ANALYSIS ON COMMERCIAL REAL ESTATE OF SUNSHINE COAST Flipbook PDF

Property research company Hotspotting released their quarterly National Top 10 Best Buys report and named the Sunshine C

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ANALYSIS ON COMMERCIAL REAL ESTATE OF SUNSHINE COAST Melissa Snow The University of Adelaide April 2018 Key terms: Commercial Property of Australia, Real Estate Current Trend, Interest rates and real estate cost, Best suburbs to invest in Sunshine Coast. Introduction Property research company Hotspotting released their quarterly National Top 10 Best Buys report and named the Sunshine Coast as a real estate winner. Housing is by far Australians' largest asset, worth a total of $6.8 trillion across the country, according to the latest official ABS estimates. Just over $1.7 trillion in outstanding home loans also account for more than 60 per cent of Australian bank assets. That makes housing the bedrock of Australia's household wealth, financial system and economy. It is a foundation that has appeared solid as prices have risen strongly over the past five years in Australia's two biggest property markets — Sydney (75 per cent) and Melbourne (59 per cent). But, with prices already slipping in Sydney and price growth easing in Melbourne, that foundation is looking a little shakier. Operators in the Real Estate Services industry have reaped the benefits of a booming residential property market over the past five years. Despite turbulent economic conditions, housing prices have grown strongly, supported by government incentives at the beginning of

the period and then fuelled by falling interest rates. In contrast, the commercial property market has performed modestly over the past five years due to volatile business confidence. Overall, industry revenue is expected to increase at an annualised 2.7% over the five years through 2017-18, to reach $14.2 billion. Industry revenue is expected to drop by 1.8% in 2017-18, with an anticipated decline in housing transfers likely to reduce industry activity and earnings The Sunshine Coast has been singled out as the new real estate hotspot with four suburbs topping a list Queensland's boom areas. Experts predict Sunshine Coast real estate prices will skyrocket on the back of rising infrastructure spending, industry growth, jobs and lifestyle. Analysis of the region's market growth over the past 12 months revealed 14 suburbs where housing achieved capital gains of 10 per cent or better with Buddina, Forest Glen, Meridan Plains and Noosa Heads all breaking the 13 per cent barrier. Sunshine Coast market is next nation’s property hotspot STAND aside Brisbane and Gold Coast, there’s a new boom market in town.Experts predict Sunshine Coast real estate prices will skyrocket on the back of rising infrastructure spending, industry growth, jobs and lifestyle.

Analysis of region’s market over the past 12months revealed 14 suburbs where housing achieved capital gains of 10 per cent or better, with Buddina, Forest Glen, Meridan Plains and Noosa Heads all breaking the 13 per cent barrier.Property research company Hotspotting released their quarterly National Top 10 Best Buys report and named the Sunshine Coast as a real estate winner. Hotspotting also chose the region as its National Growth Star in their most recent PricePredictor Index report which studies sale volumes across Australia. Sunshine coast market monitor (Last year, 2017 ) The unit market also contracted in the June quarter, falling 4.9 per cent, from $410,000 in March to $390,000 in June. Despite the quarterly contractions, the Sunshine Coast SD is one of the top performers in the Queensland market for the past year and the past five years. Noosa continued leading the residential property market in the Sunshine Coast SD. Based on the annual median sale price, Noosa has become the second-most expensive house and land market (after Brisbane LGA) and the most expensive unit market in Queensland. The annual median house and unit prices were $645,000 and $479,000 in the 12 months to June 2017. According to the State Budget Regional Plan for the Sunshine Coast SD, the allocated funding for infrastructure projects is about $240 million for FY2018. About half of the investment will fund the Bruce Highway Upgrade – Caloundra Road to Sunshine Motorway project. Acknowledging the expansion of the region, the State Government has committed $10 million funding assistance to the private sector to

construct a sewer pump station, rising main and trunk gravity main to connect the Palmview development area to the Kawana sewerage treatment plant. This will facilitate development of dwellings and increase housing supply in the region. Building Queensland is currently assessing the viability of three large infrastructure projects: • The $780 million Beerburrum to Nambour Rail upgrade is ready for government investment consideration. It is expected to deliver a more integrated transport system with increased capacity and travel time savings for freight and passenger services. • The $80 million Lake Macdonald Dam Safety upgrade is currently under detailed business case analysis and has the goal to upgrade the dam to meet modern standards and improve performance. • The $430 million Sunshine Motorway – Mooloolah River Interchange is currently under preliminary business case analysis. It has the goal to deliver improved safety and capacity in the vicinity of the Mooloolah River Interchange at the Sunshine Motorway. The implementation of these projects will potentially inject nearly $1.3 billion into the economy over the coming years. This investment is a response to the increasing population in the region. According to the ABS, Noosa and Sunshine Coast LGA added more than 72,680 residents for the past decade to June 2016. The rental market is the strongest in Queensland with high demand of rental properties and very low vacancy rates. Similarly, the outlook of the sales market is positive and supported by economic fundamentals such as

population growth. Prospects for the Sunshine Coast’s residential property market are positive and supported by a broad plank of infrastructure and development projects. The job market in the Sunshine Coast S4 region is also performing reasonably well with unemployment dropping to 5 per cent in June, below the state average of 6.5 per cent and the national average of 5.6 per cent. a. HOUSE MARKET The annual median house price for the Sunshine Coast SD grew 6.2 per cent, from $518,000 to $550,000 in the 12 months to June. This compares with the five-year growth in the median sale price of 27.9 per cent, from $430,000 in June 2012. The median sale price of the Sunshine Coast LGA and Noosa increased 5.9 per cent and 12.2 per cent over the past 12 months. This increase positioned Noosa as the top performing market in the Queensland Market Monitor. Noosa was also the best-performer for the past five years, with the median sale price increasing 34.4 per cent, from $480,000 in June 2012 to $645,000 in June 2017. Based on the annual median sale price, the three most expensive suburbs were: • Sunshine Beach ($1,200,000) • Alexandra Headland ($960,000) • Noosa Heads ($925,000) The three most affordable suburbs were: • Nambour ($370,000) • Landsborough ($381,500) • Coes Creek ($405,000)

The volume of sales over the March quarter fell in the Sunshine Coast LGA and Noosa. Preliminary data for June also shows a fall in the volume of sales. This trend will be reviewed in the September 2017 QMM. The most popular sale price for houses throughout the Sunshine Coast SD sat between $500,000 and $750,000. Market trend indicators for the Sunshine Coast SD showed characteristics of a market favouring vendors, with falling supply and increasing demand. The Sunshine Coast LGA is one of the only four LGAs reporting a fall in listings volumes for the 12 months to May 2017. It also reported the second-smallest vendor discount (3.7 per cent) of the areas analysed in the Queensland Market Monitor. A house in the Sunshine Coast SD needed about 46 days to reach a sale in May 2017 compared with 54 days in May last year. Medium vendor discounting showed a similar trend, with the discount falling from 4.4 per cent to 3.9 per cent for the 12 months to May. b. UNIT MARKET Similar to other regions in Queensland, the unit market throughout the Sunshine Coast SD fell over the June quarter by 4.9 per cent, from $410,000 in March to $390,000 in June. The quarterly median sale price in Noosa also fell 15 per cent, from $499,900 in March to $425,000 in June. Despite the fall, the annual median sale price increased 3 per cent, to $479,000, becoming the most expensive unit market in the QMM. Over the medium term, the Noosa annual median unit price increased 17.8 per cent, from $406,500 in June 2012. This positioned Noosa as the best performer in the unit market over

the past five years. The annual median unit price in the Sunshine Coast LGA also increased over the medium term from $335,000 in June 2012 to $387,500 in June 2017.

Queensland, with vacancy rates below 2.5 per cent. The Sunshine Coast SD’s vacancy rates tightened over the June quarter, from 2 per cent in March to 1.5 per cent in June.

The most expensive suburbs for units were: • Sunshine Beach ($640,000) • Noosa Heads ($630,000) • Twin Waters ($567,000) Similar to the house market, unit sales contracted over the March quarter in both locations, the Sunshine Coast LGA and Noosa. The volume of sales fell from 1206 in December to 1109 in March. Preliminary data for June revealed a continuation of the downward trend. However, it will be reassessed in the September quarter. The supply of units in the Sunshine Coast SD increased 6.4 for the 12 months to May 2017. This is not a concern as listing volumes for the Sunshine Coast SD fell 12.9 per cent from February to May this year, revealing a seasonal supply increase rather than a sustainable increase. Similar to the house market, the market trend indicators showed characteristics of increasing demand. Days on market fell from 68 to 59 days for the 12 months to May 2017. Vendor discounting reduced 0.7 percentage points, to 3.9 per cent in May 2017. The Sunshine Coast LGA has the shortest days on market in the statistical division, with 57 and the smallest discounting of 3.9 per cent. c. RENTAL MARKET Over the past 4 1/2 years, the Sunshine Coast SD rental market has outperformed the rest of

For a third consecutive quarter, Maroochydore was the tightest rental market in Queensland, reaching a vacancy rate of 1 per cent for June 2017. Local agents highlighted the lack of rental listings in the region as a contributor to low vacancies. The weekly median rent in the Sunshine Coast LGA held steady for three-bedroom houses and three-bedroom townhouses at $440 and $420 over the June quarter. On an annual basis, the weekly median rent for three-bedroom houses, two-bedroom units and three-bedroom townhouses increased from 2 to 6 percent. The rent for two-bedroom units achieved the largest increase of $20 a week or 5.9 per cent for the past 12 months. Noosa vacancies returned to the healthy range this quarter, reducing 1 percentage point from 4 per cent in March to 3 per cent in June. Noosa remained as the most-expensive region for three bedroom townhouses in Queensland. The weekly median rent for this type of dwelling increased 10 per cent for the past 12 months, from $500 a week in June 2016 to $550 a week in June 2017.

Suburb

Median Sale Price

BUDDINA FOREST GLEN MERIDAN PLAINS NOOSA HEADS WARANA MOFFAT BEACH MOOLOOLAH VALLEY

$750,000 $642,500 $525,000

Rise in Median Price (%) 18.9% 16.8% 14.2%

$895,000 $650,000 $747,500 $510,00

13.7% 12.9% 12.8% 12.7%

0 $585,000 $625,000 $570,000 $397,000 $520,000 $785,000 $1,160,000

12.5% 12.2% 12.2% 11.8% 11.5% 10.6% 10.0%

MARCOOLA COOLUM BEACH GOLDEN BEACH COORAN BATTERY HILL DOONAN SUNSHINE BEACH

How are Queensland prices expected to change in 2017

Christopher also believes houses will outperform units in Brisbane in 2017. With the pickup in employment levels, he says Brisbane’s market could improve although the surplus in units may keep a lid on the rest of the market. The Gold Coast He says the Gold Coast will continue to outperform the Sunshine Coast for the year ahead, and that both areas will outperform Brisbane. The Australian Housing Outlook 2016–2019 forecasts further (although more moderate) price growth of around 8 per cent over the three years to June 2019 for the Gold Coast as new dwelling construction rises from long-term lows. That said, the unit price growth may be dampened by the 1,200 apartments that will eventually find their way onto the market after the Commonwealth Games in 2018. The Sunshine Coast

Looking ahead, John McLeod, who sells property in and around Bulimba for the Harcourts group, believes property prices in Brisbane will stay fairly stagnant. “Growth will be steady for houses… If I was an investor, I’d be buying houses and land packages on a lower return, but on better capital growth. When it comes to selling an investment property, I have always found that property within the 10km radius to the Brisbane city centre holds its value very well.

The Sunshine Coast also looks promising. The BIS Shrapnel/QBE report says it is expected to benefit from its relatively better affordability compared to Melbourne, Brisbane and Sydney, attracting empty nesters and retirees from these cities. It forecasts that median house price will grow an aggregate 7 per cent in the three years to June 2019, to $575,000.

Suburb in this radius also includes Fortitude Valley and New Farm.

Townsville

“The rate of price growth is expected to progressively slow in this period in line with slowing price growth in Sydney and Melbourne,” it says.

It adds that Townsville’s median prices are likely to continue to decline until local economic conditions improve – most likely towards the

end of the decade. Median house prices are expected to lose 1.4 per cent a year over the next two financial years before bottoming out. They should show no growth in the year to June 2019 as a result of rising supply. The value of real estate in Queensland? REIQ analysis Overall, the real estate market on the Sunshine Coast held strong with the HPI (Housing Price Index) continuing to trend in the positive, up 25% over March last year to $480,608. Total dollar volume for the month of March is up 14% across the Sunshine Coast to $44,412,125. Unit sales are down 55% over last March with 83 homes and property sold, while the average price of all property is $535,085 down 4% and a sales success ratio of 16% making it a balanced market overall.The housing market continues to be competitive for home buyers on the Sunshine Coast with 528 available homes and land for sale and 150 newly listed properties for sale in March.

Nationally, RP Data estimates housing wealth at $5.2 trillion, however Queensland now accounts for more than 15% of this estimation, according to CEO of the Real Estate Institute of Queensland (REIQ) Anton Kardash. In fact, with Brisbane become increasingly popular for investors, and values ticking up, this is only set to increase. “Queensland residential housing is more popular than ever with investors, who see an enormous upside as confidence rebounds in the local real estate market,” said Kardash, pointing to strong buyer sentiment and sales activity

assisting the Gold Coast and north Queensland in particular since the GFC. Confidence was also noted to be returning in north and central Queensland, as well as the south-east, with particular reference to the Sunshine Coast. “The state’s real estate renaissance is reflected by a wide range of indicators, from strong price growth and higher sales volumes to more new housing construction and finance approvals.” Final Words: Australian property is one the widest and deepest asset bubbles in the history of capitalism. Any objective assessment of this “market” can lead to no other conclusion. With a long history of commitment to home ownership, Australians have always been prepared to structure their finances around property. This showed up in a total dwelling stock to GDP ratio that persisted around a very high 150% from 1960 to 1990. In the late 1990s that shot up to 200% and then embarked on near ceaseless climb to 360% today. Moreover, Sunshine Coast tops on list of real estate investments in Australia.

References: Property Valuation & Analysis, 2nd Edition Mastering the Australian Housing Market, by John Lindeman http://www.abc.net.au/news/2017-1229/boom-is-over-most-experts-expectproperty-price-weakness/9290190

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