Southerners helping push capital growth on Sunshine Coast
Apr 03, 2018
Interstate migration is a key factor in the population growth of the Sunshine Coast as southerners take advantage of greater affordability and lifestyle.
This is good news for the region according to RiskWise Property Research CEO Doron Peleg who says due to this ongoing population growth the area is likely to deliver solid capital growth and returns over the medium to long-term.
Mr Peleg said the Sunshine Coast had delivered consistently strong population growth over the past five years and this is predicted to continue in the foreseeable future.
“The area’s affordability has been a major drawcard behind this migration, especially for large numbers of interstate purchasers who can’t afford to buy such great lifestyle properties in places like Sydney and Melbourne,” he said.
“We expect the growing ageing population will also help continue this growth trajectory.”
He said with low building approvals (at only 3 per cent for houses and 5.4 per cent for units) came good demand and alongside that, solid capital growth.
There are currently only 3,323 house building approvals in the pipeline across the entire regional area of the Sunshine Coast (i.e. SA4), and due to high demand is likely to be easily absorbed into the market.
There are also 2,581 new units to be added over the next 24 months which is unlikely to have any significant impact on the market. However, units are considered less popular property type particularly among families and some areas, such as Noosa Heads, that are experiencing a larger number of units in the pipeline, bringing a higher level of risk.
Mr Peleg said the region had ‘a good proportion’ of residents who made their living elsewhere, were professionals who worked from home or were retired.
“They make up a significant amount of the population, so while a healthy job market is important, in this case, and particularly for above-average properties, there shouldn’t be too much emphasis placed on the fact this region does not have a huge job market,” he said.
“Also, the unemployment rate is likely to deliver some improvement pending the ongoing recovery of the Queensland economy following the decline of the mining industry.
“And while weekly wages for individuals on the Sunshine Coast are slightly below that of Queensland and Australia, this should come as no surprise given the large number of retirees in the area.”
Mr Peleg said with a price-to-income ratio of 9.1, houses in the region were considered expensive relative to Greater Brisbane and this was largely due to the low median household income.
However, he said the rate was still moderate when compared to those found in Sydney and Melbourne.
Mr Peleg said with a median price of $597,000, the area offered relatively affordable houses and their rental return of 4.7% was strong.
With a median price of $430,000, he said units were relatively more affordable when compared to Brisbane and had delivered moderate growth over the past five years, which could be largely attributed to the minimal supply of available land for apartment developments, low median price and high rental demand, resulting in high rental return of 5.3%.
These factors have resulted in a healthy capital growth for houses, and to a lesser extent, with 7.1% and 5.4% growth in the past 12 months, for houses and units, respectively.
“Rental returns are likely to remain at a consistent level over the next five years,” he said.
Mr Peleg said the Sunshine Coast was also reaping the benefits from the addition of a number of large-scale projects funded by both local and state government including the Sunshine Plaza redevelopment with 100 new shops and retailers, the new Suncentral Maroochydore CBD, a new entertainment centre at the Big Top Shopping Centre and several property redevelopments. The design process is also under way for the Sunshine Coast Light Rail Project. Pending funding and approval, the project will likely be completed by 2025.