Burleigh Heads Property Watch Q2 2011

The following Property Watch is the result of an investigation into the house, unit and vacant land market comprising suburbs within the Burleigh Heads Area as depicted in the map to the right. The purpose of this report is to identify the trends influencing the performance of this real estate market and the factors contributing to its competitive environment.

Demographics
As at June 2010 the estimated resident population of the Burleigh Heads Area was 51,858 residents. This equates to an increase of 1.5 per cent or 766 new residents from the June 2009 population of 51,079. Understood to be a family oriented region, 69.3 per cent of residents live in a household that is classified as a family variation. The Burleigh Heads Area also has a strong investment market accounting for 35 per cent of dwellings, while the remaining 65 per cent of residents are owner occupiers either servicing a mortgage or owning their property outright. The bulk of households, 65 per cent, earn less than $1,200 per week, while toward the top end of the market, a significant 19.6 per cent of households earn over $1,700 per week.

House Market
The Burleigh Heads house market typifies what has occurred in the Gold Coast property market in the past decade. Before the Global Financial Crisis (GFC) unfolded in 2008 the market was growing, with increasing levels of activity matched by a rising median house price. Once the GFC occurred activity fell dramatically, as shown in the House Sales Cycle, only to be propped up in 2009 by low interest rates and Government stimulus spending. Since June 2009, successive interest rates rises and tightening criteria for lending has seen a steady fall in activity. For the most recent six month period ending December 2010 there were 257 house sales, equating to a softening of 9.2 per cent from the previous six months.

Over the December 2010 half year period the bulk of house transactions occurred in the $400,000 to $499,999 price bracket, at 32 per cent of total sales. The price segment to have contracted the most from the previous year has been the $500,000 to $700,000 range, experiencing a fall of 48 per cent. As a result of the middle segment of the market contracting, the median price has softened by $25,000 (4.3 per cent) in six months to register $550,000.

A resale analysis was undertaken to ascertain the average annual returns received by homeowners who exited the Burleigh Heads Area house market over the six months to December 2010. On the whole, the Burleigh Heads Area market sustained an average annual capital growth of five per cent per annum with an average holding period of just under eight years.

Looking closer into the Burleigh Heads Area house market, the suburb of Burleigh Waters encountered the most activity during the six months ending December 2010 with 78 (30.4 per cent) of the total 257 settled transactions. This was followed by Varsity Lakes with 74 sales (28.8 per cent). The most affordable suburbs by median price were Varsity Lakes ($476,250) and Burleigh Waters ($548,750), while the highest medians were sustained in Reedy Creek ($675,500) and Burleigh Heads ($552,500). The only suburb to experience an increase in activity was Miami, from 32 sales to 33.

Unit Market
The Burleigh Heads Area unit market has continued to experience softening sales over 2010. For the first time in just under a decade, the unit market registered activity below 300 sales for a six month period, with the second half of 2010 recording 297 settled sales. This equates to a significant decline from the June 2010 six month period at 24 per cent. The majority of sales in the six months period ending December 2010 occurred in the $300,000 to $399,999 price brackets, with 39 per cent of the total sales. A resale analysis on unit stock sold over the December 2010 half year period has yielded an average annual capital growth of four per cent per annum, with an average holding period of just under seven years.

Looking closer into the Burleigh Heads Area unit market, the suburb of Varsity Lakes has encountered the most activity during the six months ending December 2010, with 106 (36 per cent) of the total 297 settled transactions. This was followed by Burleigh Heads with 100 sales (34 per cent). The most affordable suburbs by median price were Reedy Creek ($316,500) and Burleigh Waters ($365,000), while the highest medians were sustained in Varsity Lakes ($402,500) and Miami ($389,000).

Rental Market
A large portion of tenure in the Burleigh Heads Area belongs to the rental market. As a result, the performance of the rental market and subsequent yields become important in understanding the performance of the market as a whole. The appeal of the coastal lifestyle as a popular holiday destination, particularly in the less developed suburbs of the Gold Coast will continue to drive growth within this market.

Demand in the Burleigh Heads Area unit rental market appears to have stagnated over the past couple years, as there has been little to no change in the median weekly asking price of $350. Rental bonds for standard two bedroom unit decreased by 2.2 per cent over the 12 month period ending March 2011. Standard three bedroom houses have received a slight increase in the level of demand from the previous year, with the quantity of rental bonds rising by 11.9 per cent. The median weekly house rental price has also increased by 3.6 per cent to $435.

Long term growth in the rental market has been driven by the financial viability of the renting and the popularity of Burleigh Heads as a holiday destination. When assessing the investment potential of a property, buyers should look for properties within close proximity to surrounding activity hubs and the level of amenity, which promote better rental and capital growth.