July 2009

When considering the future of real estate on the Gold Coast it is interesting to review the past 12 months which have certainly caused a lot of headlines.

The dramatic actions of regulatory authorities to quarantine Australia from the deep recession that has already claimed the United States and, increasingly, powerful European economies, have created a compelling case for investment in the property sector.

As the dire position of the US economy started to emerge in the second half of 2008, the Reserve Bank of Australia made its first downward adjustment to interest rates in seven years. The reversal in the interest rate movements, which was designed to stimulate demand for borrowing to keep the economy moving forward, was dramatic.

In the final four months of 2008, official cash rates eased a remarkable 3%, sending a clear message to Australians that the threat from slowing global economies required a dramatic policy response. At the same time, the Federal Government`s first home owners grant doubled to $14,000 for existing home purchases and tripled to $21,000 for the purchase of new dwellings.

But the stimulus to the property market did not stop there. In February 2009 the RBA cut rates again, taking the cash rate to 3.75% - a level not seen since the mid 1960s.

The net effect of the halving in interest rates from their peak of 7.25% in mid 2008 is significant for borrowers. On a $300,000 mortgage, repayments have fallen by almost $9000 a year or the equivalent of a 15% pay rise for the person on the average income.

It represents a significant saving to borrowers, many of whom were also showered with cash courtesy of the Federal Government`s $42 billion stimulus package approved in February 2009.

But against the crumbling broader economic environment, the foundations have indeed been laid for a future property-led recovery and results from April, May and June on the Gold Coast have confirmed that there are still a large number of property transactions. The Gold Coast property recovery has definitely been led by the first home owners grant with properties priced up to $500,000 being the most competitive segment of the market.

So it does seem that the doom and gloom is behind us and the Gold Coast property market will continue to deliver results.

For further information on the current market or on any of your real estate needs, contact Ray White Broadbeach on 07 5553 1100 or Ray White Mermaid Beach on 5575 5766.