GOLD COAST HAS TWO YEAR APARTMENT OVERSUPPLY
Written on the 13 January 2012
A PROMINENT property commentator believes the Gold Coast has enough apartment supply to last at least two years and says it will be unsustainable for new product to come on line in the next 12 months.
Midwood Report author Bill Morris calculated that new high rise apartment sales hit a two-year high in the quarter to November last year with 73 sold - due mainly to mortgagee sales in Nirvana at Kirra (33) and Southport Central (16). He says Oracle recorded no sales in the quarter, despite being in receivership.
“Even though most of those were mortgagees, it is still a good sign,” says Morris.
The figures contrast to Brisbane, which recorded its worst level of sales for two years (74), with a seven year supply of 1632 apartments still on the market.
The Gold Coast has 552 apartments for sale with new apartments at Hilton, Soul and Oracle, while the construction of RDG’s new $950m six-star Jewel project will begin in 2013.
Morris says the Gold Coast still needs a break from major high rise projects, despite the latest figures.
“I wouldn’t be thinking about any new project for a year,” says Morris.
Researcher Colleen Coyne says while the market will be senstive to price points, there would be some developers that will 'find the right sites and offer the right products'.
Coyne believes projects that offer apartments below $500,000 will prosper and cites product such as the re-marketing of Amagamated Property Group's Broadbeach Central and one-plus-one bed product in Southport Central as examples.The 20-level Broadbeach Central has the only supply of new developer stock in Broadbeach priced from $369,000 for a one-plus-one bedroom with double bathroom.
"Those projects that have price points where people are most active - below $500,000 are going to have a chance in the next 12 months," says Coyne.
While new high rise sales were up for the previous quarter, a drop in prices is expected this year.
Analysts expect the fall to be less severe than 2011, with a four per cent drop in house prices and a 2 per cent fall in unit prices.
According to a recent RP Data report, the worst-performing suburbs for unit sales were Broadbeach, Tugun, Main Beach, Currumbin Waters and Paradise Point, where prices fell 10 per cent or more.