Issue 08 | Thursday 22 April 2021 | A Prestigious Gold Coast Estate
Hi, Andrew Bell coming to you from what continues to be an extraordinary market here on the Gold Coast. A recent example of our market is the 21 residential properties we put to auction on the 8th of April which saw an incredible 86 percent success rate by the end of the auction day, and while I understand we are the most experienced auction company on the Gold Coast, and one would expect to deliver those kinds of results, but these sorts of figures are amazing. There is only one property that remains unsold, so the success rate is now just short of 100%, and that was backed up on the following Saturday with two other properties being sold under the hammer with a collective 16 bidders between those two properties. Over 40 percent of those auctions actually sold prior to auction with offers just too good to refuse.
It is no surprise that people are asking how long this market can continue at this pace. As I address that, I am also giving you an insight into one of the most remarkable properties in Australia. It is the Australian home of our sporting icon, Mick Doohan and it has been his family home for 25 years. Whilst you are looking through I will share some thoughts about this ongoing market.
The last time we saw a market anything like this was after the 1987 Black Monday stock market crash that led to people taking their money out of the stock market and injecting it into the real estate market. The sort of price rises we are seeing now is not dissimilar. For example, March saw the strongest jump in house prices coming in at 2.8 percent in just one month and that is the highest since October 1987. At that time, the surge of money out of the stock market created massive buyer demand, and credit was made cheap to stimulate consumer demand to support the shock to the economy. Sound familiar?.
We have of course had other booms since then. We had the mining boom in the late 90’s and into the early parts of 2000’s, and this created a flood of wealth that led to strong buyer demand for real estate. We will all remember hearing about region mining towns building at the rate of knot and the massive demand for rental accommodation that stimulated investor activity. Some overcooking and some Government intervention with some tampering to capital gains tax brought that to an end.
After the start of the financial crisis in 2008, the Government again tried to stimulate our economy, and we particularly saw stimulation come from population growth through the relaxing of immigration laws which saw the rise of the Chinese buyer. Again, a fall in interest rates and some relaxation of FIRB laws facilitated that boom, and here we are yet again in a real estate boom. For me, much of it can be justified here on the Gold Coast because of the overcorrection in prices post the financial crisis that the Gold Coast never quite recovered from. It is really interesting that this boom, unlike the two previous, has been driven by owner-occupiers and not by investors and foreign purchasers.
As I have said on many occasions, this is a COVID driven market. Borders were closed, there were great concerns about living in high density population centres such as capital cities, and it triggered a rapid and very large reassessment of everyone’s lifestyle. It started the migration from capital cities to regional locations. People wanted to buy lifestyle homes and so there has been an enormous amount of repositioning. Money is cheap. The lowest interest rates in the country’s history. Holiday homes were in strong demand as were caravans, boats, cars, and the like. It has been one of the greatest spending splurges in the country’s history. We have tried to stimulate everything, including first-home buyers who have seen the biggest grant in the country’s history.
Here we were hit with unprecedented buying demand at a time when the stock was tight and so the fundamentals of real estate clicked in once again. Short supply and strong demand, and so prices have shot up.
Can this continue forever? Of course not. I liken it to a dam wall. As rainfall feeds into rivers and into a dam, it builds up pressure against the dam wall. Eventually, the spillway is opened, and you see a massive shot of water firing out the spillway until, with time, the pressure starts to drop as water is released to the point in which eventually that release of pressure reduces to just a steady flow and even possibly a trickle. We had that burst of buyer demand released some six months ago and with time every person who wanted to buy will have bought, and eventually, we will get back to normal buyer demand and normal price growth. However, we will find that the whole attitude to real estate has changed. A new appreciation of how important the home you live in is and it is more than just an investment, it is where you live and where you enjoy life. The re-evaluation of ‘where I live’ will continue as people can work more effectively from home and so on, and whilst our economy continues to go from strength to strength we will have more prosperity to support home purchasers.
There will be winners and losers. The Gold Coast is the No. 1 ‘go to’ location of Australia and so whilst things undoubtedly will ease and come back to more sustainable growth, we have every reason to be confident that buyer demand will hold at levels that will support our real estate market. The only thing to be wary of is that awful x-factor. Some national or international event that has a dramatic effect on consumer confidence and even the economy, just as the collapse of Lehman Brothers which triggered the Global Financial Crisis. An easing to this price growth would be welcomed by me so that we can keep a sustainable market into the future.
I hope you have enjoyed having a look at this incredible and definitely most unique home. One thing is for sure and that is homes like this meets the criteria of the ever-increasing number of super-wealthy who are now popping up all over Australia. It is beyond question a one-off property in one of the most stunning locations in the country. Whilst you could describe it as a ‘trophy home’, it is indeed a home. A safe and secure location with immense privacy and offering a lifestyle that simply cannot be found elsewhere. A home like this perhaps only comes to the market once in a lifetime. It is a case of being bold, decisive, and claiming the trophy. It is a home that will be the centre point of your life for your partner, your children, the broader family, and indeed for friends. To answer any questions you might have please contact our marketing agents, Michael Willems and Jackson Rameau on the details shown on screen now.
That is all for this fortnight. I look forward to being with you in two weeks’ time
Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group