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What influences the value of real estate in Surfers Paradise? – Part 1

By Andrew Bell

If you've resolved to buy a Surfers Paradise property rather than rent, you'll be setting yourself up for all the benefits that come with home ownership. Aside from being able to do just about whatever you want with the property (unless it's a unit) and make renovations as you see fit, there are huge potential monetary gains to be reaped. If you decide to rent out your home, you'll be making rental income, which could serve as a terrific secondary source of income. Even if you don't, you'll most likely still benefit from capital gains as your real estate in Surfers Paradise climbs in value.

In fact, QBE's Australian Housing Outlook for 2015-2018 forecasts that the Gold Coast median house price will increase by 14 per cent to $615,000 over the three years to June 2018. This is certainly promising news for investors and house vendors.

With that being said, there are many different factors that influence the movements of property prices. Here are a few to look out for that could be a sign you should strap in for some hefty profits coming your way.

Interest rates

Unsurprisingly, interest rates have an incredible pull on the value of property. When rates are low, there is more incentive to borrow, whether it's a loan for a car or a house. With this, demand for housing rises, which can push up prices.

So, how exactly do banks set their interest rates? The cash rate set by the Reserve Bank of Australia (RBA) plays an integral part of this equation, forming a framework that, more often that not, is followed by financial institutions. When the cash rate is low, bank interest rates generally follow suit.

An example of this is when the RBA sunk the cash rate to the record low of two per cent in May 2015. Since then, real estate activity and prices across the country (with some exceptions) reached unprecedented heights as people raced to take advantage of the low interest rate.

The labour market

The labour market has an immense impact on the value of property. After all, people need to be employed and make a decent living to afford real estate. Only when there's strong demand for it can property housing values rise. 

A November 2 release by CoreLogic RP Data explores this notion, showing that cities with high real estate value growth simultaneously had rapid expansion in its labour force.

On this note, Surfers Paradise property could be set up for quite a bit of value growth. The Economic Development Strategy 2023 publication released by the Gold Coast City Council is a framework that outlines how it plans on pushing the local economy to overdrive.

A lot of the initiatives revolve around bringing foreign investment and development to our shores through a number of key themes. These include diversifying the Gold Coast's economy, improving urban infrastructure and nurturing a sense of creativity and innovation among the industries. If things go as planned, this will go a long way to growing the job market in the Gold Coast, and should help to bump up property prices.

The growing property market in Surfers Paradise

As you can see, interest rates and the labour market are two key factors that can influence the value of property in Surfers Paradise. The best way to keep an eye out for these is to be informed. This means reading media releases from government council sites as well as watching for cash rate changes.

Stay tuned for part two, where we explore more variables that play into the equation, and how to keep watch for them. In the meantime, if you want to stake a claim on real estate in Surfers Paradise, get in touch with Ray White Surfers Paradise.

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