Issue 19 | Thursday 21 September 2023 | Navigating Variability in the Gold Coast Real Estate Market
Hello, Andrew Bell here with you, and I have a wealth of relevant information that will provide deeper insights into our real estate market and its intricacies.
Let’s start with some updates on interest rates, which have remained unchanged for the third consecutive month. There is a prevailing belief that the recent economic downturn, coupled with decreasing inflation figures, suggests that we may have reached the pinnacle of the interest rate cycle. However, there is a significant variance in forecasts among various banks and economists. Some anticipate a reduction in rates as early as late this year, while others predict no change until the end of the following year. The consensus, though, is that we are at the peak.
Interestingly, this perception of reaching the peak has spurred a more robust buying trend for the upcoming Spring season. FOMO (Fear of Missing Out) still lingers in many markets due to low inventory levels and strong buyer demand.
Auctions remain the most prominent method of sale across the country, with Ray White leading the way. Last weekend, we recorded 393 auctions with an impressive auction day clearance rate of 74%, which has since risen to over 90% post-sales. Sydney boasts the highest clearance rate at 82%, and on average, each auction attracted 4.1 bidders, only slightly down from the peak of the pandemic property frenzy.
Our monthly in-room auctions on September 7th saw a bustling crowd and robust bidding, averaging 7.1 bidders per property. For those considering buying, mark your calendars for September 28th, when we will have 40 auctions featuring a diverse range of Gold Coast properties, highlighted in this market update.
It’s essential to acknowledge that the Australian property market exhibits substantial regional variations. National averages fail to capture the stark differences between strong and weak markets, even within the Gold Coast. Sales activity, listing numbers, and buyer demand vary significantly between suburbs and price brackets.
These variations can be attributed to several underlying factors. For instance, the pandemic-induced migration from capital cities to regional areas has slowed in most regions, reducing the number of buyers in the market. Southeast Queensland, however, continues to experience healthy migration levels. This may change if prices decline in the cities migrants are leaving, affecting their buying power upon arrival on the Gold Coast.
Another factor impacting the market is the soaring building costs on the Gold Coast, currently the highest in the country, with a year-over-year increase of 10.5%. This trend is expected to persist for at least four years, prompting developers and builders to abandon projects. Consequently, we face strong migration and population growth but a shortage of new properties.
Lastly, nationally, we observed a notable 9.4% increase in new listings coming to the market in August, a typical trend for the Spring season. This surge in listings provides buyers throughout the country with more options, and only time will reveal its impact on sales activity.
In summary, these factors contribute to the complexity of predicting the future of the real estate market and explain the divergence in opinions. Many anticipate more listings due to high interest rates and the pressure they place on mortgage holders. Higher interest rates have unquestionably reduced borrowing capacity, but this effect varies significantly by region. Notably, in many parts of the Gold Coast, up to a quarter of all sales involve buyers without mortgages, significantly influencing the real estate landscape.
I’ll be back in two weeks with more updates on the Gold Coast property market.
All the best. See you in a fortnight’s time.
Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group