Gold Coast and Tweed Area Highlight Report Q4 2013

GOLD COAST AND TWEED AREA OVERVIEW

The following Highlight Report is a summary of the historic and current trends within the Gold Coast City (the Gold Coast) and Tweed Shire (the Tweed Area) residential property markets, with a specific focus on the sub-markets of Ashmore, Burleigh Heads, Coolangatta, Helensvale, Mudgeeraba, Palm Beach, Robina Runaway Bay, Southport, Surfers Paradise and Tweed Heads.

About the Gold Coast

The Gold Coast, located in south-east Queensland and bordering New South Wales covers an area of 1,379 square kilometres stretching along 57 kilometres of the eastern coast line. Approximately 78 kilometres south of the Queensland state capital, Brisbane, the Gold Coast is connected to the surrounding regions by a network of road, highway and rail infrastructure.

The region is internationally recognised for its beaches, surfing conditions and surrounding hinterland areas and national parks. It also hosts of a number of popular theme parks including Dreamworld, Sea World and Wet n Wild. The Gold Coast attracts an estimated 12 million visitors annually, predominantly tourists.

About the Tweed Area

The Tweed Area occupies an area of 1,309 square kilometres in the north-east corner of New South Wales bordering Queensland, around 860 kilometres north of Sydney and 100 kilometres south of Brisbane. The urban centres in the area are connected to the Gold Coast and surrounding regions via a well-developed road and highway infrastructure.

Renowned for its natural attractions, the Tweed Area and surrounds are characterised by a diverse network of local communities. The region has built a reputation as a popular tourist destination for both domestic and international travellers. In recent years the area has also attracted a greater number of lifestyle-oriented residents, particularly retirees.

Gold Coast and Tweed Area Residential Property Markets

The broader Gold Coast residential property market has undergone a structural correction following a period of relatively heated activity between the start of the millennium and the onset of the Global Financial Crisis. However at a macro-level, since August 2012 most property types have begun to show signs of a reversion to growth in both volume of transactions and median price as oversupply issues and market participant attitudes have gradually normalised.

Median price levels for Tweed Area residential property have not yet exhibited the same overall return to growth however there have been some signs of stabilisation for specific property types in some locations. There is evidence that the accommodative monetary policy settings currently in place are fostering an increased level of prospective investor and home owner interest and activity. This will be particularly important for encouraging further development in the Gold Coast and Tweed Area markets. On the whole, the risk appears to be to the upside in the near term.

GOLD COAST AND TWEED AREA GROWTH DRIVERS

There are a range of economic and demographic factors exerting influence on the direction and behaviour of the Gold Coast and Tweed Area residential property markets. Prominent drivers of growth are likely to include aspects of the following:

Population and Migration

The population of the Gold Coast increased more than 33 per cent in the decade from June 2002 to June 2012, equating to an average annual growth rate of 2.9 per cent, or almost double the national average of 1.5 per cent over the same period. The Tweed Area also exhibited strong population growth with an increase of 20 per cent over the same period, exceeding the national annual average rate by 0.3 per cent. It is expected that additional population growth and migration will be a significant factor in encouraging further development with these regions.

Education and Employment

A high level of education and employment are key drivers of growth in any economy. As at the 2011 Census both the Gold Coast and Tweed Area had a higher proportion of residents with either vocational or Advanced Diploma or Diploma level qualifications than the national average. Furthermore, growth in the proportion of Gold Coast residents achieving a tertiary level qualification exceeded growth in the national average between the 2006 and 2011 Censuses.

As at the 2011 Census the retail trade, construction, health care and social assistance and accommodation and food services sectors were significant employers in both the Gold Coast and Tweed Area. These industries will be important in underpinning future economic growth.

Other sectors such as manufacturing and education and training are likely to benefit in the medium term, as competitive pressures exerted by the unusually high value of the Australian Dollar begin to show signs of easing.

Infrastructure

Investment in infrastructure will continue to play an important role in the economic development and growth of both regions with construction being a key employment sector for the Gold Coast and the Tweed Area. This is in addition to other longerterm benefits derived from the infrastructure once completed. Examples of major projects investment, both underway and anticipated, include the Gold Coast Rapid Transit Project, Gold Coast University Hospital and Commonwealth Games sporting and support infrastructure programs. Total capital expenditure for these projects alone is estimated to total more than $5.6 billion.

HELENSVALE

Located at the northern edge of the Gold Coast, Helensvale is undergoing a period of significant investment and will be become an integral component of the Gold Coast transit network over the next few years. Projects underway include the linking of the Gold Coast Highway and Pacific Motorway and planning for the Helensvale terminus of the Gold Coast Rapid Transit system, GoldLinQ. Helensvale affords residents a high level of convenience and amenity with features including retail precincts, schools, parks and a golf course. The suburb is 60 kilometres south of Brisbane and only 18 kilometres north of Surfers Paradise.

Helensvale Houses and Units

The median house price in the Helensvale area recorded average annual growth of 2.8 per cent over the 10 years to August 2013. The effects of the Global Financial Crisis resulted in a subsequent period of negative median price growth and a higher level of price volatility. A relatively high degree of price stickiness is evident in the Helensvale market, with a number of periods since August 2008 recording less than half the pre-crisis volume peak but only relatively insignificant movements in median price. Buyers looking for price stability should take note of this behaviour.

The Helensvale median house price increased 1.6 per cent (to $472,500) in the six months to August 2013. Transaction volume remained steady over the same period (up one, to 124). There has been a noticeable shift in house transaction volume composition over the four years from August 2009 to August 2013, with increases recorded in the proportion of transactions in both the lower and uppermost price point ranges, while middle ranges have fallen in representation. A more substantial increase in median price was recorded for units, up 6.9 per cent (to $309,000) compared with the prior period. Similarly, transaction volume for unit type dwellings increased, up 64.3 per cent (to 23).

Helensvale Rental Market

According to the 2011 Census, 19.8 per cent of Helensvale residents live in some form of rental accommodation. The median weekly asking rent* for houses in the Helensvale area fell 8 per cent (to $400) in the third quarter 2013, while the median weekly asking rent for units increased 6.4 per cent (to $415). Relative to first quarter 2010 the median weekly rent for housing has remained steady while for units there has been an increase of 12.2 per cent.

The proportion of residents renting in social housing accommodation in the area (0.7 per cent at the 2011 Census) is more than six times lower than the national average.

RUNAWAY BAY

Runaway Bay is a suburb located towards the northern edge of the Gold Coast along the western shore of the Gold Coast Broadwater. Runaway Bay is a developed community and is a relatively affluent suburb compared to others in the northern area of the Gold Coast.

A range of attractions and conveniences position the suburb well to compete for buyers against comparable locations further south. These include a marina, premier sporting facilities and the Harbour Town Shopping Centre.

Runaway Bay Houses and Units

The median house price in the Runaway Bay area recorded average annual growth of 1.3 per cent over the 10 years to August 2013. Demand was somewhat stronger in the earlier years of this period and the median price has generally exhibited a downward trend since the initial impact of the Global Financial Crisis during 2008. In recent periods there has been an improvement in transaction volumes and median price of both housing and unit dwelling types. It is likely that the improved level of demand will encourage positive median price growth in the near term.

The Runaway Bay median house price increased 26.8 per cent (to $722,500) in the six months to August 2013, reversing most of the fall recorded in February. Transaction volume increased 17.7 per cent (to 60) over the same period. The change in house transaction volume composition over the four years from August 2009 to August 2013 suggests a notional improvement in affordability, with the proportion of transactions under $600,000 increasing 12 per cent. The Runaway Bay median unit price increased 13.8 per cent (to $495,000) over the six months to August 2013 compared with the prior period. Similarly, unit transaction volume rose by a substantial 37.2 per cent (to 59).

Runaway Bay Rental Market

According to the 2011 Census, 28.7 per cent of Runaway Bay residents live in some form of rental accommodation. The median weekly asking rent* for houses in the Runaway Bay area increased 7.7 per cent (to $420) in the third quarter 2013. The median weekly asking rent for units increased 4.5 per cent (to $345) for the quarter.

The proportion of residents renting in social housing accommodation in the Runaway Bay area** (1.5 per cent at the 2011 Census) is only one third that of the national average.

SOUTHPORT

Located towards the north of the region, Southport is the traditional central business district of the Gold Coast and is undergoing a renewed and significant period of growth and investment. The Queensland State Government has declared Southport a Priority Development Area (PDA). The Gold Coast City Council has assumed responsibility for development assessment within the PDA which will cover 195 hectares of land. The PDA should result in increases in the density of new residential projects, reduce red tape for developers and speed up development application and approval processes.

A number of major capital projects are under construction, or planned to commence within the area in the next few years including the Gold Coast Light Rail project (currently undergoing trials of the partially completed network) and 2018 Commonwealth Games related sporting and support infrastructure and upgrades.

Southport Houses and Units

The median house price in the Southport area recorded average annual growth of 2.4 per cent over the 10 years to August 2013. While both transaction volume and median price have generally remained subdued compared with their pre-Global Financial Crisis peaks, there has been a noticeable response in both measures since the Queensland State Government (the State Government) election in early 2012. It is likely that recent pro-development initiatives implemented by the State Government will continue to provide support for this trend in the near term.

The Southport median house price increased 3.6 per cent (to $420,500) in the six months to August 2013, continuing to reverse the decline recorded over the period from August 2010 to February 2012. Transaction volume fell 7.7 per cent (to 84) over the same period but remained substantially above the low (59) recorded 12 months earlier.

The Southport median unit price also rose over the six months to August 2013, up 2.2 per cent (to $305,000). Transaction volume increased 5.6 per cent (to 247) for the same period. Over the 10 years to August 2013 the median unit price recorded average annual growth of 2.9 per cent despite a 6.2 per cent fall in transaction volume. Anecdotally, it is likely that in the near term unit transaction volumes will remain somewhat below their historical peak as would-be vendors take a wait-andsee approach to price fluctuations in the area. This could potentially result in greater carrying losses for some investors should the current recovery dissipate. The change in unit transaction volume composition over the four years from August 2009 to August 2013 suggests a notional improvement in affordability, with the proportion of transactions recorded for under $300,000 increasing 14.5 per cent. The largest number of transactions fell within the range of $200,000 to $299,999.

ASHMORE

Ashmore borders Southport to the East and forms a part of the Gold Coasts growing business district. The area caters to residents in many areas including a strong retail presence, sporting facilities, dining precincts and both public and private schools. The suburb also hosts a campus of the Gold Coast Institute of TAFE, is well serviced by public transport and provides easy access to the regional highway network.

As with the suburb of Southport, a number of major capital projects are under construction, or planned to commence within the area in the next few years including the Gold Coast Light Rail project (currently undergoing trials of the partially completed network) and 2018 Commonwealth Games related sporting and support infrastructure and upgrades. Ashmore is also in close proximity to the recently opened Gold Coast University Hospital.

Ashmore Houses and Units

The median house price in the Ashmore area recorded average annual growth of 3.5 per cent over the 10 years to August 2013. Similar to the nearby suburb of Southport, both transaction volume and median price have generally remained below their respective pre-Global Financial Crisis peaks, however there has been a similar response in both measures since the Queensland State Government (the State Government) election in early 2012.

The Ashmore median house price increased 4.2 per cent (to $450,000) in the six months to August 2013, reversing most of the decline recorded over the prior period. Transaction volume increased a substantial 15.3 per cent (to 83) over the same period and remained substantially above the low (55) recorded 12 months earlier.

Conversely, the Ashmore median unit price fell over the six months to August 2013, down 17.2 per cent (to $233,000). Transaction volume fell less, down 11.54 per cent (to 23) for the same period. Given the relatively low frequency of unit transactions in the area it would be advisable for any buyer to consider a more granular level of analysis rather than attempt to interpret movements recorded by relatively broad measures such as median price and transaction volume. It is likely that in the near term unit transaction volume and median price will remain somewhat volatile given the expected level of new development within the region. The change in unit transaction volume composition over the four years from August 2009 to August 2013 suggests a noticeable improvement in affordability, with the proportion of transactions recorded for under $200,000 increasing 24.7 per cent. The largest number of transactions fell within the range of $200,000 to $299,999.

SURFERS PARADISE

Surfers Paradise is the hub of entertainment and tourism in the Gold Coast area. Consisting of predominantly high-rise residential and short-term accommodation, the area features dining and retail precincts and a busy night-life district. The suburb is best known for its extensive surf beach and draws a significant number of visitors both domestically and internationally. Surfers Paradise also hosts an array of free public events each year for both residents and visitors including the Surfers Paradise Festival and New Years Eve celebrations.

Affording residents and visitors easy access to the Gold Coast Highway and Gold Coast Airport, Surfers Paradise is also well serviced by existing public transport routes. The central business district of the suburb will form a critical component of the Gold Coast Light Rail network once it is completed.

Surfers Paradise Houses and Units

The median house price in the Surfers Paradise area recorded average annual growth of 0.7 per cent over the 10 years to August 2013. House prices in the area have exhibited a relatively high level of responsiveness to external shocks. This is highlighted by the significant downward shift in median price around the period characterised in many markets by the events of the Global Financial Crisis. Any consideration of localised median price movements should take account of the relatively infrequent nature of housing transactions in the area, as well as significant variations evident when comparing particular items of stock. For example, two dwellings of similar construction and on similar land parcels may command disparate prices where one has direct ocean views and the other does not. The effect of this upon the median price is such that a more specific level of analysis would be prudent if attempting to derive further insight from this measure.

The Surfers Paradise median house price fell 12.7 per cent (to $1,012,500) over the six months to August 2013. Transaction volume remained steady (at 41) for the same period. Recent renewed interest in higher-density dwelling construction in the Surfers Paradise area could potentially have a distorting effect upon the median house price if vendors are able to secure a premium in instances where the buyer intends to acquire land for the purpose of re-development.

The Surfers Paradise median unit price increased 4.9 per cent (to $365,000) over the six months to August 2013. Transaction volume was down 4.6 per cent (to 499) for the same period. Over the 10 years to August 2013 the median unit price has recorded average annual growth of 2.4 per cent. It has also exhibited a degree of relative stability over this time compared to markets in similar locations. This is despite significant fluctuations in transaction volume over time and gives an indication as to the relative level of maturity of the Surfers Paradise market.

BURLEIGH HEADS

The suburb of Burleigh Heads is situated along the coastline and is roughly halfway between Surfers Paradise to the north and Coolangatta to the south. There are extensive parklands lining the beaches in the area which is renowned as a family friendly and somewhat less tourist-focused location than some others in the Gold Coast region. A large number of visitors to the suburb are domestic day trippers or keen surfers. The area is also characterised by a number of national parks. Burleigh Heads affords residents a high level of convenience and amenity with features including retail and dining precincts and easy access to highway and existing public transport networks.

Burleigh Heads Houses and Units

The median house price in the Burleigh Heads area recorded average annual growth of 2.2 per cent over the 10 years to August 2013. Over the 12 months prior to the same point the median house price for the area increased 13.7 per cent. The median house price has generally exhibited a moderate level of responsiveness to external market conditions however the volume of transactions recorded on a six-monthly basis has generally reverted to pre-Global Financial Crisis norms. Other similar markets are yet to demonstrate such a recovery.

The Burleigh Heads median house price increased a substantial 16 per cent (to $580,000) in the six months to August 2013. Transaction volume similarly improved, up 11.4 per cent (to 39) over the same period.

The Burleigh Heads median unit price increased 3.5 per cent (to $364,750) over the six months to August 2013. Transaction volume also rose but by a more substantial 18.3 per cent (to 136) for the same period. Over the four years from August 2009 to August 2013 there has been a notional trend towards greater affordability with an increase recorded in the proportion of transactions under $400,000.

Burleigh Heads Rental Market

According to the 2011 Census, 33.3 per cent of Burleigh Heads residents live in some form of rental accommodation. The median weekly asking rent* for houses in the Burleigh Heads area increased 1.1 per cent (to $470) in the third quarter 2013. The median weekly asking rent for units held steady (at $360) for the same period. The proportion of residents renting in social housing accommodation in the Burleigh Heads area (1.4 per cent at the 2011 Census) is less than one third that of the national average.

MUDGEERABA AND ROBINA

Considered one of Australia's most successful planned communities, the Robina area has become one of the fastest growing Gold Coast regions. The Robina Town Centre features a major retail precinct as well as the final rail station on Queensland Rails Gold Coast line from Brisbane. Robina is also home to the Bond University as well as the $160 million Skilled Park entertainment and sporting precinct which can host crowds of up to 27,000 people.

The adjacent suburb of Mudgeeraba comprises predominantly hinterland and affords residents and visitors the convenience of proximity to the busy urban hub of Robina while retaining much of its old-town feel. Mudgeeraba is also the gateway to the nearby World-Heritage listed Springbrook National Park.

Mudgeeraba and Robina Houses and Units

The median house price in the Mudgeeraba and Robina area recorded average annual growth of 3.8 per cent over the 10 years to August 2013. Both house and unit transaction volumes have remained somewhat below pre-Global Financial Crisis peaks, however the trend in median price over this time has generally been one of relative stability compared with a despite remaining below the most recent peak in February 2009.

The relatively resilient nature of the median price level in the Mudgeeraba and Robina residential dwelling market is an indicator of the strong underlying demand present within the locality. This has been supported by investment within the region and high level of existing infrastructure.

The Mudgeeraba and Robina median house price fell 1.1 per cent (to $457,000) in the six months to August 2013 and has remained relative stable since August 2011. Transaction volume increased 3.3 per cent (to 421) over the same period and remains noticeably higher than the most recent low recorded two years earlier. The Mudgeeraba and Robina median unit price also fell over the six months to August 2013, down 2.7 per cent (to $450,000). Transaction volume increased a noticeable 6.1 per cent (to 347) for the same period. Over the 10 years to August 2013 the median unit price recorded average annual growth of 3.8 per cent despite a 12 per cent fall in transaction volume. The relatively high median price level is indicative of the quality of stock and demand for higher density residential accommodation within the area.

The change in house transaction volume composition over the four years from August 2009 to August 2013 suggests a notional improvement in affordability, with the proportion of transactions recorded for under $400,000 increasing 5.7 per cent. The largest number of transactions fell within the range of $400,000 to $499,999.

PALM BEACH

Located towards the southern end of the Gold Coast, the suburb of Palm Beach is characterised by its extensive coastal shoreline areas and relaxed beach-town atmosphere. The suburb is a popular domestic tourist destination with local features including camping grounds along the edge of Tallebudgera Creek as well as multiple dining and shopping precincts. Residents and visitors can also engage in a range of activities including fishing, snorkelling and surfing.

The area is also host to some of the earliest examples of the renowned beach shack style house and has been judged to be Queenslands cleanest beach on three occasions.

Palm Beach Houses and Units

The median house price in the Palm Beach area recorded average annual growth of 2.9 per cent over the 10 years to August 2013 making it one of the best performing Gold Coast markets over this period.

The median house price in the area has generally exhibited a moderate level of responsiveness to external shocks. For example, some periods subsequent to the events of the Global Financial Crisis have been characterised by a higher degree of volatility than previously observed. However, since February 2012 the overall trend has been one of relative stability.

The Palm Beach median house price increased 3.1 per cent (to $507,500) in the six months to August 2013. Transaction volume fell slightly, down 4.2 per cent (to 68) over the same period.

There has been a noticeable shift in house transaction volume composition over the four years from August 2009 to August 2013, with increases recorded in the proportion of transactions in the lower two and uppermost price point ranges, while middle ranges have generally fallen in representation.

The Palm Beach median unit price increased 7.5 per cent (to $345,000) over the six months to August 2013. Transaction volume also increased over this period, up 9.8 per cent (to 90). Over the 10 years to August 2013 the median unit price has exhibited the same rate of average annual growth as housing at 2.9 per cent. It is also worth noting the stability in the median unit price over this time compared to the behaviour exhibited in some markets in similar locations. Most significantly, the effects of Global Financial Crisis on the median price in the area are not so apparent, despite a noticeable fall in transaction volume. This may be indicative of a somewhat higher level of demand for newer stock within the area.

price behaviour in the Coolangatta area is the relatively elevated level of this measure towards the start of the 10 year analysis window. This suggests that the early 2000s property price boom may have begun somewhat earlier in the Coolangatta area than in other locations. Investors should take note of this if their strategy is weighted towards improvements in asset capital values.

The low quantum of housing transactions recorded in many periods makes deriving useful insight from apparent behavioural trends somewhat difficult. Buyers should take note of the specific features of a given house in the Coolangatta area rather than try to interpret fluctuations in broad measures such as median price. Significant differences in the quality and amenity of housing stock in the area are also likely to further distort similar macro-level analysis attempts.

The Coolangatta median unit price fell slightly during the period, down 2.4 per cent (to $392,750) over the six months to August 2013. Transaction volume fell noticeably more, down 14.5 per cent (to 106) for the same period. Over the four years from August 2009 to August 2013 there has been a change in the composition of transaction volumes. The proportion of transactions recorded within the ranges of $200,000 to $299,999 and $400,000 to $499,999 increased by 4.8 per cent and 4.2 per cent respectively, while the most significant fall in proportional representation was recorded for transactions of at least $700,000.

TWEED AREA

Located in north-easternmost area of New South Wales and bordering Queensland, the Tweed Area is characterised by its network of coastal and hinterland towns, diverse scenery and natural attractions including Mount Warning National Park and Lamington National Park.

The Tweed Area economy is primarily tourism-based, with key employment sectors deriving a large degree of their income either through direct exposure or support roles. In recent times the region has also begun to develop a reputation as a popular retirement destination. The most significant opportunities for growth exist in the provision of a range of infrastructure, accommodation and support services to cater to the needs of an older population.

Tweed Area Houses and Units

The median house price in the Tweed Area recorded average annual growth of 2.9 per cent over the 10 years to August 2013. While the overall trend has been negative since the uncertainty and volatility which characterised many markets during the Global Financial Crisis, this has moderated in recent periods a marginal return to median price growth.

It is noted that while the Tweed Area is likely to benefit to some extent from investment in infrastructure in the Gold Coast area due to relative proximity, there do not appear to be similar triggers which might drive significant improvements in median price levels of Tweed Area residential property in the near term. In some instances it may be advisable for holders of Tweed Area residential property assets to divest of these and consider utilising their capital to re-invest in areas with potential for higher growth in the near term.

Prospective buyers, especially first-time market entrants and would-be residents, should consider taking advantage of currently stable prices in the event that a reversion to greater levels of median price growth act to reduce affordability in the medium term.

The Tweed Area median house price and house transaction volume both increased approximately 1 per cent (to $449,000 and 383 respectively) in the six months to August 2013.

The Tweed Area median unit price fell 4.2 per cent (to $303,750) over the six months to August 2013. Unit transaction volume was also down 0.6 per cent (to 344) for the same period. Over the 10 years to August 2013 the median unit price for the area has exhibited average annual growth of 2.2 per cent.