Sunshine Coast Property Boom: Insights on Backyard Living & Price Surges
Weekly Market Update with Leigh Martinuzzi MPG
The demand for backyard dwellings is on the rise, driven by worsening housing and rental affordability, and an overall shortage in housing supply. According to recent reports by Matusik, the prevalence of multi-generational properties is expected to increase significantly over the next decade. Currently, 18% of Australian households accommodate two generations, with 9% housing three generations. These figures are projected to rise to 24% and 13%, respectively.
There are numerous benefits associated with the surge in backyard dwellings. Firstly, they help alleviate the housing shortage in Australia, which in turn can have a positive impact on pricing. Additionally, they provide more suitably sized dwellings for individuals, freeing up larger properties for larger families as household demographics evolve.
Matusik highlights several advantages for property owners considering backyard dwellings. A one-bedroom secondary dwelling can increase property resale value by 12 to 15%, and for larger homes, this figure can reach up to 30%. Rental yields for backyard dwellings are also attractive, ranging from 8 to 10% for long-term rentals and 15 to 20% for short-term rentals.
On the Sunshine Coast, regulations regarding backyard dwellings stipulate that they must be within 20 meters of the main dwelling and not exceed 60m2 in size (90m2 for rural properties). Building approvals follow standard procedures, with costs varying depending on size and finish quality. Companies on the Coast and beyond can assist in managing the entire construction process, offering services from start to finish.
While the benefits are compelling, it’s essential to consider potential drawbacks such as the impact on owners’ or tenants’ personal space and privacy. Nonetheless, backyard dwellings present a promising opportunity for addressing housing needs and capitalising on property investments.
In other news, CoreLogic’s home value index across Australia saw a 32.5% increase between March 2020 and February 2024. The Sunshine Coast, particularly the hinterland areas where I work, experienced even more substantial growth, with prices soaring by 50 to 60%. This surge can be attributed to the lifestyle benefits the Sunshine Coast offers, especially during the COVID-19 lockdowns, when it was seen as a sanctuary for space and nature.
Recent developments in the property market, including the decision by the Reserve Bank of Australia to hold the cash rate at 4.35%, are bringing back buyer confidence. This stability provides buyers with greater clarity regarding their borrowing capacity, leading to increased demand and property transactions.
While inflation remains high, it is gradually approaching the RBA’s target range of 2-3%, expected to be reached by 2025. Economic uncertainty persists, with weaker consumer spending observed across most industries. Higher interest rates have tempered activity in the property sector, prompting some buyers to hold off on purchasing decisions until more certainty is established. It’s a bit of a catch-22 because, because waiting for the interest rates to lower, which many predict will happen as early as September, one might see their borrowing capacity increase. However, at the same time, this will also likely create more buyer competition, leading to higher property sale prices. It might remain all much the same whether you buy now or hold off until interest rates decline. Auction clearance rates remain high with most auction cities reporting clearance rates above 70%. A confident sign of market resilience, despite prevailing interest rates and higher prices, is reflected in auction clearance rates, with most auction cities reporting rates above 70%. This suggests that buyers remain optimistic about investing in property, further underlining the robustness of the market.
