Supply concerns plague Gold Coast apartment market

A report by professional consultancy firm Urbis has found apartment sales in the Gold Coast to be well above pre-Covid levels, despite building constraints keeping supply levels under pressure.

The Urbis Apartment Essentials report indicated the Gold Coast apartment market is struggling to meet historic supply averages with a predicted 8.8 months of supply left.

Demand remains healthy however, with 336 apartment sales in the third quarter of this year.

The market is undeniably cooling however in comparison to the 690 sales in the third quarter of 2021 and the record-breaking 742 in the first quarter.

Surfers Paradise and Broadbeach are standout suburbs in the Gold Coast market, home to six of the ten best-selling projects in the area.

Just nine months of supply remain

Despite sales remaining above pre-pandemic levels, a persistent undersupply issue and rising caution from developers and buyers are overshadowing the market.

Urbis senior consultant Lynda Campbell said despite the launch of 11 new projects during the last quarter, these concerns remain.

“It’s a tug of war at the moment between what we see as strong underlying fundamentals and the risk aversion being demonstrated by both buyers and developers.”

Lynda Campbell, Urbis senior consultant

“Rising construction costs have led many developers to put their projects on the sidelines, while buyers are also being swayed against purchases by rising interest rates and cost of living pressures.”

Ms Campbell reassured however that several developers still see opportunity in the market, and said it all comes down to timing.

“The underlying factors that developers believe continue to support the apartment market on the Gold Coast are low supply, consistent demand, strong investment in infrastructure over the next decade, population growth, solid rental yields, and extremely low vacancy rate.”

Central precinct driving sales while most areas face undersupply

According to Urbis, performance across the existing and established apartment of the Gold Coast remains healthy, including rental yields which are currently tracking above Sydney and Melbourne.

Ms Campbell said Urbis has been monitoring the general apartment market with a focus on centrally located buildings completed within the last decade.

“These properties have recorded significant increases in sales numbers which shows that demand is still very much present.”

Lynda Campbell, Urbis senior consultant

There may be no resolution for supply issues on the horizon just yet, with construction likely to place new projects on hold in 2023.

“However, the factors currently driving caution in the market, such as construction costs, supply chain issues and interest rates, will ease at some stage,” she concluded.

At the end of the September quarter, the Gold Coast Central precinct held 84% of the market’s current supply of 983 new apartments.

The central precinct – consisting of Southport, Main Beach, Surfer’s Paradise, and Broadbeach – accounted for 77% of the quarterly sales total.

The Coastal Fringe and areas inland from the Gold Coast Central Precinct are facing extreme undersupply with almost no new apartments available, while the North Shore precinct and Southern Beaches have fewer than 100 apartments available.

NSW and Vic buyers driving demand

A significant amount of interest in the Gold Coast market is being driven by buyers from NSW and Victoria, with many undertaking inspections virtually.

Mike York, chief marketing officer of virtual tours platform Little Hinges, said the Gold Coast is leading the nation in the number of digital inspections taken from outside the region.

The platform’s Sight Unseen report released in October indicated 44% of digital inspections undertaken for properties on the Gold Coast were by interstate buyers, in comparison to the national average of 24.6%.

“The last two years have resulted in significant changes to both where and how buyers are inspecting property, which is reflected in the high percentage of digital inspections we’re seeing from NSW and Victoria on properties located on the Gold Coast,” said Mr York. 

Approximately 20% of inspections on the Gold Coast were interested buyers from NSW and 15% from Victoria, while 7.7% are from international buyers.

Article source: thepropertytribune.com.au

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