FEB. 2018:
The most recent Urbis Apartment Essentials report confirms the popularity of coastal suburbs with the Gold Coast Central precinct from Labrador to Broadbeach accounting for 40 per cent of new apartment sales in the September quarter of 2017.
While Urbis noted fewer apartment projects hit the market in the quarter, prices were sharply higher. The weighted average sale price for new apartments rose $48,381 over the quarter to $676,307 which was the highest price recorded since 2014.
CoreLogic’s head of research Tim Lawless is not surprised by the underlying strength of the Gold Coast in the past year.
Despite softer conditions in most of the capitals, he argues that the fundamentals exist for a sustained period of growth that has eluded the Gold Coast in the past.
“It was always going to be the case that some of the markets (like Gold Coast) that started this cycle much later than the larger cities were going to outperform,” Mr Lawless says.
While the Commonwealth Games loom large as a single source of stimulus for the economy, Mr Lawless sees broader issues at play that could underscore a rising market beyond 2018.
“There has been a level of stimulus in the local economy from the Commonwealth Games around the build-up of infrastructure development and you’d have to expect that as the level of investment slows down then that’s going to have a flow-on effect.
“But I don’t think the Gold Coast market is going to crash or probably even go backwards.
“The Gold Coast ticks a lot of boxes, not only because it’s coastal and has a good climate and a lot of the amenity, but also because it’s adjacent to the third-largest capital city. In that sense you can see why the Gold Coast is outperforming a market like Cairns which also has a lifestyle element to it.”
The strength of the market is being reflected in tight residential vacancy rates. Real Estate Institute of Queensland figures show vacancies plummeted to 1.1 per cent in the December quarter of 2017, down from an already tight 1.9 per cent three months earlier.
Mark Witheriff, the co-managing director of Knight Frank Gold Coast, sees the sustained low vacancy rates and relatively modest developments as two key indicators supporting the Gold Coast property market in the short term.
“In previous cycles we’ve seen fluctuation in vacancy, soft tourism numbers and massive towers,” he says.
“This time we’re seeing tourism maturing and growing, vacancies low and a housing shortage in a real sense, while the product that is currently being built is able to be delivered in an 18-month period.”
“The domestic market will continue to tick along because of the fundamentals which are there for developments up to 120 apartments, but not for mega-towers. These are traditional, sensibly sized single-market-cycle developments for owner-occupation, investment and holiday letting.
“It’s been a much more passive approach to the market than previous cycles. After the Commonwealth Games, I’m not sure what changes.
“Life continues. Population will continue to grow. There are a number of apartments at the Games Village to come to the market, but when you look at central Gold Coast there isn’t an oversupply.”
Mr Lawless agrees.
“I think the Gold Coast has gone through a long period where there hasn’t been much construction activity at all for the residential space,” he says.
“Historically the Gold Coast does go through some rapid periods of development, generally in line with housing market conditions.
“It does look like that sector is ramping up a little bit now as you’d expect because demand is ramping up as well. I don’t have any concerns around oversupply on the Gold Coast”
If office vacancy rates are any guide, business sentiment is riding high. Property Council of Australia figures show vacancies fell 1.6 percentage points to 10.6 per cent at the end of December 2017.
“That’s a pretty strong market,” Mr Witheriff says.
“Traditionally when it gets into single digits is when you get new office developments planned.”
“Not all of this growth is coming from new businesses. What we’ve seen is expansion of existing business which shows that Gold Coast businesses are maturing and growing.”
Source: we are goldcoast/business-and-invest
