Why are Sydneysiders buying in the Gold Coast?

This is consistent with ABS figures that the Gold Coast’s population will hit 1 million by the mid 2030s – a growth rate significantly faster than the rest of Australia.

Whilst there’s a strong rate of Sydneysiders moving to the Gold Coast, there’s also a growing number of people choosing to rent in Sydney, but buy in the Gold Coast.

In data from Realestate.com.au, more than 513,000 searches in 2018 for homes inter-state were for the Gold Coast and surrounds.

REA chief economist Nerida Conisbee argues this comes from the growing trend of Sydneysiders living where they love, but buying where they can afford. “When we look at what’s happening in the last few years in both Sydney and Melbourne, that extreme pricing has really pushed people into looking at alternative ways to get into the market, and rentvesting is obviously a good way to do that,” she shared with news.com.au.

In both city’s most tightly held and prized locations – on the waterfront, it becomes even more obvious why Sydney investors are buying in the Gold Coast. And whilst a lot of Sydneysiders would expect Gold Coast property to be more affordable, they often don’t realise how stronger yields can impact their yearly cashflow.

Waterfront property is sought-after by many investors, knowing that with proximity to water often comes accelerated long-term capital growth.

Sydney’s prestigious water suburbs typically attract higher rents, especially when they’re within easy access to the city and busy cafes and restaurants – but their yields (i.e. the rental price in comparison to the purchase price) can be incredibly low, making these assets hard to hold over the long term.

For a water-view apartment in Sydney, like the example below in the prestigious suburb of Elizabeth Bay, an investor would expect to pay a purchase price of $1,840,000. It rents out for approximately $1,100 per week, translating to a rental return of 3.1%. Based on an interest rate of 3.74% p.a., an 80% loan-to-value ratio, and mortgage repayments of $6,809 a month, this investor would need to chip in an additional $24,508 per year to hold this apartment.

It’s surprisingly high when you compare it to the cost of buying and holding a brand new apartment in the Gold Coast. Here’s how our Sydney example compares to an upcoming apartment building we’re recommending to our customers in the Gold Coast.

In a prized waterfront location in a prestigious area of Surfers Paradise, a 2 bedroom + media room apartment in this boutique, luxury building would set an investor back roughly $700,000 – a surprisingly affordable price considering Sydney’s waterside prices. It rents out for around $690 per week, translating to a rental return of 5.1%. Based on an interest rate of 3.74% p.a., an 80% loan-to-value ratio, and mortgage repayments of $2,235 a month, this apartment would generate $9,060 a year in positive cashflow for its investor.

Of course, other factors need to be considered like strata and council rates, but as a simple example it highlights the appeal of the Gold Coast to Sydney investors.