Gold Coast property boom to trigger a shortage in future years

Developers are warning the Gold Coast property market, pushed by strong tailwinds, could be heading for a shortage of new apartments. Here’s why.

THE Gold Coast property market, pushed by strong tailwinds, could be heading for a shortage of new apartments, says national real estate group JLL.

Valuation director John Muchall said that conditions for developers were challenging and the supply of apartments was not expected to rise materially for several years.

“Demand from southern states is expected to continue to fuel projects in the short-term but economic uncertainty, increased construction costs and market competition mean that inferior projects are likely to be delayed or abandoned,” he said.

Director John Muchall. Photo: Kit Wise

Data released in March by consulting firm Urbis revealed a lack of available units because the number of apartments built between 2018 and 2020 dropped.

In 2020, 22 new projects launched containing a total of 1411 apartments.

In 2019, 24 projects were built with 2164 units.

Mr Muchall said the number of apartments under construction fell by 35 per cent during 2020 as project completions outpaced project starts.

He said a recovery by the apartment market, briefly halted by COVID-19, had regained momentum and appeared to be in full swing.

“Projects by reputable developers, in superior locations and of smaller density, are achieving stellar sales rates.

“Owner-occupiers have driven the rebound but investors have begun to trickle back into the market.

“Apartments within the $500,000 to $800,000 range are driving this trend, which is expected to gain momentum over 2021.”

The shortage of available units and the current development boom has also coincided with a rapid rise in property prices: Tamborine Mountain recorded a 36.6 per cent rise in the December quarter, and Labrador (30.2 per cent), Burleigh Heads (27.5 per cent) and Carrara (20.5 per cent) all notched up increases of more than 20 per cent.

54-56 Alpine Terrace, Tamborine Mountain

The JLL director said demand prospects were being buoyed by an improving economic outlook, rising interstate migration, and a likely strong recovery over the medium term in overseas migration.

“We expect the rise in investor demand to be strong, driven by prospects for capital and rental growth.

“That demand also will be a response to attractive rental yields and affordable prices relative to Melbourne and Sydney.”

Mr Muchall said the Gold Coast’s total supply of new apartments in 2020 was just over 1600 new units, an 18 per cent increase from 2019.

“New apartment supply is expected to decline this year, with around 1200 completions over 19 developments.”

Mr Muchall said the number of apartments for which developers were seeking council approval, and which were expected to be built by 2024, rose by 56 per cent in 2020.

“This suggests developers are positioning themselves for the next cycle.”