Gold Coast new apartment stock halves in two years: Midwood

The number of new Gold Coast apartments available to purchase has halved in the space of two years, according to the August quarter Midwood Report.

There are now just 420 high-rise apartments up for sale (representing two year’s of supply at current low rates of sale), compared with 839 new apartments available for purchase in August 2010.

“There should no longer be the perception that Gold Coast high-rise apartments are oversupplied,” said Midwood Report author Bill Morris.

Midwood records 54 new apartment sales over the August quarter of 2012, double the 26 sales recorded in the May quarter and just above the 52 sold in the February quarter.

The long-term average for the Gold Coast is 300 unconditional sales per quarter.

The August quarter figures excluded Juniper Group's Soul tower, featuring 288 units, of which 92 are still available for sale and Brookfield Multiplex’s Orchid tower in its Hilton project, featuring 224 apartments, of which 25 remain available for purchase. Construction of both these Surfers Paradise towers is now complete.

Midwood notes that the two developers had refused to report sales “because they are embarrassingly low”.

The top-selling project was Phoenix Apartments on Lakefront Crescent at Varsity Lakes, which managed 16 off-the-plan sales.

This is a $60 million project featuring 120 apartments being developed by Trilink Developments and De Va Project Marketing.

The project features four lake precinct buildings, three eight-storey buildings and one four-storey building, with stages one and two currently being marketed.

One-bedroom apartments with a car park are being marketed from $339,000, and three-bedroom apartments on the eighth floor with two car parks from $550,000.

Sales over the quarter included a 106-square-metre, three-bedroom apartment that sold for $580,000.

Conditions for investors due not appear to be improving.

According to the Midwood Report, rents on the Gold Coast have hardly changed in the past two years.

The median weekly rent for a one-bedroom flat on the Gold Coast is $290 per week, unchanged from two years ago; rentals for two-bedroom flats have increased from $340 to $350 over the past two years, and median asking rent for three-bedroom houses has increased marginally from $400 to $405 in the past 12 months. Four-bedroom houses rent at $450 per week, compared with $440 two years ago.

Furthermore, the report notes that there has been significant changes in population trends on the Gold Coast and Sunshine Coast, “both of which have experienced a slowing down in population growth rate over the five years ending 2011”.

The Gold Coast population was growing at 6% per annum in 1991, 4.5% in 1996, 3.4% in 2001 and 2.7% in 2006

“On the other hand, Townsville has experienced a higher growth rate over the same period, whilst Cairns has seen steady growth.”

Morris notes that these are “significant trends for property investors”.

“They beg the question “have the Gold Coast and Sunshine Coast lost their growth fundamentals permanently”?

In its October Gold Coast update, LandMark White records 709 new units available on the Gold Coast in high-rise developments currently being marketed, with 527 of these apartments in the "big three" – Soul, Hilton and Niecon's two-tower Oracle project on Broadbeach, which is in the hands of receivers Korda Mentha.

Some 93 of the remaining 182 units are located within SPC Residential's three-tower Southport Central project, where receivers have also been appointed. Tower two is almost sold out, with just 11 out of 262 apartments remaining, according to Midwood.

LandMark White notes there are no new units available priced under $500,000 "and less than 10 units available priced under $750,000 if you then take Southport Central out of the equation".

"We also note that certain developers have retained units and placed them into letting pools, thereby reducing the amount of available units even further."

One new project about to commence construction is Kirra’s Pure apartments (33 units over 12 storeys), being developerd by the Pikos Group of Companies, while another project, Jewel in Surfers Paradise, being developed by Chinese developer The Ridong Group is progressing through the approval process

"This comes as good news to the construction industry which has experienced a slump in new project proposals and construction since the completion of the ‘Big Three’," says LandMark White.