The property market’s continued correction was on display in real time at Ray White’s annual The Event auction extravaganza on the Gold Coast, with buyers demonstrating a high degree of caution.
Despite a packed ballroom at the Royal Pines Resort, results obtained part-way through showed that the clearance rate was tracking around 60 per cent, significantly down on last year’s 82 per cent clearance rate across 101 properties.
During the auction of 94 properties, which was still under way late on Sunday, chief executive of Ray White Surfers Paradise, Andrew Bell, described this year’s market as both “bumpy” and a “mixed bag”.
“Last year people were throwing money, but it’s changed a lot this year. Buying interest is there, but now there’s a question mark of what’s happening,” Mr Bell said.
Touted as the Magic Millions property calendar equivalent, The Event signals the start of the 2023 auction year when three rotating auctioneers sell off a collection of properties from one-bedroom units to commercial development sites and prestige waterfronts.
Mr Bell said about half of vendors had come to terms with the cooling market, while the other half were still clinging to price expectations set early last year, when “no one was worried about interest rates”.
Attending The Event was Gold Coast local Simon Thomas, who watched his four-bedroom waterfront home in Coomera Waters go under the hammer for bang on the $1.6 million reserve.
Although happy with the result, the upsizing Mr Thomas conceded his timing was a little out. “Look if I’d sold 18 months ago, the house could have sold for another 10 per cent,” he said.
This Coomera property sold for its reserve price of $1.6 million at Sunday’s Ray White auction event.
Selling agent Ray White’s Thomas Fliniks said the auction sale process was key to managing shifting buyer and seller expectations. “Buyers are nervous about changes, and are slightly uneducated on the market, so auction is a great way to find out where the market is on reserve,” he said.
In a telling sign, last year’s dedicated prestige sales event was not on the schedule, with the few available top-tier properties absorbed into the general auction due to limited supply and softening luxury prices.
Also selling on Sunday was Queensland property investor Stuart Colquhoun, who offloaded one of his two Gold Coast investment apartments for $6000 over reserve at $696,000.
Mr Colquhoun was satisfied with the outcome after purchasing the two-bedroom Surfers Paradise apartment in The Hilton for $600,000 in late 2021. “I probably made 20 or 30 grand net profit in the year on that.”
This two-bedroom Surfers Paradise apartment sold for $696,000.
The investor intends to plough his newly freed-up funds into Melbourne’s cooling market where he plans to purchase a short-term rental and cash in on the southern capital’s rich sporting calendar.
For Brisbane-based Mr Colquhoun – who has been servicing four mortgages across two Gold Coast units, a Brisbane home and Noosa hinterland
retreat – the continued supply pressure exerted on the Gold Coast region had made it an appealing investment. The apartment located in The Hilton Surfers Paradise Hotel & Residences was part of 96 properties being auctioned at The Event 2023.
“Particularly after the COVID period people are still coming to the Gold Coast, and the rental returns are good and occupancy is high, so it pays itself off,” Mr Colquhoun said.
Ray White’s Mr Bell said the supply shortage combined with population pressure was so far insulating the Gold Coast market against the full effect of eight consecutive interest rate rises that had understandably “scared the bejesus out of buyers”.
“We’re actually getting a second
wave of southern migration where the family and friends of people moving here have been visiting, and then decide to move based on the lifestyle,” Mr Bell said.
The other factor driving supply shortage was hiking rents. “The amazing
crisis in rental accommodation is forcing people to buy,” Mr Bell said. “People can’t find anything to rent and are now becoming buyers.”
The Gold Coast’s median house value sits at $972,708, down 1.7 per cent over the last 12 months, according to CoreLogic data. That is off the back of a 44.1 per cent increase in value over the last three years driven by the pandemic-induced population exodus to warmer climes.
Mr Bell said the comparably restrained auction room in contrast to last year’s frenzied affair was simply a sign of return to normality for what has been one of the strongest performing real estate markets in the country. “It’s not a boom, it’s not a depressed market – it’s normal,” he concluded.