Gold Coast ambitions
The 2018 Commonwealth Games are raising a nagging question: is there an end in sight for Gold Coast’s property woes?
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, outdoor entertainment and drunken schoolies – has witnessed a downward spiral in prices that has lasted almost the full course of this decade. Nearly all areas have been affected, with fingers pointed at a softening local economy and a high Australian dollar as the culprits.
RP Data figures 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 about $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 it.
ANZ head of property research Paul Braddick says that, unlike other parts of Queensland that are benefiting
from a high-flying resources industry, the Gold Coast remains weak – not just in terms of property outlook but also in its wider economic outlook. “The Gold Coast has been witnessing further falls in house 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 for
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 necessary 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 chief John Edwards believes there is enough evidence to suggest that sporting events have a positive impact on local housing markets. Looking at information gathered before, during and after the 2000 Sydney Olympics, he says around 64% of 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, almost all suburbs failed to perform in the two years after 2002, and this was likely due to overpricing in the lead-up to the Olympics.
The Gold Coast is also 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,” Edwards says. “If I were to take a guess, the answer would be to go
off and buy old run-down 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 are 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 worth five years ago
• In Mermaid Beach, vendors are dropping their listed prices by an average of 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, accounting for approximately 14% of all sales in the area
Investors on the hunt for high yields in a good inner-city location will be well impressed by Spring Hill, just 1km from the Brisbane CBD.
Units in this part of the city are currently scoring gross yields of 7%, with a diverse tenant base made up of CBD workers and students. As could be expected, first home buyers are not a strong buyer contingent, with investors ruling the market.
However, considering how the resources boom is slowly filtering into Brisbane, and will continue to do so over the coming years, there should be enough investor demand to keep the market afloat, especially in light of the relatively low amount of stock on the market. In fact, Real Estate Investar data shows a 16% reduction in the number of listings between 2011 and 2012, refl ecting a cautious development industry over 2011.
In terms of amenities, Spring Hill can almost be considered an extension of the CBD, having access to all the
shops, restaurants and transport infrastructure the inner city has to offer.
Unit stock is typically quite small and mostly in complexes built in the last decade, but there is also an extensive selection of older and larger properties.