The Gold Coast has long been one of the most interesting property markets in the country. Since the majority of development occurred in the 1960s and 1970s, the Gold Coast has been a place cherished by both locals and holidaymakers.
The property market has been incredibly cyclical, moving through numerous peaks and troughs over the years, more so than any other major city. The Gold Coast was one of the hardest hit property markets in the 2008 GFC, and it took the longest time to recover. But it did, like it always does from downturns.
Through those peaks and troughs, over the 35 years to 2021, Gold Coast median house prices have grown 1,077 per cent, while unit prices rose 643 per cent, research by PRD shows.
While the Gold Coast property market looked to be bouncing back organically around a decade ago, the 2018 Commonwealth Games gave it another shot in the arm. Two years after The Games were held, Australia was locked down due to the COVID-19 pandemic, which saw Gold Coast property prices boom as quickly as they ever have.
Those who were living overseas, interstate, or even just in Brisbane, sought a home on the Coast. It presented a safe haven from COVID, with Queensland handling the pandemic better than any other region in the country. While being in rolling lockdowns, southern capital dwellers turned their attention to the Gold Coast, seeing it as somewhere they could relocate to, some for just a few years, but some forever.
Some were buying weekenders which they could spend extended periods of time at given the reduced expectation to work from the office, while many were advancing their retirement plans, cashing in their homes in Sydney or Melbourne and relocating earlier than planned to live the famous relaxed lifestyle the Coast is known for.
While established stock proved popular for both purchasers and renters who moved from the south, a high number of buyers looked to the off the plan market.
At the same time cashed up buyers were coming from the south, so were cashed up apartment developers. They were quickly securing development sites, launching their projects to the market before getting development approvals, and selling most of the apartments in the building within a few months, triggering construction finance in double-quick time.
Property advisory firm Charter Keck Cramer found that during FY22, over 4,000 off the plan apartments were launched for sale, the most apartments ever launched on the Gold Coast over a financial year.
Unsurprisingly, FY23 saw a sharp fall in apartment launches, around a -48 per cent drop from the launch numbers from FY22, however it was still the highest number of apartments launched since FY19.
Charter Keck Cramer believes there will be 3,500 apartments marketed in FY25 and FY26, although they don’t expect all of that stock to be delivered in the current cycle with numbers likely to be revised downwards.
“The Gold Coast has averaged around 1,500 apartment completions per year over the past decade,” Charter Keck Cramer noted.
“During FY2024 – FY2026, apartment completions are forecast to measure around 2,600 p.a. although much of this supply is yet to obtain construction funding.”
Charter Keck Cramer’s view on supply being revised downwards is due to the current construction crisis facing the Gold Coast.
While there were considerable positives for the Gold Coast apartment market during COVID, the negatives of the pandemic have reared their head, and it’s having a major impact on the future supply on the Gold Coast.
COVID disrupted supply chains around the world. That’s seen the cost of key construction items like steel, concrete, and timber skyrocket, which in turn has made projects unfeasible to build. Adding to the cost of materials has been a shortage of labour. There’s simply not enough builders on the Gold Coast, or in South East Queensland as a whole. Brisbane is having the same issue. It’s been well documented that builders have collapsed due to mounting costs, while some of the ‘Tier One’ builders don’t have too much more capacity to take on new projects.
Many developers are now sitting on development sites, with development approval in place, but aren’t able to get their projects going because of the building cost. It’s gotten to the point that build costs have been going up so considerably that it would cost the developer more to build than they would receive in the sale of the apartments. That’s going to have a major impact on future supply on the Gold Coast. And when supply isn’t there, and demand is, prices go up.
Scott Hutchinson, chairman of Hutchinsons, one of the country’s largest builders who are currently building oliver 100 projects in South East Queensland including, said at a recent Round Table event that high inflation and higher interest rates had created a “triple whammy” for the market – with build costs sending builders to the wall, developers unable to make projects feasible, and buyers wary given upward interest rate trends.
He said however that the forces were stabilising and the challenge now would be for the industry to deliver projects to meet the high migration demands which are seeing almost 50,000 people a year coming to Queensland.
“The big challenge now is how do we find enough tradespeople to deliver much needed projects to the market in such a high migration environment where housing demand has probably never been higher,” Hutchinson said.
“This is accentuated by the fact that there is so much competition for trades due to the extraordinary amount of public infrastructure spending by governments because of Queensland’s popularity, growth and the coming 2032 Olympics.”
His comments were echoed by integrated property advisory group Urbis, which added that careful planning was required to ensure the retention of the lifestyle that was drawing almost 1000 people a week to Queensland.
Paul Riga, Director of Urbis, said there is a dire need to make sure growth plans of the city are made correctly given the Gold Coast is forecast to see an increase of around 150,000 residents between 2022 and 2037, requiring around 60,000 dwellings.
“To achieve this we will need to ensure opportunities for low and middle income housing with strong connectivity to public transport and core lifestyle amenity. In doing this we cannot lose sight of the importance of urban design and the increased sense of community this can bring.”
The developers who have continued to see success over the last few years have been builder developers. While being impacted like everyone else with the cost of materials, Gallery Group has been better placed to navigate the labour shortages the Gold Coast has seen with its own inhouse building capability.
Vacancy rates are sitting at below one per cent, and have done so now for well over 12 months, while the median unit rent for a two-bedroom apartment has risen 6.6 per cent per annum over the last decade, Charter Keck Cramer’s research found.
Gallery Group also has a number of land opportunities across the Gold Coast. For more information on Gallery Group’s developments, click here.