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Anja Cass - Principal, www.orbitrealty.com.au

At its meeting today, the Reserve Bank (RBA) decided not to cut interest rates, again leaving the official cash rate unchanged at 3 per cent – but how long will this last?

With this announcement on everyone’s mind, a lot of buyers are asking the question…

Where is it cheaper to buy than rent a property on the Gold Coast?

FIRST home buyers could soon be flooding Highland Park after the suburb was declared cheaper to buy than rent.

New figures show it is almost $600 a month cheaper to repay a unit in Highland Park than it is to rent one.

Pacific Pines is also a property hotspot for first home buyers, although mortgage repayments there are only about $3 a month cheaper than rent payments.

The Commonwealth Bank and real estate information service RP Data has researched every suburb in Australia and found there are 94 suburbs where it is cheaper to buy a house or unit than rent one.

For first home buyers there are more than 200 affordable suburbs.

Highland Park and Pacific Pines were the only suburbs on the Gold Coast to make the list using figures based on buyers having a deposit of 15 per cent.

This meant a Highland Park unit valued at $290,000 would require loan repayments of $1364 a month while the average rent payment would be $1960 a month — a saving of $595.73.

The most affordable suburbs in Queensland have doubled in the past six months from nine to 18, with two in Brisbane — Sunnybank Hills and Beachmere — and four on the Sunshine Coast — Sippy Downs, Peregian Springs, Wurtulla and Minyama.

There are 18 other regional suburbs in Queensland that considered cheaper to buy in than rent.

Property analyst Bill Morris said there were some ‘good buys’ at Highland Park, Pacific Pines and at Nerang.

He said rents had gone up 40 per cent in the past five years on the Gold Coast, making buying a house or unit more attractive.

“Renting has recently become an expensive thing to do,” said Mr Morris.

“Forty per cent is a big jump. The growth in rents has outstripped the growth in house and unit prices.

“There is a short supply of rental properties and quite high demand — therefore rents have gone up.”

Mr Morris said renters in Highland Park, Pacific Pines and Nerang should be ‘taking the plunge’ and entering the property market.

His advice to first home buyers was to take advantage of the first home buyers grant, low interest rates and stamp duty concessions.

“It’s time to buy,” he said.

Reedy Creek and Varsity Lakes have an average median house price of $359,063 and a weekly rent of $410 and they are two of the top 5 rental suburbs in the state.

Reedy Creek real estate is reported to be showing a gross rental yield of 5.9 per cent.

The traditional strong rental hub of Southport and Labrador also continued to return solid yields of 5.5 per cent.

REIQ chairman Peter McGrath said investors, stung by the stock market crash, were choosing to invest their cash into the safer property market.

“With the start of the new financial year, and changes to superannuation limiting tax concessions on superannuation contributions, investors are certainly revisiting the real estate market,” he said.

“Property remains a reliable investment vehicle over the medium to long term with its potential for capital growth and rent returns.”

Mr McGrath said the emerging popularity of Reedy Creek and Varsity Lakes was due to affordable rents and proximity to the Robina Town Centre employment hub.

“Rentals come up with where the employment is,” he said.

Anja Cass - Principal, www.orbitrealty.com.au

At its meeting today, the Reserve Bank (RBA) decided not to cut interest rates, leaving the official cash rate unchanged at 3 per cent.

Despite this, banks are reporting increased lending costs, especially in trying to source funds for first home buyers entering the market. This in turn may see home loan rates increase in the near future, regarless of which direction the ”official” rates go in.

Media Release from the RBA, 07 July 2009:

The global economy is stabilising, after a sharp contraction in demand during the December and March quarters. Downside risks to the outlook have diminished, with conditions in global financial markets improving this year and action to strengthen balance sheets of key financial institutions under way. Growth in China has strengthened considerably, which is having an impact on other economies in the region, including Australia.

Nonetheless, credit conditions remain tight and the effects of economic weakness on asset quality present a challenge. There is tentative evidence that the US economy is approaching a turning point, but conditions in Europe are still weakening. While the considerable economic policy stimulus in train around the world should support recovery, it is likely to be slow at first. For it to be durable, continued progress in restoring balance sheets is essential.

Economic conditions in Australia have to date not been as weak as expected a few months ago. But output has been sluggish and capacity utilisation has fallen back to about average levels, with some further decline likely over the rest of the year. Weaker demand for labour is leading to lower growth in labour costs. These conditions should see inflation continue to abate over the period ahead.

A pick-up in housing credit demand suggests stronger dwelling activity is likely later in the year. House prices are tending to rise.

Business borrowing, on the other hand, has been declining, as companies postpone investment plans and seek to reduce leverage in an environment of tighter lending standards. Large firms have had good access to equity capital, which is assisting in strengthening their financial structures.

Monetary policy has been eased significantly. Market and mortgage rates are at very low levels by historical standards, despite recent small increases. Business loan rates are below average. The effects of these changes will still be coming through for some time yet. Fiscal measures are also providing considerable support for demand.

The Board’s current view is that the outlook for inflation allows some scope for further easing of monetary policy, if needed. In assessing how it might use that scope, the Board will continue to monitor how economic and financial conditions unfold and how they impinge on prospects for a sustainable recovery in economic activity.

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The new Hilton development in Surfers Paradise on the Gold Coast is back on track with the official launch today.

Now under the control of developer and construction giant Brookfield Multiplex, senior staff and project financier ANZ Bank will meet on-site this morning for the relaunch of the $700 million project, which stalled late last year when original developer Raptis Group struck financial difficulties.

The Hilton deal, helped over the line by the Gold Coast city council waiving $2 million in community benefit fees, is expected to create up to 870 construction jobs in a dire construction landscape.

Brookfield Multiplex, in a submission to the city council seeking the fee be waived, said the twin-tower project would inject $2.2 billion into the city’s economy.

Multiplex expects to complete the first tower by December next year and the second by October 2011.

The development has secured apartment sales of about $296 million since it was released 18 months ago.

Just more than $25 million of that was achieved in the past six months.

The Hilton Surfers Paradise will comprise 170 hotel suites and 340 apartments in two towers – one 32 levels and the other 57 levels – spanning Surfers Paradise Boulevard and Orchid Avenue.

Permanent residents will enjoy full hotel facilities, including 24-hour room service.

A national campaign is expected to be launched today to market the final stage of the project which offers apartments from $720,000.

The Raptis Group, which is operating under a deed of company arrangement, has retained an interest in the project under the buyout deal agreed to by the ANZ Bank.

Brookfield Multiplex’s head of residential property, George Kostas, said last month it was possible for Raptis Group to share in profits generated from the Hilton.

But details of that part of the agreement have not been disclosed.

Brookfield Multiplex ultimately will purchase the hotel component, which has secured Hilton as operator for the next 20 years, and sell the retail precinct.

For more details, visit: www.HiltonSurfersParadise.com.au

THE Gold Coast property market will stabilise by the end of the year in response to a growing number of loan approvals for first home buyers, according to statistics released yesterday.

The latest Housing Finance figures for April, released by the Australian Bureau of Statistics revealed loan approvals had risen for the seventh consecutive month, largely because of first home buyers taking up the Federal Government grant.

Investors are also starting to come back to the market.

In April, 28 per cent of loans approved were for first home buyers.

First home buyers have also helped curb dramatic increases in rents on the Gold Coast in the March quarter.

Bill Morris, author of the Midwood Queensland Investment Report, said landlords were facing lower interest rates and less competition in the rental market as more people took advantage of the grant.

By the end of the year the Gold Coast property market would have ‘bottomed out’, after prices dropped by 16 per cent from December, 2007, to March, 2009.

“There’s some hope out there. We should see prices start to rise gradually by early next year.

“It will then peak again early in 2010.”

But the news wasn’t all good.

Approvals for new developments on the Gold Coast have slumped to record lows.

According to the Midwood report, there were just 1564 new house and unit approvals recorded from October, 2008, to March, 2009, less than half of what was expected in that period.

Mr Morris said the development approval figures were a result of fewer development applications being lodged with the Gold Coast City Council and banks refusing to fund new developments.

He said banks were instead concentrating on funding low-risk, lower profit home loans.

“But they are going to have to fund some developments sooner or later (to get their profits back up),” said Mr Morris.

March quarter figures from the Real Estate Institute of Queensland show the median house price on the Coast didn’t fall or rise for the first time in months.

The zero growth rate, with the median at $455,000, has been hailed as a signal for investors to start buying into the local market again.

However, the city did not fare as well as others in southeast Queensland that recorded positive growth, including Ipswich which went up 4.3 per cent.

The areas which were most attractive to first home buyers, such as the northern growth corridor suburbs of Oxenford and Helensvale, performed better.

The ritzy areas, however, such as Hope Island, went backwards.

Despite the good quarter results, the year-on-year figures remained in negative territory, with the median house price falling 4.1 per cent to $470,000.

REIQ chairman Peter McGrath said the Coast market had been the first hit by the downturn and suffered the biggest falls, but now it would lead the way in recovery.

“This quarter is the first in the last 12 months where we have stopped dropping,” he said.

“We’ve seen the stabilisation of the market which is a positive sign for Gold Coast real estate.”

Mr McGrath said the flat-lining meant investors would start coming back this year, after avoiding the city since December 2007.

Midwood Report author Bill Morris agreed that the latest figures were positive, and predicted prices would start turning around in late 2010, before peaking in 2011.

Mr Morris said house prices would rise between 20 and 30 per cent at the peak in early 2011.

Although that was good, it was nowhere near the boom of 2003 when prices increased by up to 100 per cent, he said.

Mr McGrath said first home buyers had helped stabilise house prices in two ways. Firstly they were buying new or established homes in suburbs like Gaven, Nerang and Oxenford.

Secondly they were buying properties from home owners who themselves then upgraded in the inner suburbs such as Parkwood, Burleigh Waters, Broadbeach Waters, Benowa and Ashmore.

The best performing suburb on the Gold Coast in the last quarter was Clear Island Waters, which went up 24 per cent.

The worst was Paradise Point which fell 22.4 per cent.

In the March quarter, the Federal Government gave out 1224 first-home-buyer grants for established homes on the Gold Coast, and 88 for new houses.

“That’s a substantial amount of new homes,” said Mr McGrath.

“Without the boost the figures would have been half that.”

He said 65 per cent of properties sold on the Gold Coast were under $500,000, 31 per cent were between $500,000 and $1 million and 4 per cent were more than $1 million.

Sourced: Gold Coast Bulletin

The Gold Coast property market has recorded strong results in the March quarter, helping southeast Queensland secure the top five best housing sales regions in Australia, according to the latest statistics.

RP Data released figures yesterday showing the Gold Coast ranked third, behind Brisbane and Moreton Bay, for the most house sales in Australia in the March quarter.

The Coast also boasts the highest median house price in southeast Queensland at $498,000 and accounted for 9 per cent of sales in Queensland, again behind Brisbane (19.8 per cent) and Moreton Bay (10.5 per cent).

The figures were released after analysts warned that Australia would enter into recession this week.

But they also predicted the recovery would be quick.

Economists say the housing market will be one of the forces driving the recovery.

RP Data national research director Tim Lawless said the promising results from southeast Queensland were the result of the first home buyers grant and low interest rates, which are expected to remain on hold today when the Reserve Bank meets.

“We are really starting to see where first home buyers are taking advantage of perfect buying conditions of low interest rates, cheaper house prices and the Government’s first home buyer incentives,” said Mr Lawless.

“Clearly, this group is emerging as the most active of buyers when it comes to property purchases.”

He said that first home buyers had increased from just 12.6 per cent of the market to 27.3 per cent in the five years to March, 2009.

Real Estate Institute of Queensland chairman Peter McGrath said the Gold Coast figures were surprising.

“I’d expect Brisbane to be there, in terms of volumes of sales; it has been going the best out of all of Queensland,” said Mr McGrath.

“But house sales on the Gold Coast are certainly down.

“It must mean that other areas in Queensland are doing very badly.”

Mr McGrath said that rising unemployment on the Gold Coast, mainly brought on by downturns in the development and tourism industries, would continue to have a negative effect on the housing market.

He said there were fewer people moving to the Gold Coast because of the economic conditions, which would also slow growth.

“We are certainly going to see a lot more pain yet.”