Prices in the Gold Coast off the plan apartment market will continue to increase over the next 12 months, Charter Keck Cramer forecast.
Charter Keck Cramer said in their Gold Coast State of the Market H2 2023 that until conditions stabilise and improve in the building sector, prices have to go up.
“Many recently launched projects are achieving strong sales and pricing results, especially those associated with well regarded builders,” the report read.
“A notable proportion of purchaser demand has come from interstate (predominantly NSW and VIC) given the lifestyle attraction and lower relative price points of the Gold Coast.”
They noted that importantly in this cycle, foreign buyer activity has remained subdued which is very different to previous cycles which were underpinned by significant overseas buyer activity.
They said relative to other Australian cities in 2023, the Gold Coast’s apartment market showed more positive signs through robust sales and continued pricing growth. They added however that it is not without some key risks and challenges primarily in the building and construction space.
Gold Coast Build Environment
Build costs and delivery times are a critical issue and risk for the Gold Coast market, CKC says, adding that some mainstream projects have become financially unviable due to the increase in labour and material costs.
“Many active projects are beachside and targeting premium price points and therefore new dwellings at the more affordable end of the scale are limited,” CKC says.
“Infrastructure investment has turbo charged the cost of materials and labour, helping to position these as a key risk to the supply-side response. Paired with the cost of debt, the prospect of projects taking 50% longer to complete than pre-pandemic is eroding the feasibility of many projects in the pipeline and placing them on pause.”
CKC says even on smaller projects, the stringent level of due diligence being undertaken by lenders towards builders is impacting the pace of funding.
Gold Coast Supply Metrics
In 2023 there were a total of 1,000 apartments launched to market, considerably lower than the 2,100 per annum average over the past decade.
The City Fringe and Central City Regions were the most active, accounting for 34 per cent and 30 per cent of launches.
Commencements in Gold Coast remained strong in 2023, bucking the trend of many cities across Australia.
In 2023, construction commenced on 2,100 apartments, a slight decrease than 2022 but well above the 10-year average of 1,900. Gold Coast’s City Fringe Region was the most active, accounting for more than 50 per cent of commencements.
In 2023, Gold Coast recorded 1,500 apartment completions, slightly higher than in 2022.
CKC says the coming 12 months will set a new peak for apartment supply in Gold Coast, with 2,700 apartments under construction and due to complete during 2024. That would mark a 46 per cent increase on the previous peak during 2020.
There is a total of 4,100 apartments currently under construction or being marketed and due to be complete between 2025-2026, however, a proportion of marketed projects are likely to be delayed given elevated project costs.
“While the increased completions forecast for the next 12-24 months poses an element of settlement risk (particularly for larger apartment schemes), strong recent price growth and low levels of foreign buyers has offset much of this risk. Furthermore, the low volume of residual stock within projects approaching completion poses little threat to those currently being marketed or soon to launched.”
2024 Property Outlook
CKC’s analysis suggests that established stock will need to continue to reprice upwards.
“This will be followed by recently completed stock after which new off the plan stock will quickly reprice upwards across the market which offers the most affordable price points.”
CKC’s analysis of the Gold Coast’s housing market shows that the price gap between detached houses and established units is 44 per cent, a decline from 60 per cent over the past two years as demand has continued to funnel into the more affordable unit market.
“The Gold Coast has one of the most expensive housing markets in Australia and, quite simply, buyers need to make trade-offs should they wish to enter the for sale market with greater demand driven into the BTS apartment market.”
Source: urban.com.au