ANALYSIS ON COMMERCIAL REAL ESTATE OF SUNSHINE COAST (1)

ANALYSIS ON COMMERCIAL REAL ESTATE OF SUNSHINE COAST
Melissa Snow
The University of Adelaide
April 2018
Key terms: Commercial Property of Australia, Real Estate Current Trend, Interest rates and real estate
cost, Best suburbs to invest in Sunshine Coast.
Introduction
Property research company Hotspotting
released their quarterly National Top 10 Best
Buys report and named the Sunshine Coast as a
real estate winner.
Housing is by far Australians' largest asset,
worth a total of $6.8 trillion across the country,
according to the latest official ABS estimates.
Just over $1.7 trillion in outstanding home loans
also account for more than 60 per cent of
Australian bank assets.
That makes housing the bedrock of Australia's
household wealth, financial system and
economy.
It is a foundation that has appeared solid as
prices have risen strongly over the past five
years in Australia's two biggest property
markets — Sydney (75 per cent) and Melbourne
(59 per cent).
But, with prices already slipping in Sydney and
price growth easing in Melbourne, that
foundation is looking a little shakier.
Operators in the Real Estate Services industry
have reaped the benefits of a booming
residential property market over the past five
years. Despite turbulent economic conditions,
housing prices have grown strongly, supported
by government incentives at the beginning of
the period and then fuelled by falling interest
rates. In contrast, the commercial property
market has performed modestly over the past
five years due to volatile business confidence.
Overall, industry revenue is expected to
increase at an annualised 2.7% over the five
years through 2017-18, to reach $14.2 billion.
Industry revenue is expected to drop by 1.8% in
2017-18, with an anticipated decline in housing
transfers likely to reduce industry activity and
earnings
The Sunshine Coast has been singled out as the
new real estate hotspot with four suburbs
topping a list Queensland's boom areas.
Experts predict Sunshine Coast real estate
prices will skyrocket on the back of rising
infrastructure spending, industry growth, jobs
and lifestyle. Analysis of the region's market
growth over the past 12 months revealed 14
suburbs where housing achieved capital gains of
10 per cent or better with Buddina, Forest Glen,
Meridan Plains and Noosa Heads all breaking
the 13 per cent barrier.
Sunshine Coast market is next nation’s
property hotspot
STAND aside Brisbane and Gold Coast, there’s a
new boom market in town.Experts predict
Sunshine Coast real estate prices will skyrocket
on the back of rising infrastructure spending,
industry growth, jobs and lifestyle.

Analysis of region’s market over the past 12-
months revealed 14 suburbs where housing
achieved capital gains of 10 per cent or better,
with Buddina, Forest Glen, Meridan Plains and
Noosa Heads all breaking the 13 per cent
barrier.Property research company Hotspotting
released their quarterly National Top 10 Best
Buys report and named the Sunshine Coast as a
real estate winner. Hotspotting also chose the
region as its National Growth Star in their most
recent PricePredictor Index report which
studies sale volumes across Australia.
Sunshine coast market monitor (Last year,
2017 )
The unit market also contracted in the June
quarter, falling 4.9 per cent, from $410,000 in
March to $390,000 in June. Despite the
quarterly contractions, the Sunshine Coast SD is
one of the top performers in the Queensland
market for the past year and the past five years.
Noosa continued leading the residential
property market in the Sunshine Coast SD.
Based on the annual median sale price, Noosa
has become the second-most expensive house
and land market (after Brisbane LGA) and the
most expensive unit market in Queensland. The
annual median house and unit prices were
$645,000 and $479,000 in the 12 months to
June 2017.
According to the State Budget Regional Plan for
the Sunshine Coast SD, the allocated funding for
infrastructure projects is about $240 million for
FY2018. About half of the investment will fund
the Bruce Highway Upgrade – Caloundra Road
to Sunshine Motorway project.
Acknowledging the expansion of the region, the
State Government has committed $10 million
funding assistance to the private sector to
construct a sewer pump station, rising main and
trunk gravity main to connect the Palmview
development area to the Kawana sewerage
treatment plant. This will facilitate development
of dwellings and increase housing supply in the
region.
Building Queensland is currently assessing the
viability of three large infrastructure projects:
• The $780 million Beerburrum to Nambour Rail
upgrade is ready for government investment
consideration. It is expected to deliver a more
integrated transport system with increased
capacity and travel time savings for freight and
passenger services.
• The $80 million Lake Macdonald Dam Safety
upgrade is currently under detailed business
case analysis and has the goal to upgrade the
dam to meet modern standards and improve
performance.
• The $430 million Sunshine Motorway –
Mooloolah River Interchange is currently under
preliminary business case analysis. It has the
goal to deliver improved safety and capacity in
the vicinity of the Mooloolah River Interchange
at the Sunshine Motorway.
The implementation of these projects will
potentially inject nearly $1.3 billion into the
economy over the coming years. This
investment is a response to the increasing
population in the region. According to the ABS,
Noosa and Sunshine Coast LGA added more
than 72,680 residents for the past decade to
June 2016.
The rental market is the strongest in
Queensland with high demand of rental
properties and very low vacancy rates. Similarly,
the outlook of the sales market is positive and
supported by economic fundamentals such as

population growth. Prospects for the Sunshine
Coast’s residential property market are positive
and supported by a broad plank of
infrastructure and development projects. The
job market in the Sunshine Coast S4 region is
also performing reasonably well with
unemployment dropping to 5 per cent in June,
below the state average of 6.5 per cent and the
national average of 5.6 per cent.
a. HOUSE MARKET
The annual median house price for the Sunshine
Coast SD grew 6.2 per cent, from $518,000 to
$550,000 in the 12 months to June. This
compares with the five-year growth in the
median sale price of 27.9 per cent, from
$430,000 in June 2012.
The median sale price of the Sunshine Coast
LGA and Noosa increased 5.9 per cent and 12.2
per cent over the past 12 months. This increase
positioned Noosa as the top performing market
in the Queensland Market Monitor.
Noosa was also the best-performer for the past
five years, with the median sale price increasing
34.4 per cent, from $480,000 in June 2012 to
$645,000 in June 2017.
Based on the annual median sale price, the
three most expensive suburbs were:
• Sunshine Beach ($1,200,000)
• Alexandra Headland ($960,000)
• Noosa Heads ($925,000)
The three most affordable suburbs were:
• Nambour ($370,000)
• Landsborough ($381,500)
• Coes Creek ($405,000)
The volume of sales over the March quarter fell
in the Sunshine Coast LGA and Noosa.
Preliminary data for June also shows a fall in the
volume of sales. This trend will be reviewed in
the September 2017 QMM. The most popular
sale price for houses throughout the Sunshine
Coast SD sat between $500,000 and $750,000.
Market trend indicators for the Sunshine Coast
SD showed characteristics of a market favouring
vendors, with falling supply and increasing
demand.
The Sunshine Coast LGA is one of the only four
LGAs reporting a fall in listings volumes for the
12 months to May 2017. It also reported the
second-smallest vendor discount (3.7 per cent)
of the areas analysed in the Queensland Market
Monitor.
A house in the Sunshine Coast SD needed about
46 days to reach a sale in May 2017 compared
with 54 days in May last year. Medium vendor
discounting showed a similar trend, with the
discount falling from 4.4 per cent to 3.9 per
cent for the 12 months to May.
b. UNIT MARKET
Similar to other regions in Queensland, the unit
market throughout the Sunshine Coast SD fell
over the June quarter by 4.9 per cent, from
$410,000 in March to $390,000 in June. The
quarterly median sale price in Noosa also fell 15
per cent, from $499,900 in March to $425,000
in June. Despite the fall, the annual median sale
price increased 3 per cent, to $479,000,
becoming the most expensive unit market in
the QMM.
Over the medium term, the Noosa annual
median unit price increased 17.8 per cent, from
$406,500 in June 2012. This positioned Noosa
as the best performer in the unit market over

the past five years. The annual median unit
price in the Sunshine Coast LGA also increased
over the medium term from $335,000 in June
2012 to $387,500 in June 2017.
Queensland, with vacancy rates below 2.5 per
cent. The Sunshine Coast SD’s vacancy rates
tightened over the June quarter, from 2 per
cent in March to 1.5 per cent in June.
The most expensive suburbs for units were:
• Sunshine Beach ($640,000)
• Noosa Heads ($630,000)
• Twin Waters ($567,000)
Similar to the house market, unit sales
contracted over the March quarter in both
locations, the Sunshine Coast LGA and Noosa.
The volume of sales fell from 1206 in December
to 1109 in March. Preliminary data for June
revealed a continuation of the downward trend.
However, it will be reassessed in the September
quarter.
The supply of units in the Sunshine Coast SD
increased 6.4 for the 12 months to May 2017.
This is not a concern as listing volumes for the
Sunshine Coast SD fell 12.9 per cent from
February to May this year, revealing a seasonal
supply increase rather than a sustainable
increase.
Similar to the house market, the market trend
indicators showed characteristics of increasing
demand. Days on market fell from 68 to 59 days
for the 12 months to May 2017. Vendor
discounting reduced 0.7 percentage points, to
3.9 per cent in May 2017.
The Sunshine Coast LGA has the shortest days
on market in the statistical division, with 57 and
the smallest discounting of 3.9 per cent.
For a third consecutive quarter, Maroochydore
was the tightest rental market in Queensland,
reaching a vacancy rate of 1 per cent for June
2017. Local agents highlighted the lack of rental
listings in the region as a contributor to low
vacancies.
The weekly median rent in the Sunshine Coast
LGA held steady for three-bedroom houses and
three-bedroom townhouses at $440 and $420
over the June quarter. On an annual basis, the
weekly median rent for three-bedroom houses,
two-bedroom units and three-bedroom
townhouses increased from 2 to 6 percent. The
rent for two-bedroom units achieved the largest
increase of $20 a week or 5.9 per cent for the
past 12 months.
Noosa vacancies returned to the healthy range
this quarter, reducing 1 percentage point from
4 per cent in March to 3 per cent in June.
Noosa remained as the most-expensive region
for three bedroom townhouses in Queensland.
The weekly median rent for this type of
dwelling increased 10 per cent for the past 12
months, from $500 a week in June 2016 to $550
a week in June 2017.
c. RENTAL MARKET
Over the past 4 1/2 years, the Sunshine Coast
SD rental market has outperformed the rest of

Suburb Median Sale
Price
Rise in
Median
Price (%)
BUDDINA $750,000 18.9%
FOREST GLEN $642,500 16.8%
MERIDAN $525,000 14.2%
PLAINS
NOOSA HEADS $895,000 13.7%
WARANA $650,000 12.9%
MOFFAT BEACH $747,500 12.8%
MOOLOOLAH $510,00 12.7%
VALLEY
0
MARCOOLA $585,000 12.5%
COOLUM BEACH $625,000 12.2%
GOLDEN BEACH $570,000 12.2%
COORAN $397,000 11.8%
BATTERY HILL $520,000 11.5%
DOONAN $785,000 10.6%
SUNSHINE
BEACH
$1,160,000 10.0%
How are Queensland prices expected to
change in 2017
Looking ahead, John McLeod, who sells
property in and around Bulimba for the
Harcourts group, believes property prices in
Brisbane will stay fairly stagnant. “Growth will
be steady for houses… If I was an investor, I’d
be buying houses and land packages on a lower
return, but on better capital growth. When it
comes to selling an investment property, I have
always found that property within the 10km
radius to the Brisbane city centre holds its value
very well.
Suburb in this radius also includes Fortitude
Valley and New Farm.
Christopher also believes houses will
outperform units in Brisbane in 2017. With the
pickup in employment levels, he says Brisbane’s
market could improve although the surplus in
units may keep a lid on the rest of the market.
The Gold Coast
He says the Gold Coast will continue to
outperform the Sunshine Coast for the year
ahead, and that both areas will outperform
Brisbane.
The Australian Housing Outlook 2016–2019
forecasts further (although more moderate)
price growth of around 8 per cent over the
three years to June 2019 for the Gold Coast as
new dwelling construction rises from long-term
lows. That said, the unit price growth may be
dampened by the 1,200 apartments that will
eventually find their way onto the market after
the Commonwealth Games in 2018.
The Sunshine Coast
The Sunshine Coast also looks promising. The
BIS Shrapnel/QBE report says it is expected to
benefit from its relatively better affordability
compared to Melbourne, Brisbane and Sydney,
attracting empty nesters and retirees from
these cities. It forecasts that median house
price will grow an aggregate 7 per cent in the
three years to June 2019, to $575,000.
“The rate of price growth is expected to
progressively slow in this period in line with
slowing price growth in Sydney and
Melbourne,” it says.
Townsville
It adds that Townsville’s median prices are likely
to continue to decline until local economic
conditions improve – most likely towards the

end of the decade. Median house prices are
expected to lose 1.4 per cent a year over the
next two financial years before bottoming out.
They should show no growth in the year to June
2019 as a result of rising supply.
The value of real estate in Queensland? REIQ
analysis
Overall, the real estate market on the Sunshine
Coast held strong with the HPI (Housing Price
Index) continuing to trend in the positive, up
25% over March last year to $480,608.
Total dollar volume for the month of March is
up 14% across the Sunshine Coast to
$44,412,125.
Unit sales are down 55% over last March with
83 homes and property sold, while the average
price of all property is $535,085 down 4% and a
sales success ratio of 16% making it a balanced
market overall.The housing market continues to
be competitive for home buyers on the
Sunshine Coast with 528 available homes and
land for sale and 150 newly listed properties for
sale in March.
Nationally, RP Data estimates housing wealth
at $5.2 trillion, however Queensland now
accounts for more than 15% of this
estimation, according to CEO of the Real
Estate Institute of Queensland (REIQ) Anton
Kardash.
assisting the Gold Coast and north Queensland
in particular since the GFC.
Confidence was also noted to be returning in
north and central Queensland, as well as the
south-east, with particular reference to the
Sunshine Coast.
“The state’s real estate renaissance is reflected
by a wide range of indicators, from strong price
growth and higher sales volumes to more new
housing construction and finance approvals.”
Final Words:
Australian property is one the widest and
deepest asset bubbles in the history of
capitalism. Any objective assessment of this
“market” can lead to no other conclusion.
With a long history of commitment to home
ownership, Australians have always been
prepared to structure their finances around
property. This showed up in a total dwelling
stock to GDP ratio that persisted around a very
high 150% from 1960 to 1990. In the late 1990s
that shot up to 200% and then embarked on
near ceaseless climb to 360% today. Moreover,
Sunshine Coast tops on list of real estate
investments in Australia.
In fact, with Brisbane become increasingly
popular for investors, and values ticking up, this
is only set to increase.
“Queensland residential housing is more
popular than ever with investors, who see an
enormous upside as confidence rebounds in the
local real estate market,” said Kardash, pointing
to strong buyer sentiment and sales activity

References:
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