Whilst many people have heard nothing but doom and gloom about the Gold Coast apartment market, the reality is that the buying opportunities currently available won’t last too much longer. Many projects are down 30% to 40% on valuation from what the original price points were. Now if in 2007 you were offered the same apartment with a discount of that size, most buyers would have snapped them up and told their friends what a great deal they got. In the post GFC environment, there is scepticism about what actually represents a great buy.
Let’s look at some of the facts.
The Gold Coast region remains the strongest growth profile for the whole of South East Queensland in terms of population. With that population growth comes the basic economic drivers of accommodation. The Gold Coast will need to provide over 5,000 dwellings per annum on average as the recovery gets underway in order to adequately service the increase in residents.
Whilst there has been significant press surrounding the Commonwealth Games in 2018, the stark reality is that with the present development pipeline, the Queensland Government may need to find some gentle words of encouragement to get this sector going again. Those words I suspect may also need to be whispered into the banking sector to help fund the next round of developments. Rumour has it that the banks are now looking for the $10 million to $20 million projects to fund. Light at the end of the tunnel perhaps?
The point I am making is that after the big projects of Oracle, The Hilton, Soul, Southport Central and Salacia Waters are sold out, the choice for new product is going to be considerably limited. These big ticket developments do not happen overnight. They take years of planning, selling and construction to finally bring them to the market. I suspect in four or five years time, the above mentioned projects are going to look very cheap, particularly as there is no sign of easing building prices. With the influx of people for the games, accommodation may be at a premium.
Make no mistake, prices have continued to fall in the Gold Coast City apartment market and people have lost money. However the author would be very surprised if the bottom of the market has not been reached in the first quarter of 2013. The table below highlights just how far the market has come back.
With the median prices having dropped quite substantially in the last three years, rents by comparison have remained relatively robust. In many instances, rents are now starting to neutrally gear good quality accommodation, a feature that has been absent from the Gold Coast apartment market for many years.
There is always a disclaimer with this sort of quick overview. You as the reader are responsible for your own actions and if you find a good quality property to buy and make money or have a happy home from that is a great result. Remember that property is a long term proposition and should not be treated as speculative, particularly at this stage of the cycle. There are however many properties that are far cheaper today than they were when originally released to the market. I suspect the market has reached the bottom, population growth has increased and tourism appears to be rebounding, albeit gradually. These are the green shoots that give confidence to one of Australia’s best known beachside destinations.
Go and have a look, I think you will be pleasantly surprised by what you find.
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