growth rates occurred in the first one to three years,” he says. However, he is quick to also point out that almost all suburbs for a period of two years after 2002 failed to perform. This, Edwards says, was likely the result of overpricing in the lead-up to the Olympics.
Another factor to consider is that the Gold Coast is markedly different to Sydney. “The Gold Coast is already very developed with reasonably good infrastructure. This suggests there is little the Commonwealth Games can add to the city other than increased tourism exposure,” says Edwards. “If I were to take a guess, the answer would be to go off and buy old rundown blocks of flats, sit on them for a few years, remodelling them and rent them out during the games and sell immediately [after].”
Other commentators remain indifferent. “My initial reaction when I heard the Games were coming to the Coast was I couldn’t see it making a huge impact on property values,” says Rebekah Gould, a local broker. “We are already a transient population with our economy based on tourism. The Games will be great for anyone in the tourism industry, not so much for those who aren’t.”
Gold Coast property
- A median priced unit in Surfers Paradise is worth 10% less today, than it would have been five years ago
- In Mermaid Beach vendors are dropping their listed prices by an average 26% just to get a sale
- Paradise Point was the Gold Coast’s worst performer last year: houses lost roughly a third of their median value
- Surfers Paradise and Southport remain the Gold Coast’s most popular areas for buyers, together accounting for approximately 14% of all sales in the area.
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