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What’s really happening to the Gold Coast property market?

All that most people hear and read about the Gold Coast residential market is when something goes cactus or when a big sale takes place.

We have seen in recent weeks two high-value sales – most recently Dudley Quinlivan’s former Southport riverfront home, which sold for $9.5 million at auction and a few weeks prior to that, motor vehicle dealer John Zupp paid $12 million for a Sanctuary Cove home.

These two sales – the media are in a rush to tell us – are the highest paid prices for a Gold Coast residence in the last three years.  Well whoopee!

I was contacted in both cases by local media outlets to make comment.  I was happy to do so, but only if we discussed the Gold Coast market in more general terms and especially regarding its fundamentals.

The media’s interest sunk like a stone when I wasn’t prepared to preach doom and gloom or get into “well below replacement cost” chatter or embellish on the rumoured defects regarding the Quinlivan property and the potential repair bills.

So, I will use this space to highlight what I would have touched on.  It is something that very few understand about the Gold Coast, and to be honest, very few in the property industry these days appear to really have an understanding about the markets they are writing about.

The typical Gold Coast real estate cyclical

The Gold Coast housing cycle is very pronounced and history shows that this cycle, typically, has a six-year frequency.  Also, our analysis, going back to the 1960s, shows that the peaks are usually 250% higher (in sales/construction volumes) than the previous five-year averages, and the downturns are 50% lower.

Since I have been working in the industry, the Gold Coast experienced market peaks in 1988, 1992, 2002 and 2008.  Downturns were experienced in 1982, 1990, 1995, 2000 and 2012.

After close to 30 years in this business, you see certain patterns emerge.  History usually repeats.  The Gold Coast looks set to have a market peak in 2014-2015, followed by peaks in 2020 and 2026.  Downturns will also return and most likely in 2017-2018 and in 2023.  This isn’t gospel but history is on my side.

The market is turning

Just as we wrote about Brisbane turning the corner a month or so back, the Gold Coast seems to be following suite.  It isn’t there yet, but it looks to be heading down the right path.  Some tell-tale signs include:

  • Well-priced properties starting to sell soon after listing
  • Multiple offers starting to happen, again on well-priced properties
  • Some properties are now selling above reserve
  • Vacancy rates are on the decline and rents are rising
  • Fewer well-priced properties for sale – there is an actual shortage of saleable stock for sale across many parts of the Gold Coast
  • Time on the market, as a result, is starting to drop and in some cases dramatically
  • Intra-state and interstate interest is on the increase

My general reading is that people (me too!) are tired of having their life of hold and they want to get on and do things.  This especially applies on the Gold Coast, which has been in limbo for much longer than the rest of the country.  The recent state and local government changes help make this possible.

For mine, the Gold Coast has just about bottomed.  End values are likely to start growing during 2012/13 and most likely between 5% and 10%.  But here they might sit and for some time, because, as I will explain next week, the Goldie needs to supply more affordable housing stock.

The potential bump in Gold Coast prices over the next 12 to 18 months is re-correcting an overly bearish market.

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Michael Matusik is the director of independent property advisory Matusik Property Insights.  Matusik has helped over 550 new residential developments come to fruition and writes the weekly Matusik Missive.  The Matusik Missive is free, however, reprinting, republication or distribution of any portion of this material, or inclusion on any website, is strictly prohibited without the written permission of Matusik Property Insights and may incur a charge.



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Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive


'What’s really happening to the Gold Coast property market?' have 2 comments

  1. Avatar for Property Update

    July 27, 2012 @ 9:20 am Mike

    Over $60 Billion dollars worth of infrastructure work is taking place around the gold coast.
    If where going to see a peak in 2014-2015 then now is the time to buy, prices are very low and profits will be made. I have been buying every year since 2008 and believe it or not all of them are worth a lot more than I paid, backed by my own intense research and several valuers reports per property. Who said you can’t make money in a Down turn. For the novice investor or the home owner, now is a good time to buy property on the gold coast.

    Reply

  2. Avatar for Property Update

    August 7, 2012 @ 11:14 am Andrew

    I agree with your ‘overly bearish’ comment on the GC property market. However, I don’t have your level of confidence in a reasonable upturn in the next 18 months. I suggest that although history is a good guide, the missing variables are population growth from interstate migration and the loss of price advantage over comparable Melbourne and Sydney properties. I would like your thoughts on these two factors.

    Reply


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