The Sunshine Coast is in a severe undersupply.
I repeat, it is in a severe undersupply!
Over the past few months, Sunshine Coast’s vacancy rates have plummeted and remained at a level of undersupply unseen since 2005. As a result, the demand from renters is far outweighing the number of properties available. According to SQM Research, the rental vacancy rate for May 2021 sat at 0.5%.
This severe undersupply has been reflected in property prices across the Sunshine Coast. Prices across the region are reaching record levels and boast some of the strongest rates of annual growth across Australia. According to Domain, the median house price currently sits at $770,000. This is an increase of 6.9% over the March quarter (this would usually be considered a great number for year-on-year growth, let alone growth over three months).
If we put these numbers into perspective, consider that about one year ago the Sunshine Coast had a median house price of $645,000. In other words, house prices have grown by 19.4% in just over a year. On top of that, units have jumped 10.2% over the March quarter to $550,000. 18.3% higher than last year. This is the strongest rate of price increases the Sunshine Coast has seen in roughly 17 years.
So why is this?
Well, it comes down to a couple of things. Record low interest rates, price affordability, infrastructure spending, population growth and location. Many of these combined once the pandemic caused people to reassess where they wanted to live. Another driving factor is the region’s economic boost. Over $20 billion in metamorphic, i.e. ‘dramatic change’, infrastructure has been invested into the Sunshine Coast area. Some of these major projects are the following:
- Maroochydore CBD ($2.1 billion): located in the heart of Maroochydore will be 53 hectares of commercial, residential, retail, public green spaces, plazas, etc. To be released in stages, the project will generate more than 15,000 permanent jobs and inject over $4.4 billion into the local economy.
- Sunshine Coast University Hospital Expansion ($1.8 billion): due to be completed in 2021, Australia’s first public teaching hospital spans more than 20 hectares and currently employs more than 3,500 staff, which will expand to 6,000 in 2021.
- International Submarine Cable ($35 million): the already-completed International Submarine Cable will be responsible for improved telecommunications across Australia’s east coast and will create up to 864 new jobs and $927 million in new investment. Putting the Sunshine Coast on the international business map, encouraging major data-dependent companies like Facebook, Google, Amazon, and Microsoft to locate their Australian investments in the region.
As you can see, billions of dollars of of economic spending is currently and will continue to be invested into the Sunshine Coast. This will attract international business, create strong employment opportunities, and will continue drive demand for residential property.
With the Sunshine Coast’s property market in hot demand, we will continue to see a severe undersupply which will inherently convert into rent and property value rising.