The boom is over in the big smoke markets, but there’s a reason house prices keep rising on the Gold Coast.
The release of CoreLogic’s home value index confirmed house prices had fallen in the big smoke markets of Sydney and Melbourne, by 0.2 and 0.1 per cent respectively, for the first time since the pandemic.
Nationwide, REA Group’s PropTrack Home Price Index put growth at just 0.34 per cent in March – slower than any other month since May 2020.
Whispers of a downturn swirling alongside looming interest rate rises grew louder, while economists finally said it: the boom is over.
Not in Queensland though.
The home value index showed further gains of two per cent in March, with Eliza Owens, CoreLogic’s head of residential research, saying the Sunshine State, “continued to show stellar growth performance”.
But how much longer can it last?
Property prices in many suburbs have spiked again this year. For houses, median prices increased by up to around 10 per cent; and up to 14.3 per cent for the strongest unit market – Oxenford.
But even those heady quarterly gains across the Gold Coast’s suburbs were mostly well down on what we’ve seen through 2021.
And that’s not a bad thing.
Local real estate industry sources concede a softening of buyer activity and inquiry.
Less homes are going to auction, while some have sold just before they were due to go under the hammer – perhaps to offset an expected buzzkill come the big day.
But the consequence of this quieter landscape should be a plateauing of house prices on the Gold Coast, rather than steep decline.
Underpinning this is the consensus that our local real estate market has been undervalued for some years, while the city’s liveability has leaped ahead at the same time.
And while homeowners may love to see their golden goose in the shape of equity grow ever fatter, housing affordability is the bigger issue gripping our market.
Ray White Surfers Paradise CEO Andrew Bell says it’s simple economics of supply and demand.
For two years now, Mr Bell and a chorus of Coast real estate agents have pleaded for more vendors to list their properties for sale to meet the huge demand which has come partly from record interstate migration to the regions.
“There is simply not a sufficient supply of properties to meet the demand, and as result property prices and rental prices have had a sudden surge that has added substantially to this current discussion about the rapid rise in the cost of living,” Mr Bell says.
Talking on the Federal Budget and what it means for the property market, he says:
“Given that housing cost is, for most people, the singular biggest cost of living, there were no real measures by either party to address this particular issue.
“For both properties to purchase to live in or rental properties to live in, supply is our major issue, affordable real estate in particular.”
Going back to the home value index, the usual suspects – Palm Beach, Burleigh Heads, Mermaid Beach, Surfers Paradise – weren’t our front runners this quarter.
Instead, it was Pacific Pines, the northern suburb where hundreds of investors parked their money into overpriced new developments a decade or so ago, with minimal return since.
Young families flocked there for cheap rentals, and a strong community spirit flourished.
Now, those investors have done their time and are selling out for a profit perhaps even they couldn’t have imagined. Not to new investors, but to owner-occupiers priced out of the Coast’s more central suburbs. House prices in Pacific Pines rose 11.3 per cent in the three months to March, hitting a median of $902,180.
And so longterm tenants are forced to compete for a dwindling pool of available rental properties, while landlords respond to the lack of supply by hiking the rent.
Tim Wolff, of LJ Hooker in Pacific Pines, says the percentage of investor-owned properties in the suburb has shrunk from 40 to 25 per cent.
“A lot of investors are now priced out – they are seeing better value further out. We are seeing families, single parent families, as well as first home buyers wanting to purchase to move into those properties that were rental stock,” Mr Wolff says.
“But that’s obviously displacing those families who were in there, renting, who have children in school in the area and are now trying to get into something else here.
“As a sales agent who doesn’t do property management, I would get at least two to three calls a week from people asking for help to find a place to rent, and that is the same with every member of our team,” he says.