Gold Coast property: Devastating outlook for renters and homebuyers in housing market

A new report has revealed a devastating prognosis for renters and prospective homebuyers on the Gold Coast in the next three years. It reveals how the market will change.

The level of housing development currently proposed for the Gold Coast will not come close to solving the city’s accommodation crisis, a new report warns.

Leading national real estate firm CBRE’s new Gold Coast Housing Dilemma report delves into the struggles facing the property industry across the next five years, particularly with development not keeping pace with population growth.

The number of dwellings on the Gold Coast increased by 1222 in 2022, while the population grew by more than 14,000 people, or around 6000 households.

And the report warns pressure will continue to grow for both renters and buyers.

Mark Witheriff

CBRE Gold Coast managing director Mark Witheriff said high construction costs were a serious issue, having risen 44 per cent since March 2020.

“There is an undersupply of housing on the Gold Coast and when taking existing vacancy of 1300 into consideration, the Gold Coast was short around 3500 dwellings in 2022,” he said.

“The pandemic created the perfect storm for tight supply conditions across the board, with strong economic conditions but shortages of both labour and materials.

“Increased demand pressure is driving rents and benefiting investors in the medium term, however it’s evident that the supply of residential, office, industrial and retail property will fail to meet future requirements until there is more capacity in the construction sector and the interest rate environment has stabilised.

The report found:

* The Gold Coast’s population is expected to grow annually by an average of 2.3 per cent until at least 2026, while the city’s gross product will grow faster than Queensland at 3.4 per cent in both 2023 and 2024.

* The city's office vacancy rate will fall to 2.3 per cent by December 2025, with all planned buildings already booked out.

* More than 70 per cent of industrial projects under construction have already been leased or bought.

* Rents for two-bedroom units have increased by 40 per cent since 2020.

* Office rents have increased by 8.1 per cent while industrial rents have gone up 2.2 per cent.

High-rise development, towers and cranes dominate the Main Beach skyline. Picture Glenn Hampson

The Gold Coast’s housing market is under pressure on numerous fronts following the pandemic-era population and development boom

A Real Estate Institute of Australia (REIA) roundtable on the city’s housing shortage held in May heard the city’s median house price is now equal with Melbourne and construction of new housing and unit towers is not keeping pace with Gold Coast’s population growth.

A range of solutions, including taxing Airbnb owners and issuing extra levies on investors who own homes but leave them empty sitting and unrented were pitched.

Mr Witheriff said the slowing pace of construction today would have a significant ripple effect going forward.

“While apartment supply may pick up slightly in 2024, there is a major question mark on projects that are yet to start construction,” Mr Witheriff said.

There’s plenty of residential development happening but a new report warns it won’t be anywhere near enough. Picture Glenn Hampson

“Issues with labour, the prioritisation of public sector projects by construction companies and banking funding difficulties are likely to result in some supply being delayed.”

New data released in March revealed Gold Coast renters had copped the highest increases in the state over the previous year.

Surfers Paradise was the worst-affected, with tenants there paying an average of $1475 a week while Paradise Point residents spent $1275 a week, a jump of 50 per cent on 2022. The city’s rental vacancy levels fell to a historic low of 0.9 per cent.

The CBRE report said the city's population growth would continue to be fuelled by its tourism sector, the city’s most valuable economic driver.

CBRE Research Analyst Sophie Plumridge said: “Population growth is largely being led by ‘metro-movers’ from Sydney and Melbourne seeking a change in lifestyle. This has supported the confidence in the labour market, with employment growing by almost 8.3 per cent since March 2020.

“The Gold Coast has also seen a bounce back in international students with over 4500 students commencing on the Gold Coast in early 2023.”

OPINION: JACKSON HILLS ON WHY COAST MUST LEARN FROM OTHER CITIES

On 22 March, over 500 leaders from across government, the private sector, and the community gathered at a legacy forum in Brisbane. There were excellent discussions around outcomes focused on sports and recreation, the environment, transport systems, jobs, innovation, and, to some degree, housing.

As a peak organisation for solutions to housing need and homelessness, Q Shelter believes it is critical to ensure housing is high on the agenda as part of the soon-to-be-finalised legacy plan for the 2032 Olympic and Paralympic Games. The current housing crisis is well documented, and, in this context, the 2032 Games are both an opportunity and a threat.

Mega events do impact housing markets; that’s undeniable. Without the legal framework to prevent excessive rent increases, a growing number of people in places like the Gold Coast, with a high proportion of renters, will be vulnerable to displacement.

Q Shelter policy and strategic engagement manager Jackson Hills. Picture: Peter Carruthers

The surge workforce from infrastructure projects combined with a myriad of factors attracting people to Southeast Queensland creates a significant risk to the affordability and availability of existing tenancies.

The most important solution to this is to rebalance the housing market to ensure enough housing supply to meet demand. While there are considerable efforts occurring in this space already, we are still well short of meeting current demand, let alone future needs.

As Queensland faces sustained pressure from high net inward migration, many people will be under an incredible burden to sustain one of the most important underpinning factors for their wellbeing: a safe and secure home for as long as it is needed.

The 2032 Legacy Plan must seize the opportunity to secure more social and affordable housing, as other cities have. We must learn from places like Glasgow, which ensured a social and affordable housing legacy from the Commonwealth Games village, and better recent examples in our own backyard, where we may have missed the opportunity to do just that.

Q Shelter, along with a collection of key peak and industry bodies, is calling for the establishment of a Queensland Housing Trust that will capture value from the procurement of goods and services related to the Games while also providing a vehicle for community and business investment to help solve the housing crisis.

The charitable trust would attract obvious tax benefits and operate as a mechanism to capture aggregated investment for affordable housing across the state.

This would not be a replacement to the critical role of Government investment in housing supply. Federal, State, and Local Government contributions through policy and investment are essential and always will be. However, a Queensland Housing Trust could grow over time, and in perpetuity, to provide an additional funding stream, enabling Government investment to be further leveraged. It would also be a catalyst for the diversification of funding options to not-for-profit community housing providers (CHPs), enabling better access to capital and financing for growth. The net result could be greater progress in affordable housing supply targeted at people on low to middle incomes and playing into an overall supply response across all housing categories in the lead-up to and well beyond the games.

Establishing a Housing Trust that allows for the value capture from commercial and procurement efforts related to the games, as well as sponsorship, philanthropy, and other contributions from the private sector and the community, is a significant opportunity for Queensland. A Trust would provide measurable outcomes for housing solutions. It would leverage hosting the games in a way that benefits current and future generations and provide tangible legacy benefits for the government that can be distributed right across Queensland. The Housing Trust would represent a timeless innovation that would only strengthen over time, as has been the case in other jurisdictions, like the United Kingdom, where these models are common.

Gold Coast has 300 rough sleepers on any given night and the highest unmet need in the country, with over 24,400 households with unmet housing need. Ending homelessness and creating an inclusive Queensland can only be addressed if we act now to create the momentum needed to achieve this important vision by 2032.

In our view, a legacy plan that is silent on these issues could risk Queensland’s reputation as an ‘inclusive society and connected region’.

Jackson Hills is the Policy & Strategic Engagement Manager for Q Shelter, peak body for housing and homelessness in Queensland.

Originally published as Gold Coast property: Devastating outlook for renters and homebuyers in housing market