Gold Coast property market suffering from ‘chronic undersupply’ of new property stock

The Gold Coast is looking down the barrel of a critical supply issue when it comes to new property development, according to a CBRE report.

The report highlights a multitude of good fortunes for the Gold Coast, including active infrastructure investment over the next few years, ongoing population growth, gross product growth outpacing the Queensland average, but a chronic undersupply of new property stock.

Gold Coast’s CBRE Managing Director Mark Witheriff says, “The pandemic created the perfect storm for tight supply conditions across the board, with strong economic conditions but shortages of both labour and materials.”

He added that increased demand pressure is driving rents and benefitting investors in the short to medium term, however, the future supply of residential, office, industrial and retail property won’t be sufficient until there is more capacity in the construction sector and the interest rate environment has steadied.

Pros and pitfalls of population growth

The report points to the Gold Coast as one of the few places reaping the benefits of a post-COVID economy, with the region recording the second largest 2022 population growth among major Australian cities at 2.2%.

From 2021 to 2026, the population in the Gold Coast local government area (LGA) is set to grow at an average of 2.3% per annum and the region’s Gross Product is on a trajectory to soar past the state, growing 3.5% in 2023 and 2024.

CBRE Research Analyst Sophie Plumridge said this population growth is largely fuelled by movers from Sydney and Melbourne looking for a change in lifestyle.

“This has supported the confidence in the labour market, with employment growing by almost 8.3% since March 2020,” she said.

Plumridge also noted the Gold Coast has seen a bounce back in international students, with over 4,500 students commencing on the Gold Coast in early 2023.

However, housing has not been commensurate with this increase in population growth, which has led to exponential rental growth, with two-bedroom unit rents having skyrocketed by 40% since by March 2020.

Office and industrial rents have also surged by 8.1% and 2.2% respectively over the same period.

Witheriff says, “While apartment supply may pick up slightly in 2024, there is a major question mark on projects that are yet to start construction.”

The cost of construction has been one of the key barriers, with costs across the board increasing by 44% since March 2020.

“Issues with labour, the prioritisation of public sector projects by construction companies and banking funding difficulties are likely to result in some supply being delayed”, he said.

Article source: thepropertytribune.com.au

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