A leading real estate commentator has conceded that high growth predictions for one state have been overstated, warning of the possibility of oversupply dragging the market down.
CoreLogic RP Data research analyst Cameron Kusher has poured cold water on hopes the 2018 Commonwealth Games on the Gold Coast would trigger significant price growth in south-east Queensland, saying predictions of strong capital growth in the region have been overhyped.
“Well you probably could say it has been overhyped, given us and a lot of other people have been predicting that there’d be pretty strong price growth for the last few years,” Mr Kusher said in an interview with Sterling Publishing.
“We haven’t really been seeing the value growth that a lot of people were expecting.”
Mr Kusher said the upcoming Commonwealth Games were unlikely to have an impact on market activity further afield, and may even increase the risk of oversupply in a city prone to boom and bust cycles.
“I think the Commonwealth Games don’t really have much of an impact outside of anything other than the Gold Coast, I don’t think that’s why we’re seeing a lot of new unit construction in Brisbane – I think that’s related to other factors.”
“Certainly I think over the next 26 months we’re going to see quite a lot of new supply coming onto the Gold Coast market. We’re already seeing a lot of new unit approvals again, so obviously I think for the last seven or eight years there hasn’t been a lot of new development, so it’s probably time for some new development.”
However, Mr Kusher said there were concerns of “too much” development on the Gold Coast, and there could be more supply than demand after the Commonwealth Games.
It's not all bad news for investors who have purchased in the south-east Queensland region.
Capital growth may have been underwhelming over the last couple of years, but an improving jobs market and changing international economies may provide a slight boost in the coming year, according to Mr Kusher.
“I think the big thing that’s been missing from the south-east corner of Queensland is the job creation. If you have a look after the last twelve months there’s actually been some fairly steady job creation compared to what we’ve been seeing beforehand and particularly full-time employment. The other thing that will obviously help south-east Queensland is the lower Australian dollar. Fewer people from Australia theoretically will holiday overseas and more people from overseas will come and holiday in Australia so that should help the south-east corner.”
“The market continues to, I guess we could say, move a little sideways. [There’s] no real momentum for price growth and I think it’s just a lack of enthusiasm, particularly amongst the lower-priced areas out in Brisbane, out to the west and the north and down to the south of the Brisbane area,” Dr Wilson said, referring to Brisbane’s poor annual price growth performance compared to other capital cities.
“I think that’s again an under-performance by the local economy which is keeping concerns over job security and unemployment, and keeping confidence subdued. There are still high listing numbers in those outer suburbs of Brisbane.”