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Andrew Bell’s Market Wrap: The State of Housing Affordability

By Rebecca Coleman

Issue 10 | Thursday 20 May 2021 | The State of Housing Affordability

Hi, Andrew Bell here and coming to you today from Marquis at 2 Havana Way, a breathtaking brand-new boutique style building featuring three full floor waterfront penthouse apartments and located at the end of the Point at Paradise Point and overlooking Little Beach. As we start to wander through and have a look, today I want to address two very important aspects relating to the property market. My regular viewers will know that I often talk about the five fundamental factors that drive the real estate market, and one of those is housing affordability.

There are two aspects to affordability – one is personal income and the other is real estate prices that people have to pay. Whilst interest rates are low and there has been a loosening in lending criteria, which is positive, people still must get a deposit together in order to buy, and that is increasingly difficult without a sizable income. Affordability had been improving prior to the surge in real estate prices because of lowering borrowing costs, but now with prices increasing so significantly there is a greater need to borrow more money and so housing affordability comes into question. This then leads to the question of wages growth which is a critical factor in prices being able to continue to rise or the length of time in which increases can occur.

Wages growth has been all but non-existent for years now, and that is in part because of two factors – one is that unemployment has been at levels that have not put upward pressure on wages and the other is the types of jobs that we have been creating, which are generally lower paying jobs. There is another factor that is not talked about frequently and that is underemployment, which means people only on part-time work even though they are registered as employed and so they are not working the hours necessary to bring in a sizable income.

The official measures of wages growth do not really paint the full picture. They have been showing that annual wage growth has been higher than CPI, but they only measure discretionary items such as cars, electrical goods, holidays and so on which have been reducing costs, whilst non-discretionary items such as schools, rates, electricity, gas, petrol, insurance etc. have all been rising. When you combine it all the cost of living for everyone has been rising at a higher rate than wages, and it is only by being on the most austere budget that you would say any different.

There is no sign of any wage’s growth at present and the bigger focus is on just simply getting unemployment down, and so this feeds back to the question of housing affordability and it is why there has suddenly been a significant surge in people moving out of major cities like Sydney and Melbourne to regional areas. The rethinking of life that was created by COVID made people reassess where they want to live, but most importantly where they can afford to live. Whilst interest rates are at record lows, the need to borrow more money to pay for the higher real estate prices has made the average mortgage much more expensive and so for increasing numbers of people it is to look for an area where prices are lower than where they currently are. Queensland is certainly being the beneficiary of that thought process and the more the media focuses on it and the more people see family and friends making a move, the more we will see this trend continuing albeit perhaps at a lesser rate with time.

Below is a chart from Matusik research that shows there is a strong connection between high housing costs in the city of Sydney and the positive net interstate migration to Queensland. This is just one confirmation of what I have been discussing today.

Back to these amazing apartments that have been built to the highest standard and with breathtaking unsurpassed water views that makes for a perfect place to take in the sunset while watching some of the Gold Coast’s most amazing boats cruising by. The floorplans are centred around an oversized open plan kitchen and living zone which makes it perfect for family life, and includes 3 generous sized bedrooms each with its own ensuite; a study or fourth bedroom, media room, a butler’s style pantry area, and a fabulous lounge area with generous balconies plus your own private rooftop terrace or ground floor garden area that has room for a pool or jacuzzi.

Generally speaking, all our penthouse style apartments are located in the bustling centres of Main Beach, Surfers Paradise, Broadbeach, and perhaps to some of our southern suburbs, and that is what makes these apartments so rare. They are unique, they are unparalleled, and they are in one of the most gorgeous northern residential points on the Gold Coast; in a world of their own yet close to wonderful facilities and the great restaurant precinct at Paradise Point.

Take the opportunity to come and inspect these apartments through our Marketing Agent, Lorraine Drysdale she will be only too delighted to assist you.

As we have seen today, ongoing price increases will be challenged by declining housing affordability which at some stage will start to put the brakes on price increases. For now, the market continues with great strength and our remarkable team of very experienced agents continue to achieve incredible results for our clients. If there is any way we can assist you whether you are selling, buying, or renting, please reach out to us. We are not new to the Gold Coast, we have been operating here for nearly 32-years, we are here to look after you, and no one has greater experience or a greater care factor.

Having just returned from Canberra for the release of the Budget, we are working through all the impacts that the Budget will have on the real estate market and I will share that with you shortly. In the meantime, stay positive e and let’s always be part of the solution not the problem for whatever happens in life.

Warm Regards,

Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group

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