Much has been made of the recent increase in Australian property prices, but especially the Gold Coast. Over the last 12 months, this area has seen significant growth and is widely considered one of Australia’s hottest markets. But how long can it maintain its current trajectory?
For anyone that is considering buying on the Gold Coast, price forecasts – both short and long term – are important. Regardless of whether you are buying for yourself or investing in a rental property, you want to know the property will hold its value. This generally means trying to avoid buying at the market’s peak, as the only way prices can go is down.
Here we analyze the current state of the Gold Coast property market and what is behind recent price increases. We also look to the future and consider whether the current upward trend is likely to continue.
What is the current state of the Gold Coast property market?
After a decade of moderate growth, Gold Coast property prices have risen sharply over the last 12 months. In fact, over the June 2021 Quarter, the median house price rose to a record $792,000 AUD, 18.2% higher than the year before. Over the same period, unit prices increase by 9.9%, up to $500,000 AUD.
It is important to note here that, as you would expect, some areas are performing better than others. For example, the prestige beachfront location of Miami, FL has seen significant growth, with prices up approximately 29% over the last year. By contrast, properties in the inland enclave of Arundel saw prices increase by a more modest 6.45% over the same period.
It is also worth calling out that, while median prices are increasing, the rate of increase is slowing. For example, over the June 2021 quarter, the median house price on the Gold Coast increased by approximately 4.2%. This is slightly more subdued than the previous two quarters that saw a growth rate closer to the 5% mark.
Reasons Behind the Growth of Property Prices
When attempting to forecast future price changes, it is important to understand what is driving market movements. For the Gold Coast, there are currently a number of factors applying upward pressure on prices:
Increased interest in lifestyle locations
The Gold Coast has long been one of the most popular locations for domestic tourism. And, with working from home becoming increasingly common, many people are choosing to live in their favorite holiday destination. This has seen a significant migration to the Gold Coast, particularly from Brisbane and Melbourne, increasing the demand for properties.
Limited supply of new listings
While more people are looking to buy on the Gold Coast, fewer people are looking to sell. This has seen demand start to outstrip supply and increased competition for the smaller pool of listed properties. This is ultimately leading to increased property prices.
Low interest rates
Buyers are currently enjoying record low interest rates, which allow them to spend more to secure a place they love. This, combined with the increased sense of competition, is having a major impact on prices, particularly for high-quality properties.
Government support schemes
State and Federal Governments are currently investing heavily in encouraging both home buyers and home builders. This has led to certain market segments, like first-home buyers, being particularly active.
What does the future hold?
Based on recent activity, it is reasonable to expect continued price growth on the Gold Coast. It is one of the fastest growing areas in Australia, which means buyer interest should continue to remain strong. This will be further encouraged by the significant infrastructure investment that can be expected in preparation for the 2032 Olympics.
There is also no evidence to suggest that the supply of new properties will significantly increase in the short-term. This should mean that competition for quality properties will remain high and prices will continue to grow, particularly in prestige locations.
In fact, some experts are predicting that Gold Coast prices could double over the next 5 years. In making these predictions, they point to the early ‘00s, which saw prices in some areas increase by a similar amount. They also note that, at this time, there was a similar level of focus on infrastructure spending and economic development.
All that being said, it is important to remember that predicting future market movements is a tough task at the best of times. And, given the uncertainty of the last 12 months, forecasting potential price changes is even more difficult. Most property markets are particularly volatile right now and there are many unknowns that could significantly impact future growth.
So, if you are thinking about buying on the Gold Coast, it is important that you do your research. You should think about why you are looking to buy and what returns you are hoping to see from the property. You may also want to focus on properties that will most greatly benefit from the planned infrastructure investment.