- Prices have been gradually climbing since 2014, with a sharp rise since 2021
- Sales and rental supply remain low, despite extensive developments
- Various stakeholders expect prices to continue rising despite interest rate increases
Without a doubt, one of the most talked-about booming house markets in Australia is the Gold Coast.
The sixth-largest city in Australia – and the largest non-capital city – the Gold Coast is home to more than 700,000 people, and is on track to hit the million mark by the next decade.
So, how has the market fared since the pandemic began?
Although asking prices for the main area of the Gold Coast had been gradually climbing since 2014, this increased very sharply during 2021, and has for this year too, according to SQM Research.
Gold Coast Main
Asking house prices are now comfortably in the million-plus vicinity, with units at around the $900,000 mark.
This sharp price house has come as stock tightens – just 2,500 properties were listed for sale as of the end of May 2022, compared to just under 4,000 before the pandemic began in late 2019.
Gold Coast Main
In terms of the vacancy rate, after peaking at 5% in May 2020 during the initial chaos of the pandemic, the vacancy rate for Gold Coast Main has declined to just 0.5%.
Gold Coast Main
A report Colliers supports the data from SQM Research, noting the residential vacancy rate for Gold Coast Metro is now 0.4%, well below Sydney Metro (1.6%) and Brisbane Metro (0.7%).
Developer activity is booming along the Gold Coast, something we regularly report here at The Property Tribune.
Lifestyle changes and an ageing population has also seen many buyers of this calibre flock to the Gold Coast.
So, what’s in store for 2022?
With strong population growth forecasted, a fast-growing economy and over $20 billion in infrastructure and investment planned ahead of the 2032 Olympics – some events will be held on the Gold Coast – there is strong optimism for the local housing market.
Vacancies in both commercial and residential property sectors are at lows, with Colliers’ latest Gold Coast market Overview forecasting the city to continue outperforming the rest of Australia as it becomes the epicentre of post-Covid recovery for both investors and national developers.
Colliers, however, warns that rising costs could stall the progress of future developments, further fuelling the imbalance between supply and demand.
“Despite the headwinds facing the residential sector nationally, the forward-looking fundamentals of the Gold Coast market are as robust as we have seen at any other time in the past two years,” said Steven King, the Gold Coast director in charge at Colliers.
“The city’s expected population growth over the next decade will continue to drive demand for housing at a time when supply remains very tight and vacancy rates are at record lows.”
The economic dynamo of the Gold Coast has seen its GDP double to $39.24 billion, and now accounts for over 10% of the Queensland economy. Despite shaky economic times, the Gold Coast economy is expected to grow by 5.6% this year.
Around $20.9 billion in public and private infrastructure spending is occurring, such as the Southport CBD rejuvenation ($5 billion), the Gold Coast Health and Knowledge Precinct Investment ($5 billion), Olympic rail fracture upgrade ($2.2 billion) and stage three extension of the Gold Coast light rail ($1 billion).
“The improved regional transport infrastructure will positively impact the scale and investment profile of the local property market, attracting capital from institutional investors,” said Mr King.
“More jobs, more people, a bigger economy, improved infrastructure and higher demand from businesses will be the key drivers of growth.
“Infrastructure spending for the Olympics will play a significant role in this growth, but even without this in the mix, the Gold Coast is still the best placed market for growth in Australia in the near term.”
Steven King, Colliers
In terms of rising interest rates, Mr King said this will still have some effect on residential demand, which is being seen in Melbourne and Sydney.
“However, despite the gains we’ve seen on the Gold Coast in the past two years, property affordability remains compelling to interstate buyers who are also attracted by a city that is firing on all cylinders,” said Mr King.
On the ground
James Fitzgerald, authour of Bulletproof Investing and the managing director of Custodian told The Property Tribune that property values have performed extremely well and he expects this trend to continue.
“It is one of those regions which has really benefited from the Covid trend of people moving to lifestyle locations and working remotely,” he said.
“The Census data proved this with the Gold Coast population growing at 2.4 per cent per annum, much faster than the national population growth rate at 1.7 per cent per annum. That increased demand has really driven up prices with the median house price on the Gold Coast increasing by 33.1% in the year to April.
“Waterfront is more in demand than ever before, whether that be canal or beach. Interstate buyers are getting more bang for their buck on the Gold Coast than they would with a similar property in Sydney or Melbourne.”
In terms of his thoughts of the sales market over the next five years to ten years, Mr Fitzgerald doesn’t envision the market will loose any speed, also citing the impact of the upcoming Olympics.
“Unlike in previous decades when the Gold Coast market was a bit of a rollercoaster, waxing and waning as a result of what was happening in the tourism market it has a lot more going for its economy today.
“There is a lot of new infrastructure development earmarked for the region in the lead up to the 2032 Olympic Games and its population is forecast to increase by 145,000 people before then.
“That growth in population will lead to further demand for property which will help to continue to drive up property values.”
In regards to the rental market, he expects it to remain extremely tight in the next few years, which he expects to remain given industry-wide issues.
“There is not much new stock coming onto the market, particularly as a result of the soaring construction costs and a number of developers going into liquidation,” he noted.
“That means some proposed developments won’t go ahead. It will take some time for the supply to pick up again.
“We see the Gold Coast as a good opportunity for investors. There are still suburban areas where you can pick up house and land for between $600,000 and $800,000 such as Pimpama and Coomera.
“The rental prospects in these areas are great too, with Pimpama and Coomera picking up a third of all Gold Coast population growth between 2016 and 2021, growing at 20 per cent and 10 per cent per annum respectively, creating a serious undersupply of new housing in those areas.”
Waterfront in demand
Jason Adcock, Principal Adcock Prestige, added that 4,236 properties have already sold on the Gold Coast since the start of the year, noting interstate migration and high levels of demand for high-end assets.
“Buyers are looking for luxury, lifestyle properties. They want something that has all the bells and whistles; beautiful home, yard, pool, and on the water, or if not, it must at least have a water view,” he said.
“In 2021 the Gold Coast accounted for 11% of the share of regional migration. With international borders now open, I expect we will see a lot more international arrivals wanting to make the Gold Coast their home, driving up demand and prices again.
“There have been 1224 properties sold within the Gold Coast LGA for more than $1m since the start of 2022, 348 of them sold for more than $2 million, 46 for more than $5 million and four for more than $10 million with the biggest sale so far $21 million for a house on Hedges Ave at Mermaid Beach.”
Mr Adcock also expects property prices to rise over the next year to five years, especially at the prestige end of the market.
“There are limited opportunities to buy houses on the beach as owners tend to hold onto them for quite some time, so competition is always strong which drives up prices,” he said.
“The Gold Coast region is primed to feature in the 2032 Olympic Games in some form, so I think we’ll see demand continue to be strong leading up to it and for some time afterwards.
“There will be people moving to the region to help build the infrastructure and they need to be housed and then there will be people who see how beautiful the Gold Coast is once the spotlight is on it during the Olympics and decide they want to make it their home.”
In terms of the rental market, Mr Adcock said from on the ground, the rental market remains very tight.
“There is little available for rent and many people are nervous about moving out of their current tenancy as it is difficult to find another rental property.
“Development on the Gold Coast has been affected by a shortage of tradies and also by the increase in costs for construction materials such as steel which is used extensively in apartment development.
“As a result there will not be as many new apartments as one would expect delivered in the coming years, which means vacancy rates will remain low and rents will increase.”
To view commentary from the other capital cities, view the below articles: