Sunshine Coast market recovery to lag behind Brisbane: PRDnationwide
The troubled Sunshine Coast residential market is expected to recover at a slower pace than the Brisbane market, according to research by PRDnationwide.
During the past six months, the Sunshine Coast has recorded an annual softening of 1%, culminating to a median price of $475,000.
Currently the market is characterised by a shortage of purchasers and excess stock, with fears about rising interest rates and increasing cost of living creating uncertainty and deterred potential purchasers.
In comparison BIS Shrapnel predicts the Brisbane market will turn around this financial year with an impending mining boom. Analyst Angie Zigomanis is tipping Brisbane's median house to increase 15% from $440,000 to $505,000 over the next three years.
Josh Brown, research analyst at PRDnationwide, expects the Sunshine Coast market will remain flat at least until the end of the year.
“One of the key differences between the Sunshine Coast and Brisbane markets is that many markets within the Sunshine Coast are viewed as holiday markets such as Noosa, Coolum and Caloundra,” he tells Property Observer.
“This is why the Sunshine Coast was so strongly affected during the GFC, as people began liquidating their non-primary assets such as holiday apartment and houses.
“The local economy of the Sunshine Coast is also seen to be affected by the strong Australian dollar and slow tourism sector, which makes up a larger part of its economy than Brisbane,” he adds.
And despite the change in RBA interest rate sentiment and forecasts of a possible rate cut rather than increase as a possible next move, Brown says the issue remains the “increased debt aversion of households” reflected in the average household savings rate increasing.
“People’s attitudes have changed, and it will take a while before they regain confidence in the market. The RBA’s seemingly new stance on interest rates is a step in the right direction, though sales volumes will likely remain at lower levels over the short term,” Brown says.
According to PRDnationwide the Sunshine Coast housing market has been in a “strong and sustained downturn” since the GFC unfolded in 2008, with sales volumes and house prices falling.
Analysis by PRDnationwide reveals that Sunshine Coast home owners who before the GFC saw greater capital growth than those who held onto their houses and sold within the past two years, where capital values have softened.
The only respite for the Sunshine Coast market occurred following the introduction of the government’s First Home Buyers Boost (between October 14, 2008 and December 31, 2009) in tandem with the RBA cutting interest rates from 7% to a record low of 3.25% from September 2008 to April 2009.
Following the transition from the incentive-driven period in 2009 to the six-month period ending December 2010 sales activity has softened by 31%, taking the volume of settled transactions on the Sunshine Coast to its lowest level in the past decade, with only 2,089 transactions.
Analysis of the most active price points during the six months to December 2010 shows 23% of houses sold were under $400,000. This was followed by the $400,000 to $449,999 price point, which represented 17% of total transactions. Over the six months to December 2010, the most significant tightening in sales activity occurred houses under $500,000.
