This Week in Real Estate -10 February 2024
Interstate Buyers Flocking To Gold Coast
Interstate buyers are flocking to the Gold Coast after being priced out of beachside locations in Sydney and Melbourne.
Analysis by Ray White chief economist Nerida Conisbee shows that interstate buyers accounted for one in four Gold Coast auction sales last year.
“They’ve come from places like Sydney’s Northern Beaches. They want that beach lifestyle but can’t afford it in Sydney. On the Gold Coast, they can get something fairly decent, so there’s been more of that movement,” she says.
Conisbee has also seen a return of investors to the Gold Coast market driven by above-average yields.
She says 28% of auction sales on the Gold Coast went to investors.
Ray White Surfers Paradise principal, Andrew Bell says interstate buyers see good value on the Gold Coast and are prepared to pay more than locals.
He says the region’s economy has also improved in recent years as it was no longer just reliant on tourism, which made it a more appealing location for investment.
Gold Coast Market Cracks $1M
The Gold Coast property market has cracked the $1million barrier with its median house price now $1.03 million.
According to Domain the Gold Coast hit the million-dollar mark in the December quarter after experiencing growth of 4.6%. Domain chief of research and economics, Dr Nicola Powell, says price growth during the pandemic was strong on the Gold Coast and that has continued.
She says interstate and overseas buyers are driving demand. “Australians are also driven by lifestyle, and we’re willing to pay a premium for location,” she says.
Gold Coast apartments also increased substantially, up 10.2% in the past 12 months to $705,000. While it is the first time the whole of the Gold Coast LGA has had a medina in excess of $1million, some of its suburbs surpassed that level years ago. Surfers Paradise’s median house price rose by 20.5% in 2023 to reach $2.65 million.
Mermaid each has a median house price of $2.525 million, despite dropping 22% in the past 12 months.
Auctions Start With A Bang
The 2024 auction selling season is now officially underway with a solid start during the first big weekend of sales.
CoreLogic reports clearance rates last week were the second-best start to a selling season since it started collecting data in 2008 with the national preliminary clearance rate from 1671 auctions hitting 74%.
CoreLogic head of research Tim Lawless says news of low inflation and the possibility of early rate cuts appears to have boosted sentiment. Adelaide continued its successful run of auctions with the highest clearance rate of 77.6% last week based on 159 auctions. Sydney was 76.3% based on 562 auctions, its best result since July 2023.
Melbourne’s clearance rate was 71.9% based on 603 auctions and Brisbane’s 68.5% based on 203 auctions. Lawless says the next few weeks will confirm whether the strong result is some “early year exuberance” or a trend that can persist.
The best sub-region performer was Sydney’s Northern Beaches with a clearance rate of 82.4%.
Banks Offering Better Fixed Rates
In a sure sign that they think interest rate cuts are looming, the big banks have started to cut fixed interest rates.
Macquarie, AMP Bank, Bendigo, Adelaide Bank and the Bank of Queensland have all cut their fixed rates in the past three months, according to Mozo.
Research and compliance manager Peter Marshall says fixed rates are finally starting to become more competitive. It comes as the RBA met for the first time in 2024 and decided to keep interest rates on hold.
“Banks are starting to become more confident that the next change in the cash rate will be a cut, and probably more than one cut,” he says.
“When setting fixed rates, banks try to look ahead and implement anticipated future changes into their fixed rates. As they become more confident of cuts later this year, fixed rates will start to fall even further.”
He says the lowest variable rates are about 6% and now fixed rates are beginning to drop below that, particularly for those willing to lock in for two or three years.
We’re Borrowing More
Rising property prices mean we are borrowing more than ever to finance our dreams of homeownership according to the latest ABS Figures.
Queensland’s new record home loan size is now, $572,439, South Australia, $519,478, and Western Australia, $509,275.
The amount being borrowed dropped in Victoria by almost $25,000 to $613,018 and it was slightly down in New South Wales to $785,405 (it peaked at $803,235 in January 2022).
According to the ABS, there have been 732,385 mortgages refinanced since interest rates began rising.
Australians are borrowing more to keep up with rising prices according to PropTrack senior economist Angus Moore. He says prices will continue to rise in 2024, although potentially at a slower pace than in 2023.
“A more stable interest rate environment, coupled with ongoing population growth and a low level of new building activity, will support home price growth this year,” Moore says.
The median value of all dwellings in capital cities in Australia is more than $800,000 while nationally the median value of homes and units is $760,000, according to PropTrack.
QUOTE OF THE WEEK
PropTrack senior economist Angus Moore
“A more stable interest rate environment, coupled with ongoing population growth and a low level of new building activity, will support home price growth this year.”