Red-hot demand due to pandemic-inspired sea-changers and downsizers has led to record apartment sales on the Gold Coast, dragging supply levels to new historical lows.
The main driver has been intrastate migration, while interstate migration from lockdown affected states such as Victoria and NSW has also been a factor, with present stock levels now set to be absorbed by the end of the year.
Urbis senior consultant Lynda Campbell said supply had reached a “critical low” across the Gold Coast at the end of June following another quarter of robust sales activity.
“While the [sales] numbers in the latest quarter failed to match the first three months of this year, it was still the second-highest quarterly result in five years,” Campbell said.
New apartment sales for the first six months of this year have now reached 1200, leaving the city at a seven-year low of just four months of supply at current sales rates.
According to Urbis, 450 apartment sales were made in June quarter, leading to 14-project sellouts—three of which were new launches. The result follows a record first quarter of 750 sales.
Gold Coast central remained the most active precinct, accounting for 240 sales.
Campbell said owner occupiers represented just over half of buyers, with one in five investors from Queensland and only 4 per cent of buyers from overseas, down from 25 per cent of the market pre-pandemic.
The “north shore” from Runaway Bay to Hope Island, currently has 13.1 months supply while the “southern beaches”, from Mermaid Beach to Coolangatta, holds just 2.1 months supply.
David Higgins, Colliers International director for the Gold Coast, said sales from the southern beaches precinct had now eclipsed the central Gold Coast.
“This shift is highlighting the current drift of development activity to the southern coastal areas,” Higgins said.
“The market performance over the first quarter was incredible, one of the best we’ve ever experienced.”
Strong demand for apartments in the southern beaches precinct has now made it the most expensive for new apartments on the Gold Coast.
The weighted average sale price in this market has surged by $142,000 to $1.36 million, compared to the first quarter of this year, up more than 42 per cent in just two years.
The average price was lower in the Gold Coast central precinct, from Labrador to Broadbeach, where it dropped by $210,000 to $1.02 million.
“Overall, we’ve seen a smaller volume of construction work completed in the past five years at a time when demand has peaked,” Higgins said.
“Along with the rising cost of materials and greater demand for lifestyle properties, this has led to a significant increase in prices for new apartments.”
Mosaic Property director Brook Monahan told The Urban Developer that prospective sites would not be purchased to simply fill its pipeline and remained “extremely cautious” about future acquisitions.
“It’s times like these—when the market is performing well—that we are at our most cautious,” Monahan said.
“Costs are escalating on the construction front, putting pressure on margins as well as competition for sites intensifying rapidly with southerners particularly bidding up land values, especially on the Gold Coast.
“We are always fairly conservative in our outlook and approach, and we apply this to all of the decisions we make.
“We want to continue doing what we are doing for a very long time to come, so all decisions are framed with a long-term view in mind and not by maximising perceived short-term opportunities.”
Development over the next 20 years is supported by state government forecasts that the Gold Coast will attract 14,700 people a year with the city’s population reaching 940,000.
The city is expected to need 6300 dwellings a year to accommodate this growth with the combined economic benefit to create more than 150,000 new jobs by 2041.
For developers in sought after locations like the Gold Coast, building costs are now rising at a faster rate than inflation as construction demand continues to outstrip supply for both labour and materials.
“There is no doubt the industry is going to feel the pinch on both fronts and naturally, we are not immune either,” Monahan said.
“One of the reasons we established our own construction arm was to have the ability to have greater control over the process.
“We have worked hard to establish strong supply chain relationships to better mitigate such risks.
“We have also established a solid network of loyal tradespeople across south east Queensland which has enabled us to build such a strong track record of delivery through multiple cycles.
“Again, we can expect a shake out of the sector as for many, the challenges will be insurmountable.”