SIGNS OF RECOVERY DESPITE GRIM PRODAP REPORT
Written on the 8 July 2013
THE Gold Coast’s development industry continues to struggle as sales of vacant housing lots and new house-and-land packages track well below -20 year averages, says the Prodap Report.
The report’s author, Bill Morris, says combined sales of new housing and vacant land have been running at under 1000 a year, which compares with the long-term average of 4200 a year since 1995.
The dour sales figures are reflected in a 4.5 per cent fall in Gold Coast house prices and a 7.3 per cent fall in unit prices over calendar 2012.
Morris says the Coast’s housing development sector has not seen such a “grim picture” since the 1981-82 recession.
“The sad news is that not even record low interest rates seem to have had any effect on the volume of sales; sad but true,” says Morris.
He says the city council’s Construction Kickstart initiative, which has cut infrastructure charges on a broad range of developments, appears to have had no effect on new production.
However, Master Builders’ regional manager John Duncalfe tells Gold Coast Business News he is seeing early signs of improvement in the city’s construction sector.
Duncalf says the Construction Kickstart may only now be delivering some stimulus to the sector, although he says a clearer picture may emerge when the first round of the program is completed in March.
Morris says the Coast’s construction slump has been driven by rising costs, with established houses now much cheaper, and in many cases better located, than new houses.
“Land prices are still too high, representing more than 50 per cent of the price of the average home,” says Morris.
“This was not case 10 years ago, when the average serviced block cost $60,000. In 10 years that has risen to $220,000, almost 300 per cent, or 30 per cent per annum.”
Morris says land prices have escalated “out of all proportion” to house prices over the past 10 years.
“There needs to be a new era of thinking about what level of services constitutes an ‘acceptable’ house lot.”