Gold Coast Property Market Update May 2020

The last quarter of 2019 into the start of 2020 saw steady to strong growth in sale prices including good buyer/seller activity across most market segments within the Scenic Rim and western Gold Coast. Following on from these positive times, the effects of the Coronavirus pandemic on these local markets has resulted in an evident slowdown in activity and interest, including widespread economic uncertainty from increasing unemployment, which has consequently seen some vendors removing their properties from being listed

on the market or reducing their asking prices. Feedback from local sales agents tells us that we are entering into a buyers’ market; however, it will undoubtedly be challenging to find good quality stock with fewer listings across most property types as sellers become anxious due to the uncertain economic climate.

As residential property valuers, we are considered to be an essential service which has continued to operate through this unfolding pandemic, facing us with challenges never experienced before. We are at a higher risk due to undertaking multiple property inspections each day and coming into close contact with owners, tenants and agents on a very regular basis. Since the evolvement of this dilemma, we have had to adapt new measures when undertaking routine inspections as safety is paramount. Maintaining social distancing and keeping on top of good hygiene by regularly washing/sanitising hands before and after inspections have now been more important than ever. Having owners and tenants open doors and turn on interior lights prior to the valuer entering the home is now common practice. The implementation of revolutionary contactless inspection tools have also been beneficial to adapting to the unfolding situation, partially sustaining the declining volume of work from banks to valuation firms.

It is believed that we are yet to see the full effects of this pandemic take its toll on the wider property market. As we progress into the coming weeks/ months, we will continue watching property sale prices to see if/when there will be any reductions or if this pandemic is mainly affecting buyer enquiry and amount of listings on the market. A recovery is a given, however, the length of the recovery and change in values is unknown and will depend upon how and when lockdown measure are eased/ removed.

Western Gold Coast and Southern Logan Property Update

We are yet to see any sales transactions come through across the western Gold Coast and Scenic Rim showing any significant reduction from previous prices. Although there has been an obvious drop in activity and confidence across the market, some good news is that we are still seeing property owners refinancing their properties and taking advantage of low interest rates, which is in turn having some stimulating effect on the valuation industry. We predict this will continue throughout the year despite the general market slowdown from Coronavirus.

The strict government introduced social distancing rules have brought upon restrictions which are having an effect on the property industry including bans on in-person auctions and public inspections. Sales agents are reporting of challenging times with private inspections the new norm and newly implemented virtual inspections brought in to offer a safe alternative for potential buyers and vendors.

Central and Southern Gold Coast Property Update

The central and southern Gold Coast residential market appears to be ‘on hold’. Over the last four to six weeks, there have been very few properties contracted. Most agents are reporting that the number of buyers has substantially reduced. However, it is still too early to analyse what negative impact the coronavirus has had on the market. From general observation, it seems that the fundamental principal of property will hold firm as a solid investment long term. That is, good quality property in good locations will be less impacted than inferior quality properties in inferior locations.

The main sector of concern is the investment market. From discussions with property managers, there is an oversupply of properties for rent. There have already been significant drops in rents, both from existing tenants renegotiating their rent, and new rentals achieved at levels below previous rents. Vacancy rates have increased. We have been advised that there are a lot of holiday let properties (both through agencies, Air BnB and similar websites) now available for permanent rent. This will inevitably lead to a decrease in value levels.

The holiday unit apartment market is currently seeing unprecedented falls in occupancy rates as the tourism sector has been “put on hold” during the lockdown period. This will reduce returns to owners and if these properties are offered for sale will attract a discount.

Northern New South Wales Property Update

The Tweed Shire has a relatively low level of COVID-19 cases and locals for the most part are taking the lockdown seriously. Job losses across the Tweed Shire have been quite evident as the region relies heavily on tourism. The market has also had a major boost from Sydney, Melbourne and Brisbane buyers over the past 5 years, all who have all disappeared overnight with restrictions on non-essential travel.

The Tweed Shire also relies heavily on the construction industry, and whilst this may be okay for now, when the current works are completed it is expected this work will dry up. The only exception to this is the new Kingscliff Hospital where works will be continuing for years to come.

There is a definite fall in market confidence, with agents advising enquiries declining significantly with some known contracts falling over. The only end of the market that is receiving a little movement is the lower end of the market, which agents are advising these are local buyers looking as owner occupiers. Agents are advising that these are still selling in their original price range, albeit at the lower end of their range.

The coastal towns of Kingscliff and Casuarina as well as rural residential properties have in previous downturns been the hardest hit sectors. Going forward, it is anticipated that these sectors will continue to be the hardest hit however, how hard they fall depends on how long the pandemic lasts and the economic implications. It will take an extended period of time for the region to recover.

Central North Property Update

The northern portion of the Gold Coast has limited number of reports cases, however, there was one reported case in a local school. Locals don’t seem to be heeding the lockdown importance and local shopping centres are still buzzing with activity and only a few people are taking precautions.

As valuers, we are adhering to all the advice and taking all precautions necessary and work based on the assumption that every house may have a risk associated with it. Masks are being worn and no physical contact with any surfaces in the house. Occupants generally understand the measures being taken and are appreciative of the explanation that the measures are there to protect everyone.

Like all areas on the Gold Coast, the enquiry rate has fallen with less properties transacting and limited interest. This area is heavily influenced by the investment market and whilst there has not yet been large numbers of tenants using hardship rules, this will have an effect on the value of the property if offered for sale. Investors are vulnerable at present if tenants are unable to continue rental payments.

Some of these properties may appeal to the first home buyer market due to attractive interest rates, ease of borrowing and favourable prices to build a new home. However, new home constructions are currently proceeding as there is a time lag of two-to-three months to know whether the market is impacted as right now most TBEs were executed in early 2020.

The trend has shifted to a buyers market where sellers are expected to be more flexible in negotiations as the number of properties offered for sale exceed the number of buyers. It may be prudent for buyers to be patient and spend more time researching property, following sale trends including time on market and price corrections and keep in contact with agents as this could yield some bargain buys.

Given this area is highly geared towards the investment market, competition to secure a tenant has been quite high before the onset of the pandemic. Property managers are communicating regularly with landlords about their tenants and whether they have lost jobs or are now on a reduced income. The government assistance may help to stabilise market rental trend but some landlords may be forced to consider reductions in rent if they do not want to miss rental incomes

As the broader conversation tends towards recession and financial uncertainty, these factors will definitely influence the market. Mortgage stress is not widely reported in recent weeks as the government has been more concerned about containing the spread and hoping the economic stimulus would work. There will be households that are not eligible and are under pressure of losing their homes but it may be weeks or months before the true effects of the pandemic and lockdown are known.

The recovery will potentially be slow as people are still wary about the danger of catching the virus if life returns to normality. It also depends on whether those who lost their jobs are able to return to their former employment or seek new employment and there are concerns the unemployment rate will still be high as employers will not return to a full workforce until the local economic activity becomes clearer.

Speak with a Gold Coast Mortgage Broker today.