Gold Coast new apartment sales ease from record high but supply remains below historic average
The Gold Coast apartment market came off the boil in the September quarter, but sales are still tracking higher than pre-COVID levels, while building constraints is keeping supply below historic averages.
The Urbis Apartment Essentials report has revealed 336 new apartment sales on the Gold Coast in the third quarter of this year, below the 690 sales in the corresponding period last year and record-breaking 742 recording during the first quarter of 2021.
Surfers Paradise and Broadbeach dominated the latest sales data with six of the 10 top-selling projects located there.
According to Urbis senior consultant Lynda Campbell, despite 11 new projects launched during the period, the market remains broadly undersupplied amid rising caution among developers and buyers.
“It’s a tug of war at the moment between what we see as strong underlying fundamentals and the risk aversion being demonstrated by both buyers and developers,” said Campbell.
“Rising construction costs have led many developers to put their projects on the sidelines, while buyers are also being swayed against purchases by rising interest rates and cost of living pressures.
However, a number of developers still see plenty of potential and opportunity in the local market - it’s all just a matter of timing.
“The underlying factors that developers believe continue to support the apartment market on the Gold Coast are low supply, consistent demand, strong investment in infrastructure over the next decade, population growth, solid rental yields, and extremely low vacancy rate,” Campbell said.
The Urbis report notes that rental yields across the Gold Coast are tracking above Sydney and Melbourne and are on par with Brisbane. Urbis also found that the existing and established apartment market continues to perform relatively well.
“We’ve been looking at the general apartment market, particularly buildings in central areas that have been completed within the last 10 years,” said Campbell.
“These properties have recorded significant increases in sales numbers which shows that demand is still very much present – an important factor with a large portion of new product settling over the next three to six months.”
With construction costs currently ‘front of mind’ for developers, more projects may be put on hold in 2023 which could maintain the supply pressure on new apartments.
“However, the factors currently driving caution in the market, such as construction costs, supply chain issues and interest rates, will ease at some stage,” she said.
The September quarter ended with 983 new apartments available for sale, compared with 517 a year earlier. The Gold Coast’s five-year average quarterly supply is 1,400 apartments and at the current rate of sales there is just 8.8 months of supply in the market.
Some 84 per cent of current supply is located in the Gold Coast Central precinct, which includes Southport, Main Beach, Surfers Paradise, and Broadbeach, with the reflection showing in the precinct’s share of sales, at 258, which represents 77 per cent of the quarterly total.
The coastal fringe region remains under supply, while areas inland from the Gold Coast Central precinct such as Benowa, Ashmore, Robina, and Varsity Lakes, have almost no supply. The North Shore precinct, which largely comprises Hope Island to Runaway Bay, had only 68 apartments for sale while the Southern Beaches, from Mermaid Beach to Coolangatta had just 90.