Encouraging Signs Throughout February

An extremely encouraging sign for our sellers is the increased inspection numbers that we have witnessed so far throughout February. 

In the last week for example, we have had well over 400 inspections on our properties resulting in close to 50 written offers. 

The cumulative effect of these inspections and offers has been that 13 of our listings went under contract over the past week which is our best weekly result so far in 2023.

When looking at the sales prices being achieved at present, most have come at prices that are below what may have been achieved in the first half of 2022.

With prices expected to decline further as we move through 2023, these recent results demonstrate a growing acceptance from sellers that selling now is far more enticing than holding out for a better price.

Last week, the national real estate valuation firm Herron Todd White Valuers released their first Property Report for the year. The report discusses the various trends influencing the property market as well as publishing the now much anticipated national property clock.

The property clock is an illustration that visually shows where in the cycle each major city or town is on their property cycle. The report has listed the Gold Coast property market as being in a "starting to decline" position for both houses and units.

The term "starting to decline" clearly emphasises that further falls are expected. The HTW property clocks are attached to the report below as well as the major discussion points observed on the Gold Coast since their last report in December.

The full HTW report and the property clocks are our feature pieces this week as well as a selection of articles from around the country and our own statistics from the past week.

Please see below.

HTW Valuers Monthly Property Report for February 2023 - Gold Coast Summary

Gold Coast  

What’s that phrase again? What goes up, must come down? 

Considering the rapid rise in interest rates in 2022, cost of living pressures and with economists forecasting further interest rate rises this year, it’s no wonder property buyers are being very cautious now, as there may be more tough times ahead. Last year the major banks predicted quite a significant fall in house values across most major cities in 2023. The performance of the residential property market in 2023 will likely be heavily dependent upon how many more interest rate rises there are and whether external and global events will further threaten our economy. 

We will definitely see tighter lending conditions this year and as a result, buyers will have less borrowing power and in turn will have less to spend on property. Many borrowers are also coming off fixed rate loans and will need to adjust to the new rate environment. History tells us that tighter lending conditions is often a strong indicator of a cooling market. Given what has transpired in the past six to twelve months, overall we are expecting a much more subdued market in 2023 compared to last year.

Central Gold Coast 

As we noted earlier, the performance of the residential property market in 2023 will be fairly dependent upon how many more interest rate rises we have in the year. There seems to be a consensus that interest rates will continue to rise, especially in the early part of 2023, which will put the brakes on market activity. During the second half of 2022, the market slowed considerably, and it became more apparent that property prices were weakening across most market segments. 

Even in Burleigh, where there has been a very heated property market in recent years, value levels have slipped backwards by say five to ten per cent since the peak in early to mid-2022. 

The latest sales evidence also suggests that there has been an even sharper value decline for property in Elanora and Varsity Lakes. 

Both of these suburbs are known to offer a good array of affordable housing options. The suburbs that may continue to have some momentum in 2023 are likely to be the very popular coastal lifestyle suburbs such as Mermaid Beach, Miami, Burleigh Heads, Burleigh Waters and Palm Beach where you find loads of prestige quality housing options. There is quite a substantial amount of infrastructure either under construction or proposed for development in and around these suburbs. Major infrastructure spending will be a key driver for these areas over the next few years. 

Construction of Stage 3 of the Gold Coast light-rail system is about to commence in the upcoming months which will connect Broadbeach to Burleigh Heads. The expected completion date of this major project is mid-2025. Lately, the prestige sector on the central Gold Coast has been holding up well since the rapid rise in interest rates. Whilst demand has slightly cooled, supply of high-quality properties remains limited. Agents are commenting that rate rises haven’t scared off all the buyers but there are slightly less  interstate buyers in the mix and that has resulted in a greater presence of local buyer activity, particularly at open homes. 

During the days where the market was most buoyant, locals were to some degree being priced out of the market by interstate purchasers. Cashed up local buyers now see themselves as having a better opportunity to buy not being in a highly competitive market. We expect new or recently renovated properties will continue to be highly sought-after but with fewer buyers willing to pay premiums to secure them. 

Some recent reports coming from the building industry indicate that the heightened concern in relation to supply line issues, price increases of materials and unavailability of trades is now starting to ease. Building costs though remain comparatively expensive and as a result, some prestige home buyers are avoiding the renovator properties altogether to avoid potential issues (and stress).

Rental Market

Across the board, the rental market remains very strong with very limited stock available. 

Some recent reports however have pointed out that rental values in some suburbs have begun to stabilise after a strong run. Due to there still being a tight rental market, we expect the sub $700,000 property market segment will remain active as the squeeze from high rents will motivate more existing tenants to shift into a mortgage rather than pay high rent. 

Buyers in this price range are still willing to pay small premiums for vacant possession units on settlement at the moment, as having the opportunity to move straight in is very important. This is being substantiated throughout the central suburbs of the Gold Coast and particularly in Southport, Labrador, Parkwood and Arundel.   

Please see below the HTW Valuers National Property Market Clock for both Houses and Units.