HOUSE AND LAND MARKET HOLDS STEADY

Written on the 10 May 2010

HOUSE AND LAND MARKET HOLDS STEADY

VACANT land and new packaged housing on the Gold Coast remained relatively steady over the latter half of 2009, with sales volumes totaling 510 in the September quarter and 468 in the December quarter, according to the latest Prodap Report.

Property analyst and author of the report, Bill Morris, says the findings represent a marginal 8 per cent decrease.

“This is a satisfactory outcome given the rising interest rate environment and represents a steady recovery over the latter half of 2009,” he says.

“The report recorded a total of 324 vacant land sales and 144 new packaged housing sales in the December 2009 quarter.”

Vacant land sales activity was greatest in Stockland’s Pacific Pines (61 sales) and Highland Reserve (23 sales) as well as Delfin Lend Lease’s Varsity Lakes – South Bay (39 sales). Packaged housing sales were best in Sunland’s The Parc in Tugun (36 sales), Felix Finnegan’s Finnegan Woods at Coomera (27 sales) and Seachange Development’s Seachange at Arundel (20 sales).

“The best performing suburbs in the Gold Coast, in terms of vacant land and new packaged housing sales, are Upper Coomera, Coomera, Gaven, Varsity Lakes and Tugun. It just goes to show that not all the action is in our northern suburbs. Buyers are heading south to Tugun, which is in close proximity to the beach, airport and Pacific highway,” says Morris.

“Sales activity in the Gold Coast land and packaged housing market has slowed at the lower priced end due to the end of the Federal “boosts” given to first home buyers, but this just means there is now more sales activity spread across the middle and higher priced end.”

On the supply side, vacant land and packaged housing stock represents around 16 months supply, not high given normal lead times for land development.

“Stock in the Gold Coast is tightly held, in parcels of up to 60 lots between eleven developers, the exception being at Ingles Group’s Big Sky Estate at Coomera with 145 lots for sale as at 31 December 2009 and these are mainly zero and duplex lots,” says Morris.

The Prodap Report forecasts around 4000 land lots and houses will be produced in 2010 on the Gold Coast.

“This level of production is equivalent to almost twice the level of current annual demand (approximately 2,200 sales per year), indicating that supply should not be a problem in 2010, given a responsible level of development funding,” explains Morris.

“However, the supply of stock can change quickly when demand recovers to underlying levels (of about 6,000 sales per year) to satisfy population growth. We forecast demand to be approximately 3,200 sales in aggregate for calendar 2010, which is half that of underlying demand, but still an increase over 2009. This is due to credit constraints and lending policies by the banks.

“Affordability remains an issue, with medium to high density residential sites in the Gold Coast often economically constrained from supporting affordable housing by the allowable densities specified in the Town Plan.

“These densities in many cases were set 30-40 years ago when site coverage and building separation were paramount. Most had 40 per cent site coverage, which restricts density and therefore affordability.

“The new Gold Coast City Town Plan is scheduled for completion by 2012, and if history repeats, this could extend into 2013 - 2014, up to four years away. The Council policy is to encourage affordable housing, but densities need to be more flexible and negotiable.”

The Prodap Report is published quarterly and contains a database of sales and stock levels on the Gold Coast, in addition to market analysis & forecasts.


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