THE MOST IN-DEMAND PROPERTY TYPE SMART INVESTORS ARE CHOOSING

Supply and demand are what make the property market go round. Basically, if there is high demand for a certain type of property, but low stock, prices will increase. On the other hand, if there’s an oversupply of property available, prices are more likely to drop.

On the Sunshine Coast what we’re currently seeing is buyers and renters are actually offering more to secure a home as demand in our region far outweighs supply. This is widely being reported as a COVID property ‘boom’ (and fundamentally that is incorrect as what is happening across Australia is far more structural than just the impact of COVID – a story for another day) yet what is happening here is different to the rest of the country and we predicted it 10 years ago. The supply and demand balance was already way out for the Sunshine Coast, long before the pandemic hit our shores (or the other widespread structural changes), it just accelerated the process on the Sunshine Coast.

Have you ever heard someone say “The Sunshine Coast is full, we will move somewhere not as good instead”? No…us either.

Right now there is major price pressure on all property types in our region with houses, apartments, and townhomes increasing in value. We’re also seeing record-low vacancy rates, which are still declining. While this is of course great news for investors, the market to buy is extremely competitive and renters are struggling to secure a home.

So what does this mean?
The rate of population increase does not match the rate of new housing creation. To be clear here, we are not talking about those moving because of COVID. Since 2011, the Sunshine Coast hasn’t been building enough homes to support the population growth, creating a decade long undersupply.
It’s anticipated in the next 20 years more than 200,000 more people will move to the Sunshine Coast (these figures were calculated before it was announced the 2032 Olympics are going to be in Brisbane) but under the current scheme in ‘greenfield’ developments only 70,000 of these people are catered for.

The other 130,000 people need to be catered for in in-fill development – where a redevelopment in an established area occurs. It’s where houses are redeveloped into strata units by way of duplexes or high-density developments.

Right now we’re not building enough and what we are building is too much of the wrong product.

Quick stats;
● Around 70% of existing supply is detached dwellings, predominantly larger 3-4 bedroom homes.
● 65% of new dwelling approvals are similar stock to existing property, being detached dwellings.
● Interestingly, currently 60% of households on the Sunshine Coast are only single or two-person households.

Basically, overall demand levels are high but there’s a major undersupply of smaller dwellings such as apartments, townhouses, and dual living alternatives. This is where the focus should be.

While the entire market has a very good profile for both capital growth and yield, targeting the right type of property in the right areas is how you maximise returns. A key point to note here is that just because it fits the category, doesn’t mean it’s the right investment. There are many other things to consider in the due diligence process. For example, more builders go broke in boom times than in quiet times. To understand why, what and when needs further digging – also a topic we’ll cover in a later blog.

For more of our market insights, download your FREE copy of our research report The Sunshine Coast; The Future. https://investorproperty.com.au/insights/free-ebook/

To understand how this once-in-a-lifetime set of circumstances can positively impact your financial position through strategic property investment, connect with our property coaches for free and in-depth advice. https://investorproperty.com.au/offers/free-coaching-session-book-now/