This is a direct cut and paste from a recent PRDnationwide Research Report© and its authorship by them is acknowledged in full. The quote comes from their Gold Coast LGA 30 Year Study Q3 2012.
Finally, the truth. Not ramped up garbage served up by self serving media and some Real Estate Agencies who couldn’t lie straight in bed.
Read it and weep…
The Gold Coast residential real estate market continues to endure a relentless downturn in its property cycle as the ramifications of the Global Financial Crisis (GFC) that marred confidence in the once booming property market linger to the present day. Sales volumes recorded across the house, unit and land markets during the six months to 30 June 2012 have on average recorded lows not experienced in over two decades, with the median price for each market correcting to pre-GFC levels. Uncertainty remains a key barrier to entry for many prospective buyers, as prices reach a level that a majority of buyers can actually afford though are unwilling to commit to for fear of further price corrections.
With many would-be home owners/ investors sitting on their hands in anticipation for a bottoming out in the cycle, competition between vendors has been very aggressive resulting in substantial discounts to unrealistic asking prices in order to sell within a reasonable timeframe. These revisions in price have been exacerbated by stressed sales and mortgagee in possession (MIP) sales that are still prominent in certain markets throughout the Gold Coast. The volume of MIP sales to be brought to the market before the banks financial year (i.e. 30 September 2012) is uncertain, though a push of volumes to firm their balance sheets may present more headaches to vendors whilst generating greater opportunities for potential buyers. The mentality of many active buyers today is that ordinary vendors will need to adjust their price expectations accordingly in order to compete, however many vendors have proven to be very reluctant to concede, resulting in lengthy listing periods anywhere north of 12 months, as vendors ostensibly chase the market down.
The reluctance of vendor re-pricing and the apprehension of buyers, particularly investors, appears to be the key challenges the market has faced in the year to date. Overseas markets have also had a material impact on consumer sentiment and buyer confidence on a domestic level which has served to curtail any positive movement in the Gold Coast property market. Developer activity remains supressed, particularly in the unit market with very few cranes visible from the observatories of the state’s tallest buildings. In fact, some of the best value on offer in the market is from excess unit stock in the higher end market with developers eroding margins (if any at all) to meet the market.
The report dives into a 30 year sales cycle analysis of the house, unit and land markets to understand where the markets stand historically and what direction they are likely to head in the short term. (GW Note here – the Report itself is long)
Activity in the Gold Coast house market continues to slide, registering just 2,158 transactions during the six months to 30 June 2012. Observing the 30 Year House Sales Cycle chart highlights the significant under performance of the current market in contrast to other troughs experienced over the past 30 years. Sales volumes recorded since the June 2010 half year period have failed to contest the levels recorded during the past 25 years (since June 1987 period). Since the peak experienced during the June 2007 period, sales volumes have decreased on average 17.1 per cent per annum. The average number of sales per six month period since the onset of the Global Financial Crisis (June 2008 period) has been 2,884, compared to the pre-GFC peak of 5,564 recorded for the June 2007 period. Government intervention sought to underprop the collapse of the housing market during 2008 by introducing a boost to the First Home Owners Grant (FHOG) for both new and established properties. The boost (effective between the 14th of October 2008 and 31st of December 2009) together with extremely low interest rates and bullish lending practises encouraged considerable activity from the first home buyers segment. This is evidenced by the acute decline in the median price during this period as a result of a spike in activity in the lower end of the market.
Whilst the stimulus provided temporary relief for the construction industry, it also artificially inflated house prices due to the misguided perception of value it established in the market. Over the past three years prices have fallen irrepressibly, exacerbated by the inflationary pressures of the stimulus. The prevailing median price of $466,750 for the June 2012 period continues to substantiate the trend of softening house values as the market dictates an acceptable price to pay for property in an uncertain economic climate. The median price house has fallen 6.7 per cent per over the year to 30 June 2012 and 11.9 per cent from the median price peak recorded in the June 2010 half year period.
EXTRACT ENDS – Copyright PRDnationwide Research 2012