[+] Gold Coast’s Sky-High Apartment Market’s Million-Dollar Question

How much luxury apartment living is too much? Well, some might say the Gold Coast’s famed skyline—a sun-soaked crucible of Australia’s undersupplied and overheated property sector—is finding out. But is it really? Or are the record prices being paid for shiny new apartments on the tower-strewn Glitter Strip simply the new normal? Less than 10 per cent of new apartments sold across the city are now being transacted below $1 million—or what is deemed the affordable end of the market. And yet, there is no shortage of buyers willing to splash the cash in the increasingly luxurious but constrained depths of its residential development pool. Eye-watering prices are being notched up for half-floor and whole-floor apartments, not to mention sprawling penthouses—some of them across multiple levels with private resort-style rooftop terraces. ▲ The penthouse in development at Burleigh Heads set a Gold Coast sales record. In November last year, a beachfront apartment in Spyre Group’s Glasshouse development at Burleigh Heads was sold for a record-breaking $24 million. The deal for the 800sq m apartment equated to $30,000 per square metre and followed the off-the-plan sale months earlier of the project’s 970sq m double-storey penthouse for $20 million. In another more recent sale, a three-level penthouse was sold for close to its $12.5-million asking price. Capping the 21-storey 5Point Projects and Bottega Property Group’s under-construction Faro tower at Broadbeach, the deal set a new price per square metre record for a non-beachfront apartment on the Gold Coast. “The city’s had booms in the past but I’m not sure there would have been one quite like this…with such a high concentration of high-end apartments being constructed,” town planner David Ransom tells The Urban Developer . “Traditionally, there’d be a whole range of different apartment types being built at different price points. “So there’d be a bigger pool of smaller value apartments that would drag the average [price] down. But they’re not there. No one’s doing it. It’s just high-end development … and that’s pretty much it. That’s the only sector of the market that’s actually working.” Tapping into that top end market offers the only viable means most private developers can stack projects and keep turning dirt. As long as they can lock in a builder or multi-task, that is. ▲ A three-level penthouse in 5Point Projects and Bottega Property Group’s Faro at Broadbeach has also set a benchmark on the Coast recently. Across most of Australia’s major cities, the residential development landscape is being distilled as it continues to weather economic headwinds and prevailing industry challenges. Rising construction costs, skilled labour shortages, interest rate hikes and inflation have cruelled the supply of new homes, pushing up property and rental prices, exacerbating housing affordability issues. On the Gold Coast, the latest data suggests the market concentration of high-end—or at least, high-priced—apartments is now well and truly overproof. Urbis research shows that of the 240 new apartment sales recorded across the city during the March quarter, 91 per cent transacted for more than $1 million. The weighted average sale price was $1.73 million—the highest level since the town planning firm began monitoring the Coast’s new apartment market a decade ago. Overall, the average price for new apartments sold across the Gold Coast has risen more than $500,000 in the past six months, up from $1.67 million in the December quarter, and $1.13 million in the September quarter. “Demand is strong, supply is low, and that’s putting upward pressure on that high-end sector,” Ransom says. “But, obviously, there’s still a lot of purchasers out there who have enough financial firepower to sustain those prices.” ▲ “The very high-end product is the only stuff that can keep ahead of the escalations,” town planner Dave Ransom. Of course, the significant flipside of the latest Urbis apartment market figures is that only 9 per cent of new apartment sales on the Gold Coast in the first quarter of 2024 were transacted for under $1 million. “The very high-end product is the only stuff that can keep ahead of the escalations,” Ransom says. “The land, the materials and the labour are now very expensive, so how do you build affordably?” That’s a challenge the Gold Coast is not facing alone but it is also a much more intensified market than most. In the latest Demographia International Housing Affordability report, five of Australia’s capitals are listed among the top 20 unaffordable cities in the English-speaking world. Sydney, Melbourne and Adelaide are ranked second, seventh and ninth, respectively, on the list and deemed “impossibly unaffordable” based on price-to-income ratio. Brisbane and Perth—both rated as “severely unaffordable”—came in at 15th and 20th. As a whole, housing prices in Australia are an average 9.7 times typical incomes—higher than in the US, Canada, UK, Ireland and New Zealand, the report says. ▲ The Coast’s housing prices have increased in value by about 70 per cent since the onset of Covid. Image: Unsplash/Josh Withers But according to CoreLogic data, it is Australia’s regional markets where the “extreme growth” in values and prices has occurred during the past four years. “Particularly those coastal markets that hit the sweet spot of commutability with lifestyle dividend, of which the Gold Coast is the epitome,” research director Tim Lawless says. Since the onset of Covid, he says, the city’s housing prices have been “consistently rising and quite swiftly” with its established market [excluding new supply] increasing in value by about 70 per cent. To put that into context, in the same period Sydney values have risen by 27 per cent and the city’s median unit value currently sits around $850,000—only $65,000 more than the Gold Coast’s median unit value of $785,000. “That gap is definitely diminishing,” Lawless says. “The Gold Coast is still a very strong market… in the past 12 months alone, it’s up 14 per cent.” At the moment, he says, the activity on the supply side is “more skewed towards the high-end, more boutique developments”. “And it’s probably going to be the case for some time yet... simply, that’s where developers can wring out a profit margin.” Plus, he adds: “A lot of downsizers have had the benefit of extreme levels of equity accrual over the medium term, even just the last four years…so it probably makes a lot of sense for them to tap into that, downsize or or even leverage that equity to buy a coastal retreat.” ▲ Interstate investors have overtaken owner-occupiers, Urbis data shows. The latest Urbis data points to a resurgence of investor activity on the Gold Coast. “While the owner-occupier market remains strong, the latest quarter possibly signals a return to long-term trends,” Urbis director Paul Riga says. “Interstate investors in the latest quarter have overtaken owner-occupiers at the rate of 38 per cent versus 29 per cent of total sales. Local investors accounted for 20 per cent of sales and overseas buyers 13 per cent. “This is a significant shift from the trend of recent years when we saw an all-time high of 65 per cent owner-occupier sales in 2020 during the peak of the pandemic.” Lawless says with the backdrop of very low supply, combined with the “quite significant” premium to bring new stock to the marketplace and developers continuing to focus on more feasible high-end products, further growth in values and prices is certain across the Gold Coast. Testing the waters of how high the Coast’s established market is likely to go, the four-level bedroom penthouse atop the 77-storey Soul tower in Surfers Paradise has been put on the block with a $30 million price tag. Spanning more than 1000sq m, it features five bedrooms, seven bathrooms, multiple living spaces, a cigar room and swimming pool. It has been listed by its owners Simon and Tah-nee Beard, who made their fortune as the founders of streetwear fashion chain Culture Kings. The couple paid $15.25 million for the penthouse in 2021. Meanwhile, a seventh-floor “sky home” in the Coast’s southern hotspot of Palm Beach has transacted for almost double its initial sale price. The whole-floor, 391sq m apartment with four bedrooms in Sherpa Property Group’s Perspective Two Sea development has changed hands for more than $7.6 million, only nine months after settlement of its initial purchase for $3.95 million. “It is definitely a market that is becoming more unaffordable,” Lawless says. “It’s going to be a lot harder to get your foot in the door. “And probably the biggest challenge for a city like the Gold Coast is where will a lot of its lower-income service or hospitality workers reside.” Ransom agrees. He says while the high-end apartment boom “sort of is expanding dwelling supply” in the city, there is not a lot of cheaper housing in an apartment format being proposed and coming across the desk at his Zone Planning Group. “That’s where we’re going to be for a while, I’d say … until we work out what sort of economic levers we can pull to allow more affordable apartment construction to occur,” he says. Gold Coast mayor Tom Tate, who was re-elected for a record fourth term in March, says he is already on the job. “The luxury end will sort itself out because the rich are fine,” he told a roomful of Gold Coast property industry leaders at a Property Council event on June 7. Affordable housing is what he regards as a top priority for the city during his latest stint donning the mayoral robes and chains. “We’ve got a couple of levers we’re looking at,” Tate said without elaborating too much. Significantly, he noted the council had some surplus land that could be utilised for private-public development partnerships with an affordable housing component. “To make it work, we might have to do some temporary local planning instruments in some areas,” he said. “My approach is … we do for the whole-of-the-city. “Just because people don’t have a lot of money they are prevented from living closer to those wonderful people in [the Gold Coast’s millionaires row] Hedges Avenue …but value-wise [for the city] they’re good. “So we need to pepper it right across the city.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Gold Coast’s Sky-High Apartment Market’s Million-Dollar Question

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