Gold Coast development: Real reason behind shortage of units and rising property prices
Three of the Gold Coast’s leading property experts have revealed the secrets of the city’s red hot development boom – but not all Bulletin readers are convinced. JOIN THE CONVERSATION >>>>>
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SURGING Gold Coast property prices will stabilise within three years, according to the city’s leading real estate figures, as unit sales continue to surge.
Bulletin readers, though, have their own take.
While units and houses are selling out before developers can even take them to the market, buyers have been warned the current red-hot conditions will not last forever.
WHAT THE READER SAY
Gerard wrote: “Don’t be fooled … disaster in the making.”
Vabene predicted it was just a sign of the times.
“I went to boarding school on the GC late eighties and nineties. Many of the apartments sold back then would still have barely seen gains (especially after inflation).
“Houses are another story, especially in beach suburbs. The GC is a classic for existing units being worth less than its sales price way back when.
“With body-corporate levies in the hundreds sometimes, it’s little wonder most units especially in high rise buildings become an albatross for owners who can never make the numbers work, even with high rental demand.
“Perhaps vertical living that suits retirees will save the day for unit prices by the beach, else my advice is to look at the sales data, noticing the often negative returns on units.”
Cameron added: “Investors will almost never make their money back on high rises if renting out. As owner occupiers for retirement, sure but you need to be cashed up to pay the increases in Body Corp fees that become untenable over time!”
WHAT THE EXPERTS SAY
Ray White Surfers Paradise head Andrew Bell said the Gold Coast was in a “solid position” but warned there were concerns about the impact of inflation on the market.
“We are really starting to see early concerns about inflation, which would probably cause regulators to tighten up on financing to curtail the price growth in the market,” he said.
“We are also seeing, independent of the Reserve Bank, that money markets will push interest rates up, which will undoubtedly have an impact on the market but this is a healthy thing.
“You cannot have year-on-year 30-40 per cent growth, it’s just not sustainable or supportable by wage growth.
“Without a wildcard, I think we will see a gradual slowing of the real estate industry, which will cause it to level out.”
Properties on the coastal strip are the most popular among buyers but agents said the increasingly tight levels of supply meant many were being forced to buy whatever was available.
Real estate figure Amir Mian said he expected the backbone of the property market to remain strong for years to come.
Aside from interest from locals and interstate, inquiries from Australians trapped overseas looking for a place to live once they return were increasing.
Leading prestige property agent Michael Kollosche said supply levels in unit development remained tight but he expected demand to remain strong.
“The interest is strong but the supply is pretty tight,” he said.
“The rising cash rate will soften the prices and level out the market, but this will take three or four years to occur.”
RISING COAST PROPERTY PRICES ‘A COMPLEX CRISIS’
THE Gold Coast’s red-hot property boom is tipped to get a second wind once international borders reopen, a new report reveals.
The quarterly Urbis apartment essentials report, which analyses the city’s development industry, says a wave of investment will come once overseas visitors return to the Gold Coast.
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Urbis senior consultant Lynda Campbell said border closures had helped change the buyer market, but she believed the eventual reopening of foreign borders would potentially create even greater demand for Gold Coast property.
“Overseas buyers have all but disappeared due to border closures, which has had an effect on investor-style product,” she said.
“In 2016, 23 per cent of buyers were overseas, compared to only 4 per cent during 2020.
“Of the projects we are monitoring which are ready to launch, at least 50 per cent of these are premium boutique developments.
“When international borders open it is likely that we will see increased activity in investor-style product, which is currently under supplied on the Gold Coast.”
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The Bulletin on Wednesday revealed the city faced a deepening housing crisis because of a chronic shortage of units for sale.
A new Urbis consulting firm report showed there was just over three months worth of available units left in the city – if no new projects are finished.
Mayor Tom Tate said he expected overseas investors would return to the Gold Coast in coming years, but admitted the shortage of units was a serious concern.
“Yes, there is a crisis, especially if you are looking for a rental, like my kids are, ” he said.
“It is a really complex issue and one which is at the forefront of my mind, but it shows we need planned growth (with property) which is affordable.
“While the international borders are shut, there are no investors coming over, though some are buying through Zoom.
“I think we will be in high demand then but it also underlines why we need to go up, not out so that our infrastructure is affordable.”
UNSTOPPABLE BOOM: WHY COAST PROPERTY PRICES KEEP ON RISING
THE Gold Coast is facing a deepening housing crisis, with a new report revealing the chronic shortage of units for sale has intensified.
The biggest real estate boom in 30 years and a lull in new projects being built three years ago have combined to put a squeeze on the market.
A new Urbis consulting firm report reveals just over three months worth of available units left in the city - if no new projects are finished. It is down from just above eight months in the previous quarter.
The escalation of the supply shortage comes as the number of units sold on the Gold Coast increased by 97 per cent on the previous quarter.
Industry figures now warn the market squeeze will drive prices higher as property comes at an increasing premium.
“Projects are coming onto the market and selling out in the same quarter. This is creating a strain on the supply,” Urbis senior consultant Lynda Campbell said. “Based on the current quarterly selling rate, there is only 3.3 months supply of new apartments actively available for sale across the Gold Coast.
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“We will see this (pressure) continue because it is hard to put sites together and it takes time to bring them to the market, get the approvals and a team in place.
“This could put (continued) pressure on the market, particularly in the suburbs there are limited (developable) sites.”
Ms Campbell described the current real estate market as “unprecedented” but noted several tower projects under construction which would ultimately alleviate the pressure – but most are at least a year from residents moving in.
The apartment essentials report on the first quarter of 2021 paints a startling picture of the red-hot market such as:
• The new apartment market recorded 742 sales in the first quarter of 2021, the strongest quarterly sales result since 2013, surpassing a quarterly record of 495 sales in mid-2016.
• The southern beaches precinct recorded the highest rate, with 411 sales during the quarter, more than the 367 sold in the city’s south in all of 2020.
• The weighted average sales price reached $1.1 million in the quarter, for the second time ever.
• The number of apartments remaining for sale across the Gold Coast has fallen from a seven-year peak during early 2018 of 2594 to now sit at just 807.
• The bulk of those for sale are in the city’s south while the smallest is in the north.
Harcourts Coastal director Dane Atherton said many developers were tailoring applications for the new projects to allow the fastest-possible tick-off from council.
“What we are seeing is developers focusing on projects which are code compliant which means they can fast-track approvals and get them to the market,” he said.
“I have just come back from Sydney and it is clear to me our market is very undervalued compared to the capitals, while the view of the city is changing.
“Restaurant culture is now an emerging factor and people see us as a cool city which makes us more appealing.”
The Urbis report reveals the bulk of buyers are Queenslanders, with owner occupier sales making up 61 per cent while interstate buyers made up 20 per cent.
The numbers are starkly different from the same period in 2019 when 44 per cent of sales were to owner-occupiers and 26 per cent to interstate buyers.
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