Gold Coast Property Market Update May 2019

Given the vast majority of new land estates are in the northern fringe of the Gold Coast, we will concentrate on that area. The estates vary in land value for the same size lots by up to 15 per cent depending on the quality of the estate and homes built within it. This is often the result of the target market, ie owner-occupier estates are usually more valuable and prices hold firmer than investor market driven areas.

The southern land estates have limited balance stock, with the exception of resale lots, Altitude, Banora Point and a new release at Casuarina, NSW which has reportedly sold out off the plan.

Many of the housing estates in the northern fringe region have been targeted at interstate investors but in the past six to twelve months, there was a noticeable decline in the number of sales of land and building packages in this segment of the market. Consequently, some developers found themselves having to rely on first home buyers to ensure the continuity of their projects. In some estates, we have noticed a slowdown in construction activity, especially for those with a heavier dependence on interstate investors for their products. In recent months, some estates in Pimpama and Coomera have expanded to new stages, having sold all or almost all of the earlier stages during the period of stronger demand. The new home sites appear to be impacted by the slower take up as many are left vacant for a long time.

Despite the slower sales, several new estates are popping up along Foxwell Road in Coomera, riding on the hope of stronger demand driven by the recently opened Westfield Coomera Town Centre regional shopping centre as well as the construction of a new secondary school. Accessibility to this region is also expected to improve in the near future, with the proposed Coomera Connector arterial road now in a more likely to be built situation. On the other hand, this new transport corridor which is hoped to ease the traffic congestion on the Pacific Motorway has brought some trepidation to local homeowners regarding the negative impacts of traffic noise and pollution, particularly to those with homes located very close to the alignment of the future thoroughfare. Sellers of homes which are perceived to be somewhat impacted could find it harder to dispose of their properties in the normal time frame without some consideration of discount. Nevertheless, it is not all bad news because there would be some buyers who regard the new route as a benefit for commuting purposes that outweighs the adverse impacts.

The increasing supply of home sites in this region did not deter developers and builders from upgrading the price of land. Small allotments of 200 to 400 square metres continue to be priced in the $190,000 to $270,000 bracket whilst the larger allotments of 400 to 600 square metres are priced near the $300,000 mark or more. There are more expensive home sites in the market but they are priced to reflect either the lower density, provision of specific infrastructures such as state of art recreational parks, high views and proximity to water. It is common to find that buyers of the more expensive sites are financially stable owner-occupiers looking to build their dream homes whilst investors tend to prefer the less expensive small lots, which have an overall cheaper cost, are easier to rent and provide a sustainable rental income. First home buyers are also the major buyers of small lots due to affordability. New homes can be expected to cost from $210,000 up to $350,000 to build depending on size and quality. The total cost of land and building may not be realisable if the new home has to be sold immediately on completion, judging by the few resales that have occurred in the market.

Up to this time, local developers do not seem to consider a market correction for pricing as a necessity although there have been rebates and incentives being given to individual buyers. In the case of projects that did not achieve 100 per cent sale, some developers have let the remaining unsold completed dwellings or units go at discounted prices. As holding costs for unsold land can become a burden after some time, some form of correction in the market may occur if the market does not pick up momentum.

The market in this region remains patchy with local agents experiencing slow to strong buyer interest. One thing is for sure – current demand is strong for houses priced between $400,000 and $500,000 but for the more expensive homes, it is a case of too many trying to sell at the same time and eventually, price reduction is the only way forward for some.

The region west of the M1 has a variety of vacant land options. These include standard residential lot estates closer to the coast to larger acreage estates out west. Examples include: Standard/conventional size lot residential estates:

• Maudsland – Huntington Rise, located approximately 21 kilometres north-west of Surfers Paradise. Stage 5 (Woodside Heights) (over 90 per cent sold) has 51 lots. Lots range in size from 450 to 2,090 square metres. All services available. Lots have sold for between $270,000 to $340,000. Lot 230 Electric Avenue, 464 square metres sold for $275,000 ($592 per square metre). Lot 186 Electric Avenue, 1,122 square metres sold for $315,000 ($280 per square metre) and Lot 193 Victoria Court, 1,208 square metres sold for $340,000 ($281 per square metre).
• New Stage 6 – Natures Way has 47 lots. Lots range in size from 450 to 1,550 square metres. There were 12 lots remaining at the time of writing. Lot 276, 464 square metres sold for $280,000 ($603 per square metre). Lot 283, 1,520 square metres sold for $365,000 ($240 per square metre).We note that the difference between buying a home and an investment property is emotion. We believe that Hollywell offers buying opportunities for investors and homeowners and all price points, as the best investment properties include owner-occupier appeal and long term growth for the Gold Coast region is looking good with strong migration and proposed infrastructure spending in the region.
• Oxenford – Harriet Lane, located approximately 20 kilometres north-west of Surfers Paradise. Has 19 lots that range in size from 634 square metres to 1,761 square metres. Lots are generally easy sloping or retained. All services are available. Lot 13 which is 844 square metres is currently under contract for $275,000 ($325 per square metre). Lot 4 Aingeal Place, 1,761 square metres, is listed for sale for $295,000 ($167 per square metres). Lot 2 Aingeal Place 802 square metres sold for $275,000 ($342 per square metres).

Larger acreage lot estates:

• Maudsland – Tuxedo Junction located approximately 23 kilometres north-west of Surfers Paradise. 55 lots. Majority of lots have sold. Lots range from 4,000 to 9,620 square metres plus some larger lots of up to nine hectares. Power, phone, town water, NBN are available. Lots vary in topography but the average blocks are easy sloping. Lot 48 Burley Griffin Drive, 9,213 square metres is currently listed for $375,000. Lot 8 Arbuckle Place 6,901 square metres is listed for $390,000. Lot 13 Burley Griffin Drive, 5,000 square metres is listed for $465,000. Lots have sold for between $375,000 and $550,000 depending on size and topography
• Canungra – Canungra Rise is located approximately 34 kilometres west of Surfers Paradise. The estate began circa 2016 and currently has 29 lots available in the new elevated section (currently under construction). Lots range from 993 to 4,635 square metres. The older existing estate on Roxborough Street was sold from circa 2016 to 2017, with prices ranging from $190,000 to $230,000. The new stage is selling lots from $220,000.
• Woodhill – Mahoneys Pocket located approximately 68 kilometres north-west of Surfers Paradise. Includes 100 lots. Lots range from 4,000 square metres to 2.84 hectares. Power, town water, NBN available. Lots are mostly level or easy sloping. One lot of 6,237 square metres is listed for $258,000; another lot of 4,520 square metres is listed for $259,000 and another lot of 4,529 square metres is listed for $265,000. Lots have sold for between $253,000 for a 4,026 square metre block ($62 per square metre) and $345,000 for a 2.8 hectare block ($12 per square metre).

The larger acreage blocks located closer to the coast (for example Tuxedo Junction at Maudsland) have a price point of approximately $350,000 to $500,000. Larger acreage blocks located out west (for example Mahoneys Pocket at Woodhill) have a price point of approximately $250,000 to $375,000 depending on size, topography, views and services available

Residential estates closer to the coast (for example Huntington Rise at Maudsland and Harriet Lane at Oxenford) have a price point of approximately $275,000 to $350,000 depending on size, topography and views.

Most developments seem to have land prices equivalent to market value, however we have noticed some developers have tried to increase land values recently, even though the market has not seen an equivalent increase over the past year. For example, the Huntington Rise stage 5 had some 450 square metre blocks sell for $270,000 to $275,000 in 2018. The developer recently tried to sell one of the remaining lots in stage 5 (450 square metre block) for $295,000, stating that the price was in line with the new stage 6 pricing. The $295,000 contract was not supported and the developer ended up decreasing the contract price to $280,000. Land prices appear to be stable or slightly increasing for both average residential and larger acreage blocks.

More established built up suburbs such as Nerang have seen a number of older acreage blocks subdivided or strata titled and sold. These have attracted good interest due to the limited amount of existing larger than average land closer to the coast. For example, 135-169 Country Crescent, Nerang has recently been subdivided into four parcels and marketed through Ray White Mermaid Beach. The original parcel was three hectares. Lot 1 (vacant land) has an area of 5,136 square metres and has recently sold for $540,000 including a shed or flat; Lot 2 (dwelling block) has an area of 10,391 square metres and sold for circa $1.1 million; Lot 3 (vacant land) has an area of 4,076 square metres and sold for circa $500,000; Lot 4 (vacant land) has an area of 10,587 square metres and is currently listed for $719,000.

Larger acreage type estates tend to attract owner-occupiers. Estates closer to the coast with generally higher price points such as Tuxedo Junction have also been actively pursued by owner-occupiers. Investors and first home owners are attracted to estates with lower price points to maximise value. Typical building costs can vary depending on size and quality of build, however for an average dwelling in a standard residential estate, prices seem to range from approximately $220,000 to $350,000. For example, Hunting Rise in Maudsland has Ingenious Homes as the major builder in the estate. The majority of the standard four-bedroom, two-bathroom, double garage homes have a rate of approximately $1,185 per square metre. This price usually provides for the dwelling, including reconstituted bench tops, split cycle air conditioning, driveway, fencing, landscaping and turf. Larger acreage type estates tend to have larger dwellings with premium features and can vary in price (anywhere from $1,350 to $2,000 per square metre).

In general, values seem to be holding up, however with the upcoming election and possible changes to negative gearing and the economic climate, land values within the residential estates will have to remain viable, especially for investors and first homeowners.

Median house values in the Lower Logan area (Mount Warren Park, Beenleigh, Edens Landing), are estimated at between $350,000 and $450,000. Local agents have reported good interest for homes that are priced right with more interest from local buyers than investors.

There is plenty of residential land available in the developing locations and estates within Flagstone, Yarrabilba, Bahrs Scrub and Belivah. Although construction has slowed, there are still buyers out there purchasing house and land packages within the estates in these suburbs. Land in these areas is generally valued at between $180,000 and $220,000 for a 400 to 450 square metre block with build cost values for these locations generally ranging from $175,000 to $220,000. In some instances, land values have come back and are in line with the market, whereas construction costs have increased.

House and land packages have increased in pricing slightly, resulting in difficulty in supporting tender prices and ultimately, the value of improvements being valued at less than the cost to build. The median house values for these areas range from $370,000 to $420,000.

Over the border – northern NSW

Residential property prices in the far northern New South Wales areas have remained subdued with some signs of easing at mid-range and higher price points during the first and second quarter of 2019. Local selling agents have reported longer marketing periods in most instances with signs pointing towards a buyer’s market. However, vacant land in the more sought after beachside localities in the area is limited, with steady demand and restricted supply. The final stages of Casuarina, south of Kingscliff, have seen strong buyer interest, particularly with the existing, smaller, medium density zoned allotments east of Casuarina Way. Land sizes now start at 380 square metres for $515,000 up to 480 square metres for $645,000. The trend has been to construct higher quality homes, with construction costs ranging from $1,350 to $2,000 per square metre (circa $1,500 to $3,000 per square metre of gross floor area including pools and landscaping). It seems, at this stage that those dwellings with closer proximity to the beach are achieving strong resale prices and justify the high building costs.

At the end of the day, owners need to be aware that cost over-runs can escalate quickly and do not always translate to market value. In addition, a falling market reveals the sins, such as poor design, and prices for those inferior properties will fall quicker and harder than well designed (internal and external) properties.

Speak with a Gold Coast Mortgage Broker today.