Thinking of investing in the Gold Coast real estate market in 2019?
The Goldie has a deserved reputation as a top lifestyle destination - and for good reason - but is its property market worth investing in?
It has had a reputation for having a glut of units, which has impacted growth prospects as well as rental yields in the past. Thankfully the area has actually grown up into much more than a holiday hotspot - and has much more going for it economically than solely tourism.
Migration drives growth on the Gold Coast
Migration to the area from interstate and international arrivals is driving growth in Gold Coast property prices. The Queensland Government Statistician's Office (QGSO) records that some 12,270 people relocated to the Gold Coast for the year to June 2017. This, together with economic diversification and improved job prospects are all helping to create a much more resilient property market, and make the area an attractive long term investment prospect.
And just in case you were wondering what area the Gold Coast covers, it includes the area from the border of New South Wales almost up to Brisbane, and encompasses popular tourist spots such as Surfers Paradise, Main Beach, Sanctuary Cove, Coolangatta and Burleigh Heads.
Before we look at what the areas prospects look like for the year ahead, let’s take a look at how the Gold Coast property market performed in 2018.
What did the Gold Coast real estate market look like in 2018?
According to the Real Estate Institute of Queensland (REIQ) the annual median house price increased 4.5% to $622,031 in June 2018 - a record for the state. The annual median unit price grew by a more modest 0.9% to reach $429,000 over the same timeframe.
This has, over the medium term, seen median house prices on the Gold Coast grow by 32.3% since 2013, when the annual median house price was $470,000.
Louis Christopher's Housing Boom and Bust report records that overall Gold Coast dwelling values posted growth of 3% over 2018. In the context of the wider market - and particularly alongside results from Sydney and Melbourne - this can be viewed as a decent return.
But what about the year ahead?
Gold Coast growth predictions for 2019
The QBE Australian Housing Outlook (2018–2021) forecasts growth of 9.4% for the Gold Coast over the five years 2017-2021.
They predict house price growth to remain moderate over the next three years, averaging 2% per annum. This will take the median house price on the Gold Coast to $690,000 by June 2021. Comparatively, unit price growth is forecast to be slower, and QBE believes they will increase in the region by 0.8% per annum to take the median price to $425,000 by June 2021.
Best suburbs to invest on the Gold Coast in 2019
If you are looking for Gold Coast growth suburbs to invest in 2019 then there are definite areas to focus your research on.
The Real Estate Institute of Queensland (REIQ) identified close to 70 Queensland suburbs that delivered double digit growth over 12 months to June 2018. Standout performers on the Gold Coast include the suburbs of Hollywell, which recorded capital growth of 30.5% over the year. Here the main drawcard is the waterfront lifestyle and median price range of $770,000 - $810,000 - making it an affordable suburb in an area not known for homes in the sub-$1 million bracket.
Another top performer is the Gold Coast suburb of Hope Island, which posted 1 year capital growth of 15.7%, and where the median price for a property is $739,750.
Gold Coast rental market and rental yields
In its Top Rental Performers Report, CoreLogic identified a number of suburbs on the Gold Coast where houses or units have an estimated gross rental yield of 5% or more per annum.
The yield is calculated by taking the annual rental income of a property as a percentage of the property's value. Suburbs that met this criteria include Reedy Creek, Elanora and Merrimac. The median unit value in Reedy Creek is $361,413, and average weekly rents sit at $410, which works out to a stellar rental yield of 6.2%.
The REIQ indicates that the rental market on the Gold Coast was tight throughout 2017/2018, where vacancy rates held a 2% average and rental properties were vacant on average for just seven days in the year.
Should you invest in houses or apartments on the Gold Coast?
Does a Gold Coast house or apartment offer the best prospects for long term growth?
There is no simple answer, as both types of properties can perform - the trick is to research the market thoroughly and know which is more likely to deliver a positive return.
Houses have traditionally been perceived as a better long term bet, but tend to have a higher ticket price. If you are looking at entry level properties then a unit is not only more affordable but often also offer a more attractive rental yield.
The Gold Coast has often experienced an oversupply of units in the past, though currently this does not appear to be the case. According to SQM Research property analyst Louis Christopher, “...there is no evidence of an imminent oversupply in the market...with vacancy rates data steady and listings level.”
However, the same cannot be said for other locations in Queensland, with some Brisbane CBD locations making a national postcode blacklist put out by the Reserve Bank of Australia (RBA). Nationally there are some 315,000 units approved for construction across Australia over the next two years, and some off-the-plan developments have already lost value as investors take possession of their new properties.