Blog

High Demand for Rentals in 2017

Twenty-seventeen is proving to be heaven for landlords but much harder for tenants. We are seeing the highest demand for rentals in almost two decades here on the Tweed and southern Gold Coast.

I haven’t witnessed a market like it since the construction of the $380 million Yelgun Bypass around the Year 2000, when workers on that massive infrastructure project created a huge demand for rental properties across the region.

This time around, the demand is being driven by the general upsurge of employment on the Gold Coast as development takes off and the city prepares to host the 2018 Commonwealth Games.

These jobs have also attracted workers back to the Gold Coast from the mining sector as the resources boom continues to cool.

The problem is, demand is now at a level where we are seeing up to 100 prospective tenants turning up to look at one rental property inspection.

And while the wider Gold Coast’s rental vacancy rate has recently eased to 2.4 per cent – with 3 per cent reflecting a market in equilibrium – the rate across the Tweed and southern Gold Coast is sitting somewhere between 1 and 2 per cent, which is extremely tight.

The supply side of the equation is adding heat to the market with very little new housing and apartment stock being delivered across the area.

It’s no surprise then, that investors are pouncing on the area’s apartments and houses as they record capital growth of between 4 and 10 per cent and returns ranging from 4.3 to 5.3 per cent, according to PRDnationwide Research.

We’re seeing growth in rents across the board, in some cases double-digit rises. The most compelling increase being for one-bedroom apartments on the Tweed, which have jumped by almost 20 per cent.

These smaller units really weren’t on tenant radars in the past, but they have risen in popularity as people run out of other options.

So, prospective tenants need to be ready to act quickly as rentals continue to be red hot property.

Rates, Rises & Predictions

I’ve been watching our local housing market grow over the past 12 months and have talked to people with genuine concerns that maybe things are about to change so I decided to look a little deeper.
Below is some of the “stuff” I’ve discovered, I’m not an investment guru and certainly don’t have a magic crystal ball, but I have plenty of experience in both the boom & bust markets so take what I say with a pinch of Salt, or Casuarina & Kingscliff.

Capital city property values have increased on average by 7.8% since the RBA rate cut back in May 2016.
I can quite comfortably confirm prime real-estate property values in major cities and sweet places to live like here on the Tweed Coast have surpassed that figure easily.
The massive interest in our housing market over the past eight months which has pushed prices skyward is due to more than just record low mortgage rates. Cashed up Sydney & Melbourne buyers have finally discovering what we have here, and want some of it for themselves.

Apparently weekly wages are now at their slowest annual increase since the Australian Bureau of Statistics started taking records back in 1997 being just 1.9%pa.
Our economy is expanding at 2.5%pa but we are experiencing low inflation of 1.5%, well below the RBAs apparent target range of 2 – 3%pa.
Job prospects are OK, if you are prepared to travel but unemployment is still around 5.75% so the RBA really should be considering interest rate cuts.

Why aren’t they?
Well we are also experiencing record high levels of household debt. Basically most Aussies spend more than they make, I could go on about the ratio of household debt to disposable income was a record-high 186.9% but then I’d lose you (if I already haven’t) and I’m sure I’ve mentioned more records already than you will find in the Guinness Book of Records.

We’ve got high debt, high property values, low inflation, low interest rates, life should be good but I’ve heard stories of people who are struggling to get by week to week and feel change is coming.

Whatever way you look at it; the RBA is powerless to change this! They can’t lower rates because this will add further fire to the already smoking hot housing market, and they can’t raise rates as this will reduce money in the pockets of a huge chunk of everyday Australians, which will reduce our appetite for all things unnecessary and, potentially place some upwards pressure on the Australian dollar but that’s another story.

What does this mean?
If you are selling, then you’ve picked a good time to sell, be happy and enjoy the capital growth and extra cash!
If you are buying, sure competition will be strong but the short term outlook is positive, you will make money but as always buy within your means.

Sources: http://www.onthehouse.com.au & http://www.corelogic.com.au

 

Brent Jones – PRDnationwide Tweed Coast

 

 

Outlook on 2017 Property Market

To our existing and future clients, welcome to the first edition of the PRDnationwide Coolangatta/Tweed Coast blog for 2017.

Each month, I aim to provide my take on market insights and observations, discuss key happenings in and around our southern property patch, along with information I hope you will find useful, whether you are looking to buy or sell, now or in the future.

How fast is 2017 going!? We are now at the beginning of March, the festive season is well and truly behind us. Kids are back at school, everyone is back at work and already the first quarter is almost done and dusted. And there’s no sign of slowing on the property front either.

The Southern Gold Coast and Tweed property scene is poised for a momentous year as it continues to ride the wave of demand and growth that characterised the local market in 2016.

Buyers and renters are well and truly out of the blocks in 2017 and keen to secure their slice of our beautiful region, which is keeping our sales and property management teams here at PRDnationwide Coolangatta/Tweed Coast extremely busy.

This enthusiastic demand is well-founded given the solid growth of prices and huge upsurge in sales activity that our unique cross-border coastal area is experiencing.

New research from PRDnationwide reveals sales are well up on previous years with vacant land purchases jumping 18 per cent, house sales up 12.6 per cent and unit transactions rising by 11.8 per cent.

The median house price grew 4 per cent to $545,000 while the median figure for vacant land rose 3.5 per cent to $330,000.

This is not surprising; the Tweed and its spectacular coastal strip are on the radars of owner occupiers and renters who want the convenience of living close to the Gold Coast without the hustle and bustle of the nation’s sixth largest city.

Investors, particularly those from Sydney and Melbourne, also are plugged in to this region given its status as one of Australia’s leading lifestyle and holiday destinations.

They view our property as good value and a great investment avenue in which to park their cash at a time when they are getting little joy from bank deposits.

On that note, Tweed landlords have witnessed some impressive rises in median weekly rents with one-bedroom apartments leaping 19.1 per cent, two-bedroom units rising 9.4 per cent and four-bedroom houses surging 10.6 per cent.

I see these sales volume, price and rental market trends continuing throughout 2017 as the region continues to flourish and grow on the back of economic and tourism momentum.

‘Til next month.

Jason Abbott – Principal