Sunnier times ahead
After being hit hard by the GFC, infrastructure and innovation projects are helping to drive the Sunshine Coast’s property market into long-term sustainable growth
With its pristine beaches, sparkling freshwater rivers and lakes, lush subtropical forests and inviting climate, the Sunshine Coast is world-renowned as a holiday destination.
However, it is also the ninth-largest urban area in Australia and the location of some major infrastructure projects. And, thanks to the University of the Sunshine Coast’s Innovation Centre, it has started to emerge as a hotspot for entrepreneurial and innovative businesses.
Employment opportunities are increasing and the population is growing, with the growth rate expected to increase further.
This all bodes well for the future of the Sunshine Coast’s property market, according to Place Advisory director Lachlan Walker.
“Soon the Sunny Coast will not just be synonymous with words like ‘tourism’, ‘travel’ and ‘holiday’ – it is becoming a property hotspot, with huge growth potential.”
The GFC hit the Coast hard, with unemployment proving its biggest downfall. With not enough jobs to support the population, people left in droves and the price of million-dollar properties dropped 30%.
But the local government realised that it was necessary to rethink the way employment was structured, Walker says. “So rather than just relying on tourism, they started to develop other economic stimulants. By undertaking a multitude of infrastructure projects they have created employment opportunities and are bringing about a more sustainable long term.”
These projects include:
- the Sunshine Coast University Hospital, which began construction last year. It will generate 2,000 construction jobs and 3,500 permanent jobs once completed in 2016, and is expected to inject approximately $680m a year into the local economy.
- the Coast Connect, which is a state-funded public transport upgrade intended to stimulate economic growth. This is expected to be completed in stages from 2014 to 2019.
- the Airport Expansion Project, which will create 5,000 new permanent jobs upon completion. It is expected to generate around $1.6bn in regional economic benefit between 2015 and 2050 due to increased tourism, business growth and freight capacity.
As a result, the Sunshine Coast residential market has made solid progress in recent times, and there are numerous factors that suggest it will peak in the coming years, Walker says.
“The Sunny Coast lags behind Brisbane in the property cycle. So now we are seeing growth in the Brisbane market, we should expect to see growth start on the Coast in the next 12 to 18 months.”
In fact, there has already been growth in the Coast’s rental markets. The Real Estate Institute of Queensland’s latest Residential Rental Survey shows very tight vacancy rates. For example, the Maroochy and Noosa areas are seeing all-time lows with vacancies below 1%, while in Caloundra the vacancy rate has tightened to 1.3%.
Walker says there has been about 5% to 6% growth in the Coast’s rental market and this will drive price growth in future. “For the savvy investor, buying into this area is a chance to take advantage of the renewed infrastructure, an emerging luxury market, and the increase in buyers with cash.”
Compact housing best bet for investors
The latest Matusik Property Outlook for the Sunshine Coast supports Walker’s views. According to the report, the Coast is in recovery and a potential big winner in this property cycle.
It states that, for investors, strong employment growth combined with tight rental supply and underbuilding should make the Coast an attractive alternative to capital city investment. However, it recommends that investors should aim to buy compact housing, priced under $500,000, rather than traditional detached housing. It also suggests they buy and hold for a full cycle.
This suggestion is motivated by the demographic profile of the rental market, combined with affordability issues. The report states that, while the trend towards compact housing has just started, it is already quite pronounced in the rental market.
Chinese investors love Queensland
Meanwhile, the Queensland property market is proving to be particularly popular with Chinese investors, because of its affordable prices, strong infrastructure and education options.
A recent report from global law firm DLA Piper revealed that Chinese investors prefer South East Queensland, particularly Brisbane and the Gold Coast. Regional favourites include the Sunshine Coast, Toowoomba, Cairns, Rockhampton
According to Juwai.com chief executive Andrew Taylor, it is the state’s reasonable property prices that are the big drawcard for investors.
“In Queensland, investors can live like movie stars for less than a two-bedroom apartment in Beijing. Apartments in Beijing sell for 111% more than in Brisbane on a per-square-metre basis.”
Suburb to watch
At the centre of the Sunshine Coast’s hinterland sits the town of Nambour. Described as the area’s “best kept secret” by its fans, it is actually the administrative centre of the region.
Richard Krausz, from ReMax, says Nambour is the hub of the Sunshine Coast – close to all you could need and much more. “It is secluded, safe and scenic. Nambour is a growing town and a boon for investors; it is cosmopolitan, multicultural and a great place to live.”
Thanks to the local transit centre, it is particularly well served by public transport. Further, Sunshine Coast Airport is just 15 minutes from town, while Brisbane International Airport is only 90 minutes away.
Nambour boasts an excellent range of amenities and services, including parks, recreational facilities, and shopping outlets. It has a wide range of schools of all levels plus a TAFE college, and is close to the University of the Sunshine Coast.
Not only is Nambour one of the more affordable suburbs of the Sunshine Coast but it is also scenic and well endowed, Krausz says. “While it is away from the coastal/tourist-driven coastal strip, it is close enough for residents to enjoy those pleasures and to escape back to the country and what is still very much the rural hinterland.”
It is worth noting that, due to the presence of the Sunshine Coast Regional Council headquarters and the Nambour Hospital, the area’s rental market is a strong one.