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Golden property triangle in Queensland

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The Gold Coast has been highlighted in a recent report,Moreton Investor as one of the country’s top performing areas, with a significant increase in prices and sales volumes over the past year.

A recent report on Australia’s major regional markets has highlighted the Gold Coast as one of the country’s top performing areas, with a significant increase in prices and sales volumes over the past year.

The report, released by CoreLogic in May, shows the Gold Coast’s median house price increased 7.2% to $563,500 and 4.8% to $370,000 for apartments over the year to March 2016.

The number of sales is also up 7% and current sales activity is 24% above the five-year average for the city. The average number of days it takes a property to sell has also fallen by four days for both houses (70 days) and apartments (87 days).

There’s also good news in the rental market, with weekly rents up 4.2% to $500 per week for houses (an average yield of 5.1%) and 5.4% to $390 per week for apartments (average yield now 5.9%).

I’ve been talking about the Golden Triangle in South East Queensland for some time now as the pick of the Australian markets, and for different reasons, I see Brisbane, the Gold Coast, Sunshine Coast and Toowoomba being primed for good growth. The 2018 Commonwealth Games will provide an even greater boost to the Gold Coast in particular.

Demand on the Gold Coast is higher due to a lack of stock; more Chinese investors, more interstate investors (particularly from Sydney and Melbourne), and the generation of more new jobs mainly for Commonwealth Games infrastructure and many new residential apartment projects.

The picture right now is rosy, but the future picture is even better.

This is a city that suffered tremendously during the GFC. But in property, what goes down must eventually go back up if the fundamentals are good. And on the Gold Coast, the fundamentals making this an appealing market are improving every year.

Last year, the country’s most authoritative social demographer, Bernard Salt, produced a report called ‘Beyond the Horizon’. The reports seeks to forecast what the Gold Coast will look like by 2050.

Right now, it’s the sixth largest city in Australia with more than 600,000 residents. The population is expected to double in a city that is only 70km from north to south. What will that do to property prices?

This is a city ‘under renovation’ in many ways, the most important being the expansion of its economic base, so it will not be so heavily reliant on retail, tourism and construction industries, which have made the city vulnerable during economic downturns.

But a change is coming with the strategic development of a broader economic base focused on knowledge industries such as health and education.

Knowledge industries are important because it is envisaged that knowledge workers will have more scope to choose where they want to work and live, and the Gold Coast’s lifestyle and relative affordability will be a major drawcard for highly-paid, highly-skilled expert workers.

The city’s 200-hectare Health and Knowledge Precinct is rapidly growing. It incorporates the new Gold Coast University Hospital, research and allied health facilities; and a master planned mixed use community. It is also home to Griffith University, ranked among the world’s top 5% of universities with $500 million invested in recent years to improve its facilities.

Tourism will remain a huge sector for the Gold Coast. In 2013, the city was accommodating 62,000 visitors per night. By 2050, Mr Salt projects the city will host 99,000 on average per night.

Construction should also remain strong for two reasons – the ongoing desire by Chinese and local developers to build along the coast; and the need for more houses in the greenfield suburban corridor between Mudgeeraba and Pimpama.

The Gold Coast of the future will be an international city, with millions already being invested into the Gold Coast Airport to accommodate greater demand and more international routes.

China is the Gold Coast’s No. 1 source market for foreign investment and international tourists. The city is welcoming Chinese interest, with major Chinese developers such as the Wanda and Ridong groups building on the coast and the local council investing $6.8m to build a Chinatown in Southport.

According to Mr Salt, the number of Asian-born residents on the Gold Coast is projected to quadruple by 2050.

All in all, there are exciting times ahead. The Gold Coast, despite recent price growth, is still a ‘Buy’ market in my view. There is plenty of opportunity, especially for cashed-up buyers from Sydney and Melbourne, to buy well on the Gold Coast for investment or a wonderful lifestyle change.

Original article published at www.switzer.com.au by John McGrath 14/6/16

Opinion

Experts warn of ‘debt bomb’ as housing downturn worsens

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debt bomb
AUSTRALIA is facing a “debt crisis” — and the property market and our entire economy are at risk as a result.

That’s according to the sobering 60 Minutes segment Bricks and Slaughter which aired last night, revealing the country’s property downturn was just the tip of the iceberg.

According to reporter Tom Steinfort, the current slump is actually “more like falling off a cliff”, with a number of real estate and finance experts claiming houses could plummet in value by up to 40 per cent in the next 12 months.

If that happens, it would also cause an economic “catastrophe”.

Mr Steinfort spoke with data scientist Martin North from Digital Finance Analytics, who said Australia was uniquely vulnerable when it came to an economic crash tied to a property downturn.

“At the worst end of the spectrum, if everything turns against us we could see property prices 40-45 per cent down from their peaks, which is a huge deal,” he said.

“There’s $1.7 trillion held by the banks in mortgages for owner-occupies and investors. And that’s about 65 per cent of their total lending.

“That’s higher than any other country in the Western world by a long way.

“There’s probably no country in the world more susceptible to the ramifications of a housing crash than Australia. We are uniquely exposed at the moment.”

Mr North said Australia was now in the same position as the US was back in 2006 and 2007 — a position which triggered an economic collapse.

“As a society, and as a government, and as a regulatory system, we’re all banking on the home price engine that just goes on giving and giving and giving. It’s not going to,” he said.

“We’ve got a debt bomb, we’ve got a debt crisis and at some point it’s going to explode in our face.”

debt bomb

Melbourne homeowner Mohammed Souid told 60 Minutes his family was experiencing mortgage stress. Picture: 60 MinutesSource:Supplied

It’s a sentiment shared by Laing and Simmons real estate agent Peter Younan, who said the median house price in his patch in Granville in Sydney’s west had dropped from $1.2 million to $1 million in just one year — a shocking $200,000 plummet.

He said foreclosures had also risen by 600 per cent in the region.

“The mortgage stress is definitely being felt especially in this area,” he said.

60 Minutes also spoke with several Aussie homeowners who gave harrowing details of the stress they faced trying to pay off their mortgages, including having their power turned off and being “hounded’ by their banks.

What does a million dollars buy in Aussie capital cities?

debt bomb

Market analyst Louis Christopher of SQM Research said the market had been “clearly overvalued”, labelling the downturn as the “correction we had to have” — at least in Sydney and Melbourne.

“On our numbers, Sydney was effectively over 40 per cent overvalued. And Melbourne was overvalued by about the same amount,” he said.

But property investor Bushy Martin said the blame lay squarely at the feet of buyers who “mortgaged themselves up to their eyeballs” in a bid to snap up dream homes before being able to afford them.

debt bomb

Property investor Bushy Martin says homeowners are to blame for the crisis. Picture: 60 MinutesSource:Supplied

However, the segment has also sparked backlash online, with some claiming the situation had been exaggerated.

One Reddit user branded the report as an example of “alarmist journalism and scare tactics”, while another said it was “dramatic and cringe-worthy”.

Others also criticised the segment for making it seem like all homeowners would be affected, when the downturn was actually mainly focused in the NSW and Victorian capitals.

And some said it was unfair to blame the banks for the situation, and that homeowners needed to take responsibility for their own decisions.

That was in response to comments made by one homeowner on the program, who said the bank had “suddenly switched the mortgage to interest and principal”, raising his repayments by 57 per cent.

“The interest only part annoyed me the most. The bank didn’t ‘suddenly change’ your repayment from (interest only) to (Principal and interest) your IO term expired. You a) knew this would happen and b) assumed the bank would renew it when it expired. I hope this speculator gets burnt first,” one Reddit user said.

Related article: Experts warn of ‘debt bomb’ as housing downturn worsens

Source: news.com.au

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Opinion

Queensland is the next property hotspot, experts say

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Queensland is the next property hotspot, experts say

As New South Wales and Victoria continue to experience weakness. Queensland is expected to take the lead, a National Australia Bank (NAB) poll of property professionals revealed.

According to the survey, industry experts project house prices in Queensland to increase by 0.7% next year and 1.3% in two years.

Some areas seen to perform strongly over the next year include Brisbane, Cairns, the Gold Coast, and the Sunshine Coast. Out of the suburbs, Coomera and New Farm are expected to realize robust gains.

Meanwhile, Queensland’s rental market is also poised to enjoy an upward boost, growing by 1.3% next year and 1.9% in two years. This is despite the stricter rules on housing investment.

The respondents of the survey also expect Queensland to retain foreign buyer interest. In fact, the share of foreign sales hit a four-year high of 22.8% over the previous quarter.

The results of the survey go against NAB’s own projection of the market. For instance, the bank expects house prices to remain flat in Brisbane over the next three years. Unit prices, on the other hand, is seen to fall by 4.5% over the next year.

NAB chief economist Alan Oster said Brisbane’s housing market seemed to be going sideways and its unit market still creates concern.

“It hasn’t peaked yet, so that’s good. We’re seeing quite strong economic activity in Queensland, so that always helps,” Oster said, as quoted by The Courier-Mail.

Source: brisbaneinvestor.com.au

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Opinion

Gold Coast house values record the biggest growth in Queensland

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Gold Coast house values record the biggest growth in Queensland

The Gold Coast has recorded the strongest growth in house prices in Queensland over the past 12 months.

GOLD Coast house prices are leading the way in Queensland, up six per cent in the past 12 months to an average $620,000.

The latest figures by the Real Estate Institute of Queensland show homes on the Glitter Strip are $35,000 more on the same time last year.

Unit prices are up 1.9 per cent to $428,000.

Gold Coast house values record the biggest growth in Queensland
REIQ data reveals houses on the Glitter Strip are worth $35,000 on the same time last year.

REIQ’s Queensland Market Monitor for March said the strong population growth came on the back of infrastructure projects such as the $550 million Gold Coast Health and Knowledge Precinct and M1 upgrades.

“The property market has been one of the big winners from the sporting event as the $1.5 billion infrastructure investment has boosted confidence and demand for housing in the region,” the report stated.

“We expect house prices will show an upward path in 2018. However, this growth will most likely be more moderate.”

A quiet real estate period leading up to, and during, the Commonwealth Games likely contributed to a slight drop (-0.3 per cent) in the March quarterly median sales price, the report reveals.

Gold Coast house values record the biggest growth in Queensland
Andrew Henderson says a growing population and employment opportunities were contributing to a strong property market. Picture: Jerad Williams

REIQ Gold Coast zone chairman Andrew Henderson said he expected interstate migration to continue to benefit the city.

“I expect the market to remain strong,” he said.

“There is a heavy amount of interstate buyers moving here.

“I was at an auction recently where the winning bidder was from Sydney and the underbidder was from Melbourne.”

Mr Henderson said growing employment opportunities were also attracting homebuyers to the city.

Gold Coast house values record the biggest growth in Queensland
The Gold Coast property market is expected to remain strong.

“We have some of the best health facilities in the country and our universities are world recognised.

“Those two things alone complement the tourism industry and the lifestyle aspects that the Coast offers.”

The report found the fastest-selling suburbs on the Coast included Worongary, Merrimac, Highland Park, Mudgeeraba and Carrara.

It also revealed the rental vacancy held tight throughout the first quarter of the year at 1.1 per cent.

Gold Coast house values record the biggest growth in Queensland
Andrew Bell says the Coast had evolved from a tourist town into a vibrant city with an expanding economy. Picture Mike Batterham

Ray White Surfers Paradise Group CEO Andrew Bell said the Games heralded the next chapter for the Coast, as it evolved from a tourist town into a vibrant city with an expanding economy.

“The city’s property market is riding the irreversible momentum that has now come to the Gold Coast in terms of economic diversity and with more employment options we will need more housing options for people,” Mr Bell said.

“We are no longer going to be subject to tourism upsides and downsides as we were in the past because our economy has well and truly diversified beyond just tourism.”

Source: brisbaneinvestor.com.au

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