Gold Coast Unit Market Price Performance

Data recently released by PropTrack indicates that the Gold Coast unit market is “holding up better” than the detached housing market in the region. PropTrack further elaborated that affordability is playing a role in this recent Gold Cost trend in stating that, “now as we’ve seen borrowing costs rise and maximum borrowing capacity reducing, we’re seeing the unit prices are holding up better. “

The table below highlights residential price growth for the monthly period ending February 2023. The performance of the Gold Coast, especially the unit market, is in contrast to many other national markets given the current rising interest rate environment.

Source: PropTrack

The chart below, which includes data sourced by PriceFinder, also confirms the trend that the Gold Coast attached residential product market (units, townhouse, and villas) has been holding up well in the face of rising interest rates. Despite the national media coverage that prices are falling rapidly due to a quick succession of interest rate rises, attached residential product located on the Gold Coast, and within the suburb of Surfers Paradise (includes Chevron Island), are defying this wider market trend by generally holding their values.

Source: PriceFinder

A balanced residential rental market, where supply is meeting demand, is generally considered to result in a vacancy rate of between 2.5% and 3.0%.

Vacancy Rates on the Gold Coast, Surfers Paradise and Chevron Island remain extremely tight. Data from SQM Research highlights that the vacancy rate for residential dwellings located on the main Gold Coast region is currently 0.7% and in postcode 4217, which includes Surfers Paradise and Chevron Island, was only 1.0% as at January 2023.

Current rental vacancy rates of 1.0% or below for the main Gold Coast area and the 4217 postcode, including Surfers Paradise and Chevron Island, should be considered as “full occupancy”, especially for an internationally renowned tourist destination that that will always have some form of shorter-term holiday based turnover periods.

Given residential vacancy rates act as a real time indicator regarding the existing supply of dwellings capacity to handle subsequent demand, the Gold Coast market is currently best described as undersupplied.

With the escalating construction cost environment, amongst other things, making it extremely difficult to deliver new dwellings, combined with existing, and forecast, strong demand drivers for the Gold Coast, it is unlikely this undersupplied status is set to change in the region any time soon. The undersupplied nature of the market will continue to place upward pressure on Gold Coast units into the future.

Given the undersupplied nature of the Gold Coast market, it is also not surprising to note that strong levels of rental price growth have also been recently achieved in the region.

Over the annual period ending December 2022, the Residential Tenancies Authority indicates that weekly rental values for detached houses located within the wider Gold Coast LGA experienced average annual growth of 13.5%. In comparison, attached residential product achieved 14.6%, further evidence to indicate that units are now outperforming houses on the Gold Coast.

In summary, our read of the tea leaves is that strong demand will continue for new apartments on the Gold Coast, provided they meet the discerning needs of purchasers, especially in terms of their lifestyle drivers. This demand will continue to place upward pressure on prices for these apartments based on the following:

The existing shortage of housing supply that is already prevalent across the board on the Gold Coast for both permanent occupation and rental purposes.

The established housing market, in particular apartments, are bucking the national trend on the Gold Coast and experiencing growth in both prices and rental values; this further underpins the value of new apartments.

Construction cost escalations continue to result in multiple projects being stalled or abandoned, further exacerbating the challenge of providing new apartment supply to the market.

An increased level of demand is being experienced from local, interstate, and international purchasers looking to secure new, high-quality apartments that offer genuine residential amenity.

Further to the above, the next 6 months will provide a deeper understanding regarding the direction of interest rates and the overall shape of the Australian economy. There is already an increasing number of experts predicting no further rate rises, or even a lowering of the cash rate in the immediate to medium term future. In terms of macro-economic market drivers, only time will ultimately tell, but at the local Gold Coast level, SIERA remains very confident that market conditions will continue to underpin the strategic positioning of our Gold Coast projects.

During 2023 to date, the Tapestry project located on Chevron Island has experienced an increase in sales of 100% as compared to 2022. In similar circumstances, 85% of sales to local owner-occupiers have been made so far in 2023. This level of activity at the coal face substantiates the trends being noted in recent data regarding the strength of the Gold Coast unit market.