Issue 24 | Thursday 30 November 2023 | Gold Coast’s Apartment Market: Challenges and Opportunities Ahead
Hello there, Andrew Bell here, and today I want to provide you with a brief overview of the current apartment market, a crucial element in our city’s development—one that raises significant concerns.
The demographics of those relocating to the Gold Coast are diverse. As illustrated by the on-screen graph, the most substantial growth is observed among individuals aged 30 to 49, closely followed by those aged 75 and above. Notably, the influx of individuals under 30 is relatively low. Consequently, our focus is primarily on catering to families and career-oriented individuals in the 30 to 50 age group, followed by retirees.
A noteworthy trend is the preference of a significant portion of the 30 to 50 age group for central locations, particularly in suburbs like Mermaid Beach, Broadbeach, Broadbeach Waters, Sorrento, Bundall, Isle of Capri, Surfers Paradise, and Paradise Waters. A considerable number are seeking large, upscale apartments in these areas, driven by both financial considerations and lifestyle choices. Retirees over 75 are also contributing significantly to the market, with approximately 25% of all sales in Broadbeach and Surfers Paradise involving cash transactions from those selling expensive homes down south.
Shifting focus to the construction side, it’s interesting to note that the highest number of migrants to the Gold Coast comes from other parts of Queensland (29%), followed by New South Wales (27%) and overseas migration (27%). Victoria lags behind at 10%, albeit showing a growing trend.
Examining the delivery of new apartments through construction levels, the blue bar graph represents completed projects from 2017 to 2022. In 2023, approximately 40% of apartments have been built and completed, while the remaining 60% are subject to pre-sales. Notably, 2023 is the peak year for apartment deliveries to the market. Looking ahead to 2024, construction levels drop by about 40%, with all ongoing projects in the construction phase. Moving to 2025, there’s a potential surge in construction, with around 45% of properties under construction and a similar percentage subject to pre-sales. However, looking beyond 2025, 2026 and 2027 show a significant reduction in the pipeline, indicating a potential slowdown.
Several factors contribute to this reduction in the construction pipeline. Firstly, land costs have surged. Secondly, developers nationwide express dissatisfaction with the slow approval process through local governments, even though the Gold Coast is comparatively better. Delays equate to significant costs. Additionally, fluctuating construction costs, primarily driven by labor shortages and associated expenses, pose challenges. The competition for skilled construction labor intensifies due to large government infrastructure projects in Queensland, diverting labor away from private sector projects. This trend is likely to persist, and addressing it requires federal attention to skilled construction labor in immigration policies—a change that will take years to materialise.
In conclusion, the Gold Coast faces a potential challenge in meeting the demand for high-rise developments in the coming years, impacting migration and economic development. While some may view a slowdown as positive, a healthy economy is essential for overall prosperity. Quick solutions are unlikely, and pricing is expected to reflect these challenges in the apartment market over the next few years.
A quick reminder that time is running out to be part of The Event 2024, the Gold Coast’s high-profile marketing program for properties held annually. January, the peak visitor season, provides a unique opportunity for sellers to showcase their properties. Details are on the screen, so reach out to us soon before bookings close.
Finally, for our local community, our office at Level 2, 50 Cavill Avenue is a drop-off point for Christmas packages for the Salvation Army. Non-perishable items like canned or packaged foods are appreciated. Feel free to drop them off between 9 am and 5 pm, Monday to Friday. As we enter the Christmas season, let’s spread love and positivity through kind words and deeds in a world that often seems overwhelmed by negativity.
Andrew Bell, OAM
The Ray White Surfers Paradise Group