The supply of new apartments on the Gold Coast has hit record lows, with increasing construction costs and consistently strong demand likely to push prices higher.
- A record 2,492 new apartments were sold last year, above the five-year average of 1,100
- There are warnings that many new projects are not geared towards the dominant owner-occupier market
- Developer suggests strong demand and supply constraints will push prices higher for the “next few years”
According to data from Urbis, 411 new apartments remained for sale at the end of the March quarter — the lowest number since the consultancy firm began monitoring records in 2014.
“That supply is all based in three suburbs — Surfers [Paradise], Southport and Broadbeach,” director Lynda Campbell said.
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 exceeded $1 million for the past five quarters, well above the pre-pandemic average of around $800,000.
But as the building industry continued to grapple with high construction costs, supply chain issues and labour shortages, prices were likely to rise further.
What’s coming may not be enough
While Ms Campbell said “there is a pipeline coming” of new apartments, “the biggest projects due to launch are large-scale resort-style projects” in the Surfers Paradise and Broadbeach areas.
“The choices for buyers are getting more constrained,” she said.
“The demand over the last few years has come from owner-occupiers and there’s not a lot of supply of that product coming through.
Ms Campbell said the “supply from Mermaid [Beach] south and to the north is almost nothing”, emphasising the need for “more affordable product”.
“In the past we’ve seen that in the Northshore precinct and the coastal fringe, which is the Benowa, Robina, Varsity area, but they’ve got really limited supply.
“There are a couple of projects to launch there, but even their prices are creeping up.”
Prices likely to keep rising
Developer Hirsch & Faigen has undertaken two apartment projects in Palm Beach and Kirra, with construction on a third in Mermaid Beach starting in June.
Director of sales Matt George said that project had seen $100 million worth of sales this year.
“There is still plenty of depth in the current market at the moment,” he said.
“There’s still a lot of downsizers selling their homes and moving into apartments, a lot of first home buyers around, and obviously the Labor government have brought out quite a wide-ranging scheme to help people purchase their first homes.”
But Mr George said the dwindling supply of new apartments had been fuelled by rising construction costs, meaning prices were likely to keep increasing for “the next few years”.
“Land used to be the major part of our developments, buying the land right,” he said.
“Unfortunately on the Gold Coast but also nationally, that doesn’t lean towards affordable housing.”
Path to a stable market?
The building industry faces significant uncertainty, with Gold Coast firm Pivotal Homes, which has built more than 1,500 homes over the past 15 years, the latest to collapse.
It came just months after major builders Condev and Probuild were placed into liquidation.
But Mr George said the troubling market factors could help builders to balance demand and supply in the longer term.
“I think market factors — delays in construction, limited steel, limited timber — is actually levelling the market out over the long term, which changes the way it’s been over previous decades,” he said.
“I don’t really see any major market factors that are going to change the current market conditions in the next 12 months.”
Lynda Campbell said she was uncertain as to when the market would stabilise.
“There’s construction costs, interest rates rising, high inflation, but then on the flip side, we’ve got low supply, lowest unemployment in decades and it’s the Gold Coast — why wouldn’t you want to live here?”
The Gold Coast market is not predicted to stabilise within 12 months.(ABC Gold Coast: Dominic Cansdale)