The supply of new apartments on the Gold Coast has hit record lows, with building costs rising and consistently strong demand likely to push prices up.
Most important points:
- Last year, a record 2,492 new apartments were sold, above the five-year average of 1,100
- There are warnings that many new projects are not aimed at the dominant owner-occupied housing market
- Developer suggests strong supply and demand constraints will drive prices up in the coming years
According to data from Urbis, there were 411 new apartments for sale at the end of the March quarter – the lowest number since the consultancy started monitoring records in 2014.
“That offer is all located in three suburbs – Surfers [Paradise]Southport and Broadbeach,” said director Lynda Campbell.
A total of 377 new apartments were sold in the March quarter, well below the 742 sold in the same period last year.
Median prices have crossed more than $1 million in the past five quarters, well above the pre-pandemic average of about $800,000.
But while the construction industry continued to struggle with high construction costs, supply chain problems and labor shortagesprices would likely continue to rise.
What comes may not be enough
While Ms Campbell said “there is a pipeline” of new apartments coming, “the biggest projects to launch are large-scale resort style projects” in the Surfers Paradise and Broadbeach areas.
“The choices for buyers are becoming more and more limited,” she said.
“Demand in recent years has come from owner-occupiers and not much supply of that product comes through.
Mrs Campbell said the “Mermaid delivery” [Beach] south and to the north is almost nothing”, highlighting the need for “more affordable product”.
“In the past we’ve seen that in the Northshore district and the coastal fringe, the area of Benowa, Robina, Varsity, but they have really limited supply.
“There are a few projects to launch there, but even their prices are creeping up.”
Prices will likely continue to rise
Developer Hirsch & Faigen has completed two apartment projects in Palm Beach and Kirra, with construction on a third in Mermaid Beach to start in June.
Director of sales Matt George said the project had generated $100 million in sales this year.
“There is still enough depth in the current market at the moment,” he says.
“There are still a lot of downsizers selling their houses and moving into apartments, there are a lot of first-time homebuyers around, and of course the Labor government has launched a pretty broad-based plan to help people buy their first homes.”
But Mr George said the dwindling supply of new apartments was fueled by rising construction costs, meaning prices are likely to continue rising “in the coming years”.
“Land used to be most of our developments, buying the land,” he said.
“Unfortunately on the Gold Coast, as well as nationwide, that doesn’t tend towards affordable housing.”
Road to a stable market?
The construction industry faces significant uncertainty, with: Gold Coast company Pivotal Homes, which has built more than 1,500 homes in the past 15 years, the last to collapse.
It came just months after great builders Condev and Probuild were liquidated.
But Mr George said the troubling market factors could help builders balance supply and demand over the longer term.
“I think market factors — construction delays, limited steel, limited timber — level the market in the long run, which is changing the way it’s been for the past few decades,” he said.
“I don’t really see any major market factors that will change current market conditions in the next 12 months.”
Lynda Campbell said she was unsure about when the market would stabilize.
“There’s construction costs, rising interest rates, high inflation, but then again we have low supply, lowest unemployment rate in decades and it’s the Gold Coast – why wouldn’t you want to live here?”
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