Gold Coast land sales rise 30% in June quarter but funding for new developments still “tight”: Prodap Report

There was a 30% increase in the volume of vacant land sales on the Gold Coast in the June quarter but the market remains depressed, with house prices still well below pre-GFC levels and more locals choosing to rent, according to the latest quarterly Prodap Report.

The report recorded 208 land sales over the three-month period to June off a record low base of 159 sales in the previous quarter.

Most of the sales were to speculative builders at Gainsborough Greens, Coomera Waters and The Meadows on Yawalpah Road in East Coomera.

This figure is expected to rise higher in the first quarter of the 2013 financial year with end users "in most cases delaying purchasing until the next quarter to avoid paying higher stamp duty".

Prodap Report author Bill Morris says this delay “camouflaged underlying demand over the June quarter”.

But he says funding for new developments remains tight, restricting new housing supply.

The report found that sales of new house and land packages "continue to wallow" at around 70 per quarter for the past two years, reflecting low stock choices because of a limited number of new projects being released to the market.

It notes that only local ASX-listed developer Sunland is adding to the pipeline with new house and land packages at Royal Pines, Sanctuary Cove and The Glades golf resorts.

Over the quarter house sale prices averaged $527,819, down 12% from $600,110 two years ago and 9% below a pre-GFC level of $580,670.

Morris says the effects of the GFC continue to be felt, in particular the contracting pool of available funds for bank lending.

“This situation needs serious attention from the Federal Government, as it is not a local problem."

“It is suggested that the pool of bank funds for lending could be increased if interest earned on bank deposits was not taxable. If this were the case, there would be more incentive for investors to use bank deposits as a serious investment strategy,” says Morris.

Despite stock levels remaining relatively low, the report says falling prices indicate “changing patterns of household ownership, ie. renting or sharing rather than attempting to purchase unaffordable houses”.