Issue 25 | Thursday 15 December 2022 | How is the Gold Coast Market Positioned Entering 2023?
Hi, Andrew Bell, and season’s greetings to you. At this time of year, we are reminded how quickly the year has gone and it’s been a fascinating year in 2022 has been as we followed the usual path of a transition out of two years of real estate boom in which this time prices grew at the fastest and largest rate in the history of Australia, and we saw the market move into the next phase which always is price correction. It’s always driven by the Reserve Bank seeking to slow down price growth by increasing interest rates and my goodness didn’t they do that well and truly this time with a rapid eight sizeable interest rate rise in eight months? Again, setting a record of the fastest and largest increase in interest rates on record, largely because there has been an outbreak of inflation, something that we really haven’t seen anything of for some 30 years.
But the good news is we are probably 85% through those interest rate rises, although we do have to live with the consequences for some time to come.
The consequences of higher interest rates have bigger impacts on markets throughout Australia. The mortgage belt and first home buyers truly feel it first as do all of those who bought over the past two years unless they were downsizing retirees. Whilst most of the country has already experienced around a 15% drop in property prices the Gold Coast to date has been very blessed. A good percentage of our market, and a very large percentage of those who bought over the past 2 years, have indeed been downsizers and migrators. They have sold their larger properties interstate and relocated to the Gold Coast pocketing a sizeable amount of cash due to the more affordable prices that the Gold Coast has on offer through the past couple of years. As a result, we have not felt the same degree of price correction and it has been modest, to say the least in most segments of the market, yet we are only at the beginning of the pain that comes with higher interest rates.
The true effect of interest rate increases is not really seen until 6 plus months after the bulk of the interest rates has worked their way into the system. It’s when month after month people are digging into already eroded weekly incomes, or it happens for most, digging into savings to pay the higher interest rates. That’s when people find themselves under significant mortgage stress and that’s when people are forced to sell or indeed their bank takes possession and sells their property on their behalf. The Gold Coast will, unfortunately, record its share of these sad circumstances, but touch wood, we will be one of the best-performing markets in Australia.
We are already getting an insight into why the Gold Coast is holding firm at present, and that is an acute shortage of property on the market for sale. Around the country presently there are some 30.8% fewer properties for sale right now than there were at the same time last year. Look at a suburb like Surfers Paradise. Back in the dark days of the Global Financial Crisis, there were well over 2300 properties on the market for sale at any one time. Three months ago, there were around 500 properties for sale of all types, sizes, and price brackets. That’s now just over 250 properties. It’s not just the shortage of properties for sale. That shortage is also met with very healthy demand, and whilst we expect that equation to change as we move through 2023 with more property owners being forced onto the market to sell and more buyers becoming hesitant about buying, right now we have the best selling conditions that we have seen in 2022.
With this acute shortage of properties for sale is no surprise that results at auction, and in the private treaties, are so strong. Our November auctions saw an extraordinary 100% success rate for the month. Our December auctions to date are showing an 84% success rate. Remember the significance of those numbers is the fact that around the country typically auction success rates currently are anywhere from 30 – 60%, and the success rate of properties listed for a private treaty with a price is even lower. This huge success rate of ours not only reflects the better market conditions on the Gold Coast but dare I say, our expertise in the field of auctions where the accumulated experience of over 35 years and how to operate in markets such as this comes to the forefront. No one, and I repeat, no one is more experienced in these market conditions than the Ray White Surfers Paradise Group.
So, we are closing out the year securing auctions for The Event 2023. With such incredible shortages of properties for sale that I mentioned above, we were expecting a significantly downsized volume of properties for The Event, but we are pleased to see that its reputation as the premiere way of selling Gold Coast property, during our peak selling period of the year has attracted an outstanding volume of properties for sale. So, for our buyers be assured that the properties that we are listing are not just people testing the market but committed sellers who will adjust to market values in the sale of their properties.
Whilst this is the second last eNews of 2022 our last will be on Thursday 29th December, in which we will highlight all of the brand new listings to the market that is participating in The Event 2023. Mark it in your diaries not to miss reviewing those listings. For buyers, 2023 will be the perfect year to buy before the market moves into its new phase, and the opportunity to purchase from sellers more motivated to sell will have been missed.
For sellers, we are still open for bookings to be part of The Event 2023. We work all through the Christmas, and New Year period as we are already starting to see the big influx of holidaymakers arriving, and amongst them there is always a large contingent of people who want to secure whilst they are here their real estate purchase, whether it be the home they are moving to, a holiday home, or a property that is showing huge rental returns and the best in Gold Coast history. We even have our photographers and videographers and copywriters all on standby just waiting for those late bookings to be part of the program.
With all of that said, on behalf of myself, my brother Greg and our CEO of Residential Charles Higgins I would like to pass on to you our very sincere best wishes for the festive season. I trust you’ll celebrate it in the way you truly seek to do so with family, many of whom we don’t see as often as we would like to, with friends that are increasingly hard to keep up with in this busy world. Merry, merry Christmas from all at the Ray White Surfers Paradise Group.
Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group
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