Market Update

The residential market on the Sunshine Coast over the past 24 months has seen a significant improvement in sales volumes and values. The pace of these increases in some cases has been breathtaking. The current low interest rate environment is also providing significant assistance with the difference between paying rent and a mortgage being minimal.

Stock levels remain very low and demand is strong. The market is extremely dynamic with upward pressure on values so we are continuing to see new value benchmarks being set. At first this trend started at the northern Sunshine Coast region around Noosa Heads. This has now stretched right across the Sunshine Coast and in most asset classes. We all have a fair indication of the main drivers of the market which we have discussed in previous updates. What is becoming apparent is that when we look at the level of competition, there are some external value relativities influencing decisions. Purchasers coming from an external market (say Sydney or Melbourne) will look at a property and all its attributes and think it’s pretty cheap compared to where they come from. That combined with that real fear of missing out is becoming more and more evident.

When we look at the investment market, it is becoming a little hard to decipher. There are investors active but when you get down to the detail, a fair portion are purchasing with a view to moving to the area and into the property at a later date, so when we take that into account, there is little doubt that the true investor market has softened over recent times given the level of competition. The main driver for investors appears to be yield. This is being ably assisted by the current rental market which is one of the strongest in Queensland with vacancy rates below one per cent and rental values on the increase. Smaller complexes with lower body corporate fees have been the best performing. Properties underpinned by development potential or situated in unique and sought-after locations tend to be at the lower end of the yield range.