David Koch “catastrophe” comments revisited: Gold Coast and Sunshine Coast house prices record modest declines in 2012
House prices on the Gold Coast and Sunshine Coast declined relatively modestly over 2012 and showed signs of recovering in the final quarter of the year, according to new figures released by the Real Estate Institute of Queensland (REIQ).
The figures suggest these tourism-dependent, retiree-friendly coastal markets averted the “catastrophe” suggested by Sunrise presenter and finance guru David Koch and his wife Libby a year ago.
House prices on the Gold Coast declined by 3.1% over the year with the median price declining from $480,000 to $465,000 on an annualised basis.
This compares with a steeper decline of 4.8% recorded over the 2011 calendar year.
Over the final three months of the year, Gold Coast house prices lifted by 1.1% - a better result than the Brisbane city market, where house prices gained just 0.4% over the final quarter of the year.
On the Sunshine Coast, house prices fell 2.9% over the year with the median price declining from $445,000 to $432,050 on an annualised basis.
In 2011, Sunshine Coast house prices fell 5.3%, according to the REIQ.
There are indications that house price declines may be slowing down with the Sunshine coast recording just a 0.2% decline over the final three months of 2012.
REIQ CEO Anton Kardash said the latest quarterly result demonstrated that the second half of 2012 was one of improvement.
“This is the second consecutive quarter where the market has exceeded expectations,” he said.“Historically the December quarter is quieter than the September quarter- and we did have a very strong September quarter last year - but what these figures are showing us is that buyers continue to be more active than the year before.
The REIQ also reported increased buyer activity in Queensland’s tourism centres with the numbers of house sales up 27% on the Sunshine Coast and 19% on the Gold Coast compared to the December 2011 quarter.
“Buyers are once again looking at our beautiful tourism regions, perhaps attracted by the lower price-points that are now available in some of these areas,” says Kardash.
REIQ Gold Coast zone chair John Newlands said the positive results show signs that the housing market on the Gold Coast is now in a period of stabilisation.
“Recovery appears to be on its way with both the lower end and prestige markets performing well over the quarter,” he said.
Commenting on the Sunshine Coast, zone chair Lloyd Edwards said market conditions generally are faring well, with a very upbeat and positive sentiment in the marketplace.
"We are seeing more completed sales, most likely due to buyers being frustrated by the tight rental market conditions in the region," he said.
“The month of December saw uncharacteristically high activity despite the dramatic decrease in properties coming onto the market as interest rates reduced their holding costs.
"The beach community of Buddina appears to be back in favour with buyers with its median house price increasing by 14.9% over the year ending December, possibly attributed to the varying number of waterfront properties sold.
A year ago Sunrise presenter and finance guru David Koch and his wife Libby outraged Gold Coast and Sunshine Coast estate agents and developers by describing the two South East Queensland coast markets as “catastrophes”
Coastal Queensland estate agents took to the parochial local newspapers to vent their anger at Kochie.
But he remained unfazed, responding with a barrage of real estate data, including quoting figures from RP Data showing that Gold Coast house prices had fallen 15.1% from their peak in March 2010, with units were down 15% from December 2011 quarter.
On the Sunshine Coast, he said, house prices were down 13.9 % from their peak in December 2009 with units falling even further, down 16% from their peak in March 2010.The figures out today from the REIQ suggest the worst may has passed for these two markets, though early indications about the Gold Coat unit market suggest falls will be greater than those experienced in the detached housing market.
Figures released in the December quarter Prodap report, which looks at new housing,says Gold Coast house prices fell by 4.5% over 2012 with units down 7.3%.
Bill Morris, author of the Prodap Report, said he had not seen such a grim picture of the new housing production market since the 1981-82 recession.
The problem for the Gold Coast land market, said Morris, was that “established houses are cheaper and in many cases better located than new houses”.
“In other words, replacement costs are higher than the price of older homes,” he said.
REIQ figures till the end of September 2012, record a 5.5% decline in the median price of Sunshine Coast units to $325,000, with Gold Coast City units down 2.8% to a median of $330,000
Residex provides a collective Gold Coast unit figure in its regional property update.
It records that Gold Coast unit prices fell 4.34% for the year to October to a median value of $325,000.
As a point of comparison, country Queensland unit values fell by less than half of that - down only 1.95% over the same period to a median of $278,500.
However the Gold Coast unit price correction in 2012 was less than half the 8.74% fall recorded over the previous 12 month period to October 2011, suggesting the market may be close to bottoming out.
RP Data has Surfers Paradise unit prices down 2.8% over 2012, but Broadbeach units up 2.3%.
These suggest modest price corrections over 2012.
Telling though, sales volumes continued to fall steeply, indicating the market remains severely depressed in terms of sales activity.
This most likely reflects a disconnected market with vendors unwilling to set realist price expectations (and take a loss on their investments) combined with buyers in search of an expecting to secure big discounts off the previous selling price.
RP Data records 728 unit sales in Surfers Paradise in 2012, a 12% decline compared with the already low figure of 831 sales recorded in 2011.
Putting this in context, RP Data recorded 2,359 sales on Surfers Paradise in 2007 – that’s more than three times as many as there were last year.
Sales picked up a little on Broadbeach – rising from 295 in 2011 to 317 in 2012 – but this is less than half the 714 sales recorded in 2007 before the GFC began to bite.
Certainly new and off the plan apartment sales on the Gold Coast remain very weak.
The November quarter Midwood Report reported on a deeply troubled Gold Coast apartment market with developers reporting only 19 high-rise apartment sales over the November quarter, a 70% plunge from sales figure a year ago, according to the latest Midwood Report.
Quarterly sales figures were more than double the paltry eight sales recorded in the August quarter, but just a fraction of the 73 sales recorded in November quarter of 2011.
In total there are 705 high-rise apartments available for purchase on the Gold Coast, which at current sales rates would take close to a decade to clear.
The Midwood report classifies high-rise sales as those developments of 40 storeys and higher.
All but three of the sales over the quarter were in the Brookfield Multiplex-constructed $700 million Hilton Surfers Paradise (pictured below), following prices being reduced by up to a third.
There were no sales reported in the two other major high-rise apartments – Niecon’s Oracle and Juniper’s Soul, both of which are in the hands of receivers.
Midwood records 47 unit sales on the Sunshine coast over the November quarter with 40 of these sales occurring at Saltwater, being developed by RGD Property group in Birtinya with prices starting from $360,00 for a one bedroom apartment. 38 units remain up for sale.
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