Property investors will make a cautious comeback in 2021 as COVID-normal conditions bring renewed confidence, with increased interest in coastal locations and Surfers Paradise maintaining its mantle as top choice for buyers looking to profit from the market.
While owner-occupiers dominated through 2020, Gold Coast suburbs are proving popular with investors this year, latest data on inquiries from REA shows.
Nationally, Surfers Paradise kept its number one ranking for investors over the last 12 months, with inquiries on realestate.com.au up 28 per cent, while Coolangatta posted the largest year-on-year growth among Coast suburbs, up 188 per cent.
Mermaid Beach and Robina also ranked highly, up 170 per cent and 162 per cent respectively.
Local property analyst Colleen Coyne tipped a comeback on the back of interest rates remaining at historic lows until at least 2024, with investor loans increasing nationally by 13 per cent in December to their highest point since mid-2018.
“Investors represented only 25 per cent of all residential loans in December 2020, but the low vacancy rates of less than 1 per cent on the Gold Coast and signs of rising rents for houses in areas like Coomera and Pimpama should encourage them into this market,” Ms Coyne said.
She predicted rising demand for affordable house and land packages or townhouses and apartment developments in the northern growth areas.
“There are still reasons for investors to be cautious about metropolitan inner cities, with vacancies still high and rents down.
“However, vacancies in these markets are down from earlier in 2020. Assuming this trend continues, this could see investors return, possibly in the second half of 2021, responding to more workers returning to offices and the vaccines permitting some return of international visitors and students,” she said.
New research from Property Talk Australia with the Real Estate Buyers Agents Association (REBAA) found investors would be a dominant force in 2021, with 43 per cent of homeowners surveyed looking to purchase a subsequent property.
“Property investors are seeing the potential of manufacturing capital growth in the current market with almost a quarter of respondents looking for a property with renovation potential,” said REBAA president Cate Bakos.
Properties with subdivision potential, granny flats or separate tenancies were most attractive, with 84 per cent of investors planning a passive buy and hold investment strategy, and remaining 16 per cent looking to build, renovate or develop.
Ray White Surfers Paradise Group CEO Andrew Bell said investors were desperately needed to ease the squeeze on the Coast’s rental market, with vacancies dipping to less than 1 per cent in 2020 and below .3 per cent in some areas.
“There are a reasonable number of investors that are out in the marketplace, but that number is vastly inadequate for what is needed and I’m a little surprised that investors haven’t picked up on what is happening in the market,” Mr Bell said.
While investors may be put off by heated competition from owner-occupiers, Mr Bell said current market conditions allowed for positive gearing to draw an immediate income from their property.
“Now should be the most compelling time of all for investors to buy,” he said.
Buyers agent Matt Srama, of the Srama Group, said beachside property would continue to attract heated interest through 2021, with a lack of land supply and tight rental vacancies rates coupled with strong economic drivers supporting long-term growth.
“My biggest tip around Gold Coast property is that there’s markets within markets, and for investors there are a lot of micro-factors you will need to be aware of,” he said.
“There are different suburbs, streets, dwelling types and price points that all offer varied returns on the Gold Coast and so you will need to look at each sort of market separately and understand which are more appealing.”
Investors looking for a property to rent should seek one with “owner-occupier appeal”.
“Ask yourself, ‘would a family or an owner-occupier like this property, or could I manufacture equity through renovating it to make it more appealing?’
“You want to buy something that is scarce in terms of the land size or dwelling type, or something that has got a bit of x-factor to it, or that you can add x-factor to.
“You don’t want to buy a property that is identical to every other dwelling in the street,” he said.
Sydney property investor Natalie Sutton engaged Mr Srama to secure a Palm Beach townhouse, which was tenanted almost immediately.
“I love the Gold Coast lifestyle and I wanted a property that was an investment but hopefully I could move there in a couple of years’ time,” Ms Sutton said.
“I saw the Gold Coast market was going nuts and I didn’t want to miss out. I was ready to buy my first property but I had to move quickly, because in Sydney for the same money you can only buy a really run-down apartment.”