Byron 2.0: Surging Prices Push Coast to Affordability Edge

The locals in Byron Bay have long declared the popular NSW north coast town would never become “another Gold Coast”. But new research suggests maybe it should have been the other way around. Perhaps it is the tower-strewn Gold Coast that should have been vowing never to become “another Byron Bay”. At least, when it comes to property prices. Holding the low-rise, low-density development line has certainly come at a high cost for Byron over the past few decades. Prices have soared in its restricted property pool and it has emerged as one of the most expensive and exclusive places to live in Australia— affordable only to the most affluent of buyers. But in the wake of the pandemic, the biggest property paradigm shift has occurred 90km up the Pacific Motorway on the Gold Coast. Over the past four years, a wave of well-heeled lifestyle and luxury seekers has continued to wash over the coastal strip—making it the second most expensive housing market behind Sydney. Gold Coast Market has ‘shifted’ According to a market report from Ray White Surfers Paradise Group, the city’s median house price has hit $1.17 million and by 2027—if its growth continues at the current rate—it will be at Sydney’s $1.7 million median. “Will we see Point Piper pricing? I don ’ t think so,” Ray White chief economist Nerida Conisbee says. “But the Gold Coast market has definitely shifted.” ▲ Ray White's Nerida Conisbee says the Gold Coast market has grown out of sight, with tall towers such as the newly proposed Meriton Shore (pictured). She recalls analysing the data back at the end of 2019 when the city’s median house price was sitting around $700,000—about half the Sydney median at the time. “The fact that we ’ ve seen that gap narrow so much, so quickly is quite phenomenal. “Back then, I wouldn’t have predicted it would hit a million dollars for a very long time,” Conisbee says. “But it hit that during the pandemic, came back a little bit when interest rates started to rise and then things took off again. “And that really does show how much it has changed … historically, it has been such a boom-bust market but it doesn ’ t seem to be showing those tendencies anymore.” As indicated by the Ray White data, strong demand from the top end of the market has been driving the rapid acceleration in price growth. “What we ’ ve seen on the Gold Coast is that rise of luxury,” Conisbee says. Of the top 10 regional suburbs in Australia with the strongest price growth and the most luxury ($5 million and above) sales, the Gold Coast dominated—accounting for eight and seven suburbs, respectively—in the year to July. In that 12-month period, two of its suburbs—Surfers Paradise North and Mermaid Beach-Broadbeach—recorded price growth of $220,000 to $250,000. No end in sight “We’re now seeing incredible prices being paid for homes and I can’t see it stopping,” Conisbee says. “We ’ ve still got population growth. We ’ ve still got troubles with construction, so it ’ s not like things are going to be suddenly cheaper to build. And just the popularity of the area, the Gold Coast is a really popular place to live now. “So that momentum that’s been built does look like it will continue.” And with it, further price increase. ▲ Sherpa is acquisitive on the coast and won approval for its Palm Beach project Perspective Nexus earlier this year. Of course, the flipside to the Gold Coast’s big property shift is an increasing number of people are being priced out of the market—as they have been in Byron Bay. “[The Gold Coast] was a pretty affordable market pre-pandemic,” Conisbee says. “But now it is second most expensive after Sydney, and increasing at a rapid rate.” Nevertheless, she says the latest data also shows: “It’s not all expensive. “We tend to think of the Gold Coast as a very high density city but it’s not really…the majority of homes on the Gold Coast are houses. “Absolutely, the top end of the market has boomed … but there’s also a lot of affordable options still available. “It ’ s not like Byron Bay, which is all expensive, and where they’re so anti-density … you ’ re never going to get affordable options in Byron Bay. “The Gold Coast, because it has embraced density and people are used to it, it does allow for more affordable options to be available for people ... but people will need to make a shift from living in a house to an apartment.” House to apartment mindset shift needed Conisbee cites the latest data for Surfers Paradise as an example of the city’s available “affordable options”. “Not only did it contain the most expensive homes, it also had the highest proportion of homes available, under $750,000.” Gold Coast-based town planner David Ransom takes a different view. “There ’ s a lot of older stock in places like Surfers Paradise and, basically, those are redevelopment sites,” he says. “So you can expect that older, more dilapidated housing stock to reduce over time … [and] if there ’ s less of it and more people competing for it, then the price they pay is inevitably going to go up as well.” Density no silver bullet for Glitter Strip And although Ransom agrees the Gold Coast has embraced density, he is not convinced it will stop the increasing number of people being priced out of the city. “It’s a city that embraces change. That’s why it’s here and has grown very rapidly in a very short period of time. “But whilst we embrace change and accept it here, the reality is the vast majority of our population aren't going to be able to afford to live in the apartments being built. “The cost per square metre of construction of apartment projects is not going down …so we ’ ve just got to stop pretending that everybody in the future is going to be living in a highrise building affordably.” ▲ Low density properties will be few and far between on the coast as prices push higher. The Zone Planning Group director adds: “No private developer is going to pursue some sort of social agenda for benevolent reasons and go broke. If they can't make it work, then it's not going to happen”. Ransom says expanding slab-on-ground housing is the cheaper option to apartment towers but the geographically constrained Gold Coast is running out of greenfield land. The other option, he says, is to “compress suburbia” by reducing the city’s 600sq m minimum lot size, opening up the potential for thousands of more affordable homes to be built. With the private sector accounting for 95 per cent of housing built, he says government needs to remove “any impediments” and incentivise developers to produce the type of housing needed. “There are some pretty simple stroke-of-the-pen solutions out there and levers that can be pulled but we ’ ve just got to have some political bravery to implement them.” And if we don’t? “You know how all the affordable housing for Byron Bay is no longer in Byron Bay—it’s 35km away in Ballina. “That’s where we’re headed and what we’ll be facing but on a much bigger scale,” Ransom says. “Just based on what we’re seeing through our office, we ’ re doing very little affordable product … it ’ s getting more and more skewed towards the luxury end of the market. “Also, let's not forget the banks hold the keys here. It's the lending practices of the banks that dictate what people build by requiring a margin, a decent margin to occur. “So it may well be that we’re pushing people out of the city altogether. “And they’re going to be commuting to work on the Gold Coast from Beaudesert, Yarrabilba or wherever it is they can access affordable housing within an hour-and-a-half drive. “That's going to become the rule rather than the exception.” Conisbee is acutely aware the Gold Coast still has some big challenges ahead of it—and affordability is just one of them. “Trying to get affordable stuff built is really hard at the moment,” she says. “So, yes, the stuff that's getting built is beautiful and it's expensive…and it’s also getting built because there is demand for it. “But you can’t just keep getting beachfront views. It does run out at some point and development will be increasingly pushed back.” However, as Ransom puts it, the whole city is “hemmed in and has already hit the edges” of its developable limits. Conisbee agrees and says the only way is up. “We will have to see more high density developed,” she says. “But it doesn’t have to be all highrise.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

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Phil Bartsch
Sat 31 Aug 24

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