Where are the next property hotspots on the Gold Coast and Sunshine Coast?
SARAH WEBB MAR 25, 2021
Property experts across south-east Queensland’s top coastal hot spots have revealed the next round of suburbs set for soaring price growth — offering budget-conscious sea changers and savvy investors a glimmer of hope in an ocean of skyrocketing prices.
While median house prices almost doubled to reach more than $1 million over the past five years in some coastal patches, a handful of suburbs such as Ashmore and Tugun on the Gold Coast and Noosaville and Old Tewantin on the Sunshine Coast were slated as the next pockets pegged for major growth where you can still bag a home for under $500,000.
The top tips have come hot on the heels of surging interstate migration and Domain’s 2020 fourth-quarter house-price data that revealed some suburbs such as Palm Beach on the Gold Coast, had exponential growth of more than 83 per cent over the past half-decade – bringing the median house price to $901,000.
Sunshine Beach, near Noosa, has had more property price growth than any other suburb in Queensland over the past five years. Photo: Supplied
On the Sunshine Coast, Sunrise Beach and Sunshine Beach were two of the standout performers after median prices shot up by 71.8 per cent over the past five years to reach a record height of $1,000,500 in the first, and a whopping 95 per cent in the latter to $1,802,500.
The Gold and Sunshine coasts have dominated property price growth in Queensland over the past five years. Out of the top 20 performing suburbs in the state, 17 of those were on the Gold or Sunshine Coast.
But, while the incredible growth has priced out many hopeful buyers and sent optimistic “sea changers” heading for the hills, Ray White Surfers Paradise CEO Andrew Bell said boom suburbs such as Palm Beach had sparked a cascading effect to the east of the city, with some forgotten spots lying in the path of property success.
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Boom suburbs of the Gold and Sunshine Coast over the past five years
SuburbProperty typeMedian price5-year growth
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“All along the coastline now [a lot of buyers are saying] ‘I’m priced out’. Palm Beach and Burleigh are the domain of the higher income purchasers and the old days of surfies buying a place by the beach side is out of the question, and that growth has been pretty uniform across the coastline,” Mr Bell said.
“But, if I could pick a place [pegged for major growth] it would be Ashmore. It’s a suburb that no one has really talked about and it still offers great value for money with good sized blocks of land while being incredibly central. It also has a good component of properties ready for renovation and ready to live.
“The places I’m also keeping an eye on now are older suburbs such as Labrador, Southport and Carrara — they are all places where homes were built 50 years ago. Now 40 and 60 years later you look at the homes and you think I wouldn’t want to live in them but there’s an opportunity to knock them down and rebuild.
“Then the other thing to watch for is new centres that have opened up. It was only a few years ago that Westfield opened at Coomera and that had an effect of triggering growth in all the surrounding areas.”
According to Domain data, the median house price for Ashmore was $605,000, ahead of Carrara at $550,000 and Coomera at $518,000.
The Gold Coast suburbs picked for growth
Median house price
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Amir Prestige principal Amir Mian said budget-conscious buyers looking to bag a bargain in a Gold Coast suburb brimming with potential should also cast their eyes to hidden hot spots such as Tugun and Hollywell.
The latest median house price for Tugun was clocked at $730,000, according to the Domain report.
“There are hidden pockets in the Surfers Paradise area such as Paradise Island and the older parts. They are still on the main river and they are still affordable with more growth to come,” Mr Mian said.
“So, if I’m a buyer those are the areas that are not on the radar you can still buy there for $450,000.
“But Tugun will be the next Palm Beach. You’ve got the underpass close to the airport and the beaches, they are just beautiful there.
On the Sunshine Coast, Tom Offermann, of Tom Offermann Real Estate, said while the swathe of “sea changers” from the nation’s capitals could further fuel house price growth in the area, opportunities to bag a bargain remained in and around Noosaville, with Tewantin and Peregian Springs two cheap hot spots that were set to soar.
“There’s still excellent value in and around Noosaville and the eastern beaches which includes Castaways Beach,” Mr Offermann said.
“First-home buyers are focusing on Tewantin and Peregian Springs and those places will absorb a lot of demand and we will see those prices go up.
“But Noosaville (in particular) is going through a metamorphosis with new developments and new restaurants and it is certainly the up-and-coming area in the region. It has three kilometres of riverfront parkland and the older homes in the area and apartments are making way for modern development including apartments.”
The Sunshine Coast suburbs picked for growth
Median house price
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Adrian Reed, of Reed and Co on the Sunshine Coast, agreed that Tewantin was a hot spot to watch, but also listed Eumundi as a place that could boom.
“Old Tewantin is particularly one I’m watching. It’s nice and close to the centre and it has had really hotly contested auctions and private treaty sales (recently),” Mr Reed said.
“In context of how much you’d have to pay in Noosaville, it’s half the price so those markets are prime to grow.
“Old Tewantin is where I’d put my money or anywhere within five kilometres of Noosa.”
The latest Domain figures revealed Tewantin had a median house price of $600,000, while Peregian Springs was slightly pricier at $661,100.
Noosaville median house prices were last clocked at a hefty $980,000.
Explainer: How Australia’s slowing population growth will affect property markets
Jim MaloReporter Oct 12, 2020
Australia’s population growth will grind to a near halt for the next two years because of coronavirus border closures, which is expected to smash GDP, the economy and harm property markets.
Budget documents reveal the federal government expects the rate of growth to fall from 1.2 per cent last financial year to 0.2 per cent this year, and then 0.4 per cent next year — the slowest growth in a century.
The sudden loss of international migration has already hit the economy and property markets across the country, with low-cost, investor-class housing losing value as international students and new arrivals disappeared nearly overnight.
What does this mean for the wider property market now and into the future?
First, what are the numbers?
The 1 percentage point fall from 1.2 per cent to 0.2 per cent is mostly due to a drop in international arrivals.
AMP Capital chief economist Shane Oliver said the drop was so large that births were barely offsetting the shortfall.
“Population growth usually sits at about 1.7 per cent. About two-thirds of that are from immigration and the rest is from natural growth,” the respected economist said. “Usually we see about 240,000 net immigrants coming here each year. This year the government is forecasting that to be negative 70,000.
“That’s a loss of 300,000 relative to what we normally get. But if you’ve got a huge collapse in immigration, it’s largely offsetting any natural growth in the population.”
Why is that bad?
There are a few reasons. Demographer Simon Kuestenmacher and Dr Oliver agree three major issues are at stake. The country’s GDP will be lower, the workforce will shed middle-class jobs which will weaken the economy, and property markets will take a hit.
While GDP isn’t a direct measure of how life is for most Australians, its growth has been almost directly linked to the amount of value new members of the workforce bring to the economy, as they are consumers and produce value for their employers.
Most of this growth in the workforce has come from immigrants for some time.
“The simple thing is everyone who has a job creates money for the country and creates GDP,” data-interpretation expert Mr Kuestenmacher said. “In the past couple of decades Australia used migration-based population growth to amp up GDP.
“It worked like a charm and it will once COVID is over.”
How does that affect the economy?
The economy, in part, relies on a steady stream of workers to continue growing. As they produce more, GDP goes up.
The challenge presented by losing all international migration is not just the number of workers, but also the jobs they do.
Mr Kuestenmacher is concerned the country’s middle class could shrink further without skilled workers.
“Australia used to have 30 per cent in the middle-skilled jobs in the 1960s. Now this is down to 13 per cent,” he said. “We are shrinking them away. We then need to upskill our existing workforce because we’re not taking in migrants.”
Mr Kuestenmacher praised the Morrison government’s budget for its focus on supporting the construction sector, as this would keep these middle-skilled positions open. However he said Australians needed to be able to reskill into the work if necessary.
“TAFEs must be free,” Mr Kuestenmacher said. “They’re the most important vehicle to get low-skilled people into middle-skill jobs.”
Dr Oliver agreed this was an issue and said the loss of the middle class was making both society and the economy less resistant to external shocks like pandemics.
“If you take away migrants the economy will lose that dynamism,” he said. “[The loss of the middle class] contributes to fragility in society. The middle class is a positive in many Western countries. It’s quite stable.
“These people are comfortable and they just want to go on with their lives and raise their children, but now they’re falling out on the low end.”
The construction sector may be supported for now, Dr Oliver said, but may take a hit as reduced demand for homes from new arrivals takes the wind out of the new-builds market – although that may take some time to set in.
“The sector that would be most hit by that will be the housing sector. Every year we need around 175,000 dwellings … to satisfy underlying demand,” he said. “It’s driven by people already in Australia leaving the family home and starting their own home or it could be an immigrant coming to Australia.
“[The loss of immigration] reduces underlying demand by about 100,000 a year, roughly speaking.
“If the norm is we need 175,000, we’ll only need 75,000.”
Mr Oliver said this would have a knock-on effect on other sectors.
“It means less housing construction, less property transactions, which is bad for agents, less people moving so moving companies will be hit and less demand for things that go into houses like carpets, paint, TVs, et cetera.”
What about the property market?
“The lack of immigration in the next couple of years will definitely impact property,” The Agency chief executive Matt Lahood said. “That’s definitely going to hurt the real estate sector.”
The boss of The Agency, which has offices in NSW, Victoria, Queensland and Western Australia, said it would be off-the-plan apartments and rentals that would be hit at first.
“It relies heavily on overseas students, people coming in, people who then rent first before they buy,” he said. “We’re going to lose that.”
Mr Lahood expects the existing home market in middle suburbia would not see price falls, providing the malaise at the bottom of the market didn’t set in.
“A lot of people [who are buying now] sold their properties in December last year and January and February,” he said. “A lot of our buyers at the moment are people who couldn’t find anything in March, April, June.
“That’s the reason the market’s been held up … we won’t see the effect of immigration in the next few years or so.”
Housing markets held by owner-occupiers will manage to escape price pain, for now. Photo: Peter Rae
Mr Lahood said the concessions for first-home buyers would prevent prices of investor-class housing falling too far because the extended scheme is restricted to new homes.
“Having the first-home loan scheme targeted at younger people will put a floor under the market for the next couple of years,” he said.
Dr Oliver said while the markets for existing and new houses were currently supported by pent-up demand and government stimulus respectively, a reckoning could come for both.
“That chain of events has now been disrupted. It will initially show up in units, but it will eventually show up in houses,” he said. “It’s [dictated by] demand for dwellings, and this year the demand will be about 100,000 lower.
“Things are happening now, but there is a freight train which is coming down the track.”
Which cities will be hit the worst?
Mr Lahood said Sydney and Melbourne were the most exposed, and would bear the brunt.
“Melbourne is heavily targeted with rentals, same with the eastern suburbs in Sydney,” he said. “And then obviously the uni accommodation they have there as well. They’re not going to be seeing students.”
Dr Oliver said the issues in the student and rental-heavy areas could spread if left unchecked, but for now areas that were skewed to owner occupiers would be safe.
Mr Lahood said holiday locations on the Sunshine and Gold Coasts may also take a hit, in part because of the closed internal borders.
Other areas of the country – Perth, Adelaide, Canberra and the rest – would be largely unaffected for the time being, he said.
In Perth and Darwin, house prices were emerging from years of falls and stagnation and momentum was insulating the local markets from shocks.
Canberra was protected by its perennial public service sector, he said.
10 tips for getting started in property investment
When it comes to building a retirement nest egg for the future, property is still regarded as one of the safest long-term investments.
While some investors may want to buy a property and rent it out straight away, others may choose to live in the home while they renovate it. Investing in bricks and mortar can be a great way to create wealth, but there are some golden rules to consider before taking the plunge into property investment.
1. Know your budget
Before investing in property it's vital to have a thorough understanding of your cash flow. Also, ask your bank for a pre-approval of your investment loan, so you know how much you're able to borrow before you start hunting for properties.
2. Don't underestimate ongoing costs
Make sure you budget enough for rates, insurance and general repairs. And when you have purchased your ideal investment property do what you can to prevent costly maintenance issues arising, such as replace ageing taps.
3. Buy in a growth area
Try to choose an investment property in an area where there is strong demand for rental accommodation. Buying a property close to transport, universities and schools will make it more attractive to renters.
4. Be realistic about your investment goals
Are you looking for fast capital growth or wanting to hold the property long-term? During boom periods, it's much easier to renovate properties and turn them over for a quick profit. In slower economic times, it may take many years to achieve the same growth. While a home on a steep block may have a stunning view, it could be a nightmare to renovate due to retaining or excavation costs
5. Build sweat equity
Paying tradesmen to renovate your investment property is costly. If you're prepared to get your hands dirty you can save money and increase your profit margin by doing the work yourself.
6. Look for liveable not luxury
Remember a rental property only has to be clean and functional. Don't get sucked into buying a property simply because it has a stylish interior.
7. Buy with your head not your heart
When house hunting it's very easy to get caught up in emotions. While a home on a steep block may have a stunning view, it could be a nightmare to renovate due to retaining or excavation costs. Be sure you weigh up the pros and cons.
8. Think carefully before negative gearing
If your repayments on the investment loan won't be fully covered by the rent, your property will be negatively geared. While this can have tax advantages, it can also lead to financial stress if you don't have enough cash flow to cover the loan repayments, rates or body corporate fees, so consider your budget carefully before buying
9. Still paying off your own home?
It isn't necessary to have your own home fully paid off before buying an investment property, however it is important to be comfortable with your current debt levels. Ideally you'd want to have a large portion of your own home paid off and other debts, such as credit cards, under control.
10. Get a building inspection
Before signing a purchase contract, take the time to understand the building report to avoid expensive repairs down the track. Termites are one potential problem to watch out for.
2017 outlook for Chinese outbound property investment By Juwai, 16 January 2017
With Chinese buyers being a force to reckon with in international real estate markets, how will Chinese outbound property investment fare in 2017? We take a look at 3 key things to note on Chinese homebuying abroad amidst rising attention on China, ranging from its policies and reforms to its economic growth and currency strength.
#1 Stable growth predicted for China economy
China’s GDP growth remained steady at 6.7% in 20161, and is forecast to maintain a growth of around 6.5% in 2017.2
Despite a slight slowdown, that’s still an enviable growth compared to 2017 GDP growth forecasts of 2.2% in the US, 1.9% in Canada, 1.0% in the UK, and 0.6% in Japan.3
Besides that, both China’s factories and services closed out 2016 on relatively strong notes as well, which also bodes well for China’s economy in 2017.
According to Bloomberg, China’s manufacturing purchasing managers index steadied near a post-2012 high in December, inching down from 51.7 to 51.4, while the non-manufacturing PMI dipped slightly from a two-year high of 54.7 in November to 54.5.1
Those are telling indications that growth is strong enough in China for its policy makers to press for economic reforms in 2017. Thus, China’s economy is generally expected to do well in 2017, and this will create more wealth to power Chinese overseas buying.
#2 Currency devaluation motivating Chinese outbound investment
According to a recent report released by Mercatur Institute for China Studies (MERICS) and the Rhodium Group, China’s foreign direct investment (FDI) charted a record $190 billion in 2016.4
That’s a 40% increase, which perfectly showcases the speed of China’s outbound investment expansion.4 With the Chinese yuan currently under pressure due to concerns over a devaluation, Chinese property investors are especially incentivised to buy overseas properties.
This is driven by the fact that many Chinese investors are already intending to increase their offshore holdings in the next two years (mostly to hedge the risk of a falling RMB), and the prevalent trend of real estate being the most favoured asset for Chinese.
These two factors combined make international property one of the top choices for Chinese when it comes to overseas investment and global asset allocation, and this rings true particularly true with China’s rich and wealthy.
Overseas property purchases are the most popular form of overseas investment for China’s high net worth individuals (HNWIs), says Hurun Report.5
In fact, 60% of China’s high net worth individuals (HNWIs) plan to invest in overseas property over the next three years – that means approximately 800,000 Chinese real estate buyers are looking to purchase overseas.5
#3 Minimal impact on Chinese individuals investing abroad
How will the recent tightening of control on personal forex purchases in China potentially impact Chinese outbound real estate investment?
While China’s capital controls may scale back some Chinese billion-dollar commercial property investments abroad, it probably will not have too much impact on mainland individuals and families buying homes overseas.
After all, despite existing restrictions on exchanging more than $50,000 of currency a year (which was already in effect since 2007), almost three-quarters of home purchases in the US last year by individual Chinese buyers were all-cash, and they paid an average of $800,000, twice what other foreigners spend.3
Fact is, notwithstanding the news, there is actually no change in the amount of money Chinese are permitted to move overseas, nor what they can do with it once they do move it overseas.
The $50,000 annual quota of foreign currency officially permitted to Chinese citizens was first increased from $20,000 on 1 February 2007.6
So, in fact, we have seen the Chinese gradually loosen up restrictions over time. What's new, though, is that Chinese individuals now have to officially declare on an application form as to why they need foreign exchange, and when they will spend it.7
That aside, considering outbound tourism and studying abroad – two major drivers that motivate Chinese property investors to look abroad – are not affected, we further opine that Chinese homebuying abroad will unlikely suffer any meaningful impact from this new forex ruling change. And while China’s international property investment may have touched all-time highs, we believe that it will continue setting records in the years to come.
When does it make sense to buy a property sight unseen?
SUE WILLIAMS DOMAIN REPORTER | OCT 5, 2020
Buying a property sight unseen was once only for gamblers with a dangerous appetite for risk. But it has become a growing trend in some
situations, as a result of both COVID-19-related travel restrictions and the new technology that’s developed as a result.
“We sold $33.5 millions worth in the three months since April,” said Adrian Reed of Noosa’s Reed & Co Estate Agents.
“People are getting more used to being given information in a virtual environment, and have embraced video-conferencing and all the
technology they now have. I think as a way of buying property, this is here to stay.”
Drone footage offering a bird’s eye view of a home, its aspect and 360-degree aerials of its position in the neighbourhood, as well as virtual tours, live streaming of walk-throughs, a huge volume of photos and online building and pest inspection reports are now giving potential purchasers unprecedented ways of appraising property.
“It means suddenly people are feeling much more confident about judging, sight unseen, whether a home is right for them,” said Brian White,
joint chairman of Ray White Group. “Some were prepared to buy before like that, but only if the property was a bargain. “Now people are prepared to be competitive in pricing, knowing they have to compete with others buying the same way. And I think the fact that, so far, we haven’t heard of any bad experiences or misrepresentation is encouraging people and they’re thinking afterwards that thank God they were prepared to take the chance!”
Because of Queensland’s closed borders, many sight-unseen buys have been enacted in that state by Sydneysiders, Melburnians, expats and
overseas purchasers. Andrew Bell, chief executive of the Ray White Surfers Paradise Group, sold nine properties worth a total of $4.5 million on one weekend six weeks ago without a single physical viewing. Four buyers were from Victoria, three from NSW, one from the ACT and one from South Austrlia.
Sources: 1. Bloomberg: China’s factories, services cap year of gains as prices rise; 2. China State Information Center (SIC); 3. IMF World Economic Outlook (2017); 4. Mercator Institute for China Studies (MERICS) and the Rhodium Group “Record Flows and Growing Imbalances: Chinese Investment in Europe in 2016”; 5. Hurun Report: Immigration and Chinese HNWI 2016; 6. China Knowledge: Managing fallout from China’s US$1T reserves; 7. Financial Times: China/US real estate: safe as houses premium;
Australian housing prices soar by 500% over past 25 years - REIA
Real Estate Institute of Australia (REIA) President, Adrian Kelly said housing investors have been driven more by expected capital gains rather than rental yields.
Australian housing prices have soared by more than 500% over the past 25 years but while capital values have grown, yields have fallen to all-time lows.
Real Estate Institute of Australia (REIA) President, Adrian Kelly said housing investors have been driven more by expected capital gains rather than rental yields.
According to data from REIA, the median price for Australian housing inflated from $160,000 in 1996 to $825,000 in 2020.
It’s a tale of two cities with other dwellings, such as units and apartments seeing capital values increase by just over 400% in comparison however these assets produce higher yields.
The data shows that over the past five years, housing grew by 25%, from a median of $683,000 to $825,000 while other dwellings rose by 10% to $600,000.
Mr Kelly said that over the 25-year period, Australian housing yields tightened from 5.1% to 2.9% while other dwellings have recorded a drop in yields but not as dramatic, falling from 5.2.% to 3.7%,” he said.
“Houses in Darwin have the highest return averaging 4.2%. In 1996, housing investments in Darwin were yielding 6.4%.
“Melbourne and Sydney have always had the lowest yields both falling from around 4% in 1996 to just 1.8% in 2020.
“The pandemic saw Melbourne and Sydney experience rising vacancies with Melbourne now the highest in Australia at 5% while Sydney is currently at 3.7%,” he said.
Mr Kelly said that there has been a decline in investors in the market in recent times particularly as concerns have emerged with moratoriums on evictions and rising vacancies.
The increasing vacancy rates had made residential property less attractive as a proposition for investment particularly in inner Sydney and Melbourne.
“Despite rising vacancies and the low yields, we are starting to see investors reemerge as they respond to a rising market with further growth expectations and low borrowing costs,” he added
REIA’s latest report, Real Estate Market Facts found that in the December quarter 2020, the weighted average capital city median price for both houses and other dwellings increased in the Australian residential property market.
“The weighted average capital city median price increased by 6.0% for houses and by 0.9% for other dwellings. The weighted average median house price for the eight capital cities increased to $825,205. Over the quarter, the median house price increased in all capital cities.
“At $1,211,488, Sydney’s median house price continues to be the highest amongst the capital cities, 46.8% higher than the national average. At $490,000 Perth has the lowest median house price across Australian capital cities, 40.6% lower than the national average.”