While the decision is unlikely to surprise many, given the overwhelming expectation of an interest rate cut today, many in the property market will be pleased to know that the Reserve Bank has dropped interest rates by 0.25%.  This is the first reduction in the Cash Rate Target since December 5th 2001.

This decision takes the Target Cash Rate to 7.00% (as it was in February of this year) and places renewed pressure on lenders to reduce their own interest rates to follow suit.  Already it has been announced that Westpac, the NAB, Commonwealth Bank and ANZ will bring their rates down between the 4th and 8th of this month.

In new data released by the Housing Industry Association, new home building is predicted to fall by around 20% state-wide in the December quarter.  On the Gold Coast however – one of the state’s fastest growing area – the fall is tipped to be as high as 30%.  This drop will contribute to a state-wide shortage of 11,000 homes in this financial year alone.

Instead, Queenslanders are renovating more, with a 19% increase in renovations over the past three years and predicted increases of around 13% for the next three.

This information conincided with figures from the Australian Bureau of Statistics showing a 32% fall in the number of Queenslanders taking on mortages in the year from June 2007 to 2008.

With the region – and indeed the entire state – experiencing record population growth and low rental vacancy, these trends will only worsen the housing shortage and cause vacancies to fall and rents to rise further.  While the figures are perhaps daunting for those who are currently renting and potentianl new home buyers, those already in the market look set to enjoy strong future capital or investment income growth.

The Residential Property Prospects 2008-2011 Report produced by independent forecaster BIS Shrapnel point to the Gold Coast enjoying some of the strongest price growth in the nation for the next three years .

While the 2008-09 financial year is only expected to exhibit moderate growth, 2009-2011 is predicted as a time of rocketing values, with the median Gold Coast house price expected to rise from $475,000 (where it currently stands) to $580,000. Angie Zigomanis, the study’s author has pointed to “The shortage of new properties being built, the strong demand from population growth, both interstate and overseas, and the very low rental vacancy rates on the Gold Coast” as the driving forces behind the expected growth.

There is little argument that with recent interest rate rises and stock market jitters the Gold Coast property market is a buyer’s market at present – but with underlying population growth continuing and rents rising, it may not be for too much longer.

After a couple of weeks of speculation, Singapore-based private equity firm CVC Asia Pacific have purchased a 65% stake in the Stella group from the embattled MFS. The deal values Stella at around $1.5bn (over half a billion dollars less than the asking price 3 months ago, and about $400m less than it cost MFS to assemble the company.)

However, the deal does bring a degree of certainty back to Stella’s operations – which include the management of a number of Gold Coast resorts under the Mantra, Breakfree and Stella brands. Helped in no small part by the removal of over $900m worth of debts the company was holding. Exactly what effect this will have on Stella’s operations remains to be seen, however given the strong financial backing that CVC can provide, the outlook is certainly more positive than it was several weeks ago.

Over the past few days, embattled MFS Limited has made several moves towards paying off the $220m worth of short-term debt it must cover by March.

In addition to selling most of it’s 16.9% stake in MFS Diversified (it’s development arm which owns development company Villa World) and a 3.5% stake in Babcock & Brown Communities Group, MFS has also reported selling the Domain Aged Care Group to AMP for $93.5 million ($43.5 of which is profit). This is good news for shareholders, as it has dampened some of the ‘fire sale’ atmosphere that has been surrounding the group over the past few weeks.

Perhaps the most anticipated sale is that of a major stake in key asset Stella which is presently under negotiation. With Stella owning management rights to a large number of Gold Coast resorts and apartment buildings, this is probably the move being most keenly watched by Gold Coast property investors and building managers. At this stage, it is unknown when any official decision will be reached regarding the Stella sale, but given the short-term debt deadline, one suspects that it will have to be soon.

In addition to the fundraising, it is understood that from April 1st, MFS will have a new name – it’s moniker being given to Boston’s ‘Massachusetts Financial Services’. It is not known what the proposed new name will be.

Part of the reason behind the Gold Coast property market’s strong growth is the large number of  interstate and international visitors that it receives – in both their capacity as purchasers and their effect on holiday accommodation vacancy rates and returns.

As such, it is great news for Gold Coast property that passenger numbers through the Gold Coast airport grew another 8% in 2007 with a total of 3.9 million people through the terminal.  This increase has elevated the Gold Coast airport from 8th to 6th busiest in Australia.  The recent introduction of budget international airlines Tiger Airways and Air Asia X has provided an extra boost to visitor numbers – especially from south-east Asia.  The addition of the new carriers has also been instrumental the airport winning the award for ‘Best Low-Cost Airport’ at the 5th annual Asia Pacific Low-Coast Airline Congress last week.

The growth seems sure to continue, with work to commence on a 20 month $100m redevelopment of the main terminal, which will double the size of existing structure, providing more service space for both local and international carriers.   This is great news for the airport as a whole, as well as the tourism industry and of course the property market, which can only benefit as long as visitor numbers continue to swell, increasing room occupancy rates, holiday investment returns and the number of potential buyers on the Gold Coast.

The latest figures from PRD Nationwide and KPMG have confirmed it – the Gold Coast is continuing to grow at breakneck speed. With an annual population growth rate of 3.5%, well in excess of the national and Queensland averages (1.3% and 2.4% respectively), we are expected to reach a population of over 700,000 by 2021. That’s nearly 200,000 people over the next 15 years!

The news is particularly good for local homeowners and investors as well with the Real Estate Industry of Queensland (REIQ) reporting a 9% jump in the median Gold Coast house price for the 12 months to September this year – taking the figure to $436,050. This, coupled with anecdotal evidence from local real estate professionals suggests that even this years’ interest rate rises and the change in government have done little to slow things down.

Gold Coast holiday accommodation and the investor market have been having a great time of it as well, with average room takings for this year’s March Quarter up 22.7% since the same period in 2003, and occupancy rates up 10.6%.

The population growth has created a need for 133 new dwellings every week (that’s 6916 per year), however the annual amount both housing and unit approvals have fallen since 2003, with 3441 housing approvals and 3125 unit approvals registered in 2006. It goes without saying that as long as growth continues to outstrip supply of new property, we can expect to see prices rise further.