Leo Zhang and his wife have just bought an apartment in Harbour Quays, a master plan development north of the Gold Coast Highway.
For Mr Zhang and his family, who only moved into the suburb eight months ago, the attraction of Harbour Quays for an investment is clear. “There are lots of families living here,” he said.
Investors like Mr Zhang – who hopes to buy three more investment properties by year-end – are getting in to an apartment market that is once again starting to show signs of life, after the global financial crisis and over-supply caused a four-year slump in prices.
The median price of a Gold Coast apartment ticked down in the three months to April – a quiet selling season – to $355,250 from $360,000 in the three months to January.
But overall the market is up on the recent trough of $340,000 in the quarter to October 2012, according to figures from Fairfax Media’s Domain group. “It looks like the market has bottomed out,” said Andrew Wilson, Domain senior economist. “The prospects for demand are on the rise for a number of factors. Investors are starting to recognise that Gold Coast apartments are a good medium-term prospect.”
Detached house prices have started to rise, gaining 2.2 per cent in the three months to April to a median price of $497,000, and apartments are likely to play catch-up, Dr Wilson said.
DEMOGRAPHIC CHANGES IN THE AREA
In addition to a strengthening economy that is driving investors from overseas and interstate – particularly those from Sydney and Melbourne, who are attracted by property that is cheaper than in their own cities – the rise in demand is coming from demographic changes in the area.
More people are living there. While Gold Coast City’s population rose 14 per cent to 494,496 at the time of the 2011 census from five years earlier in 2006, the proportion of empty-nesters and retirees aged between 60 and 69 years jumped 26 per cent to 51,639. The proportion of people aged between 18 and 24-years-old remained the same, as did that for 25- to 34-year-old workers.
Greater absolute numbers of long-term residents, and a growing proportion of retirees, is pushing demand for a housing market that suits long-term residents, in contrast to one predominantly focused on tourism.
Mr Zhang said the likely tenants in his new apartment at developer Emandar Group’s Levanto project – which will only be completed in August – would be families or professionals.
Different demographics demand different products, and the larger two- and three-bedroom apartments that were predominant in the region are losing ground to smaller one- and two-bedroom apartments suited to a younger rental market. More than half – 52 per cent – of the region’s future supply of 13,846 apartments – the total of those approved, in application as well as approved and deferred – are two-bedroom properties and 29 per cent have one bedroom, according to research analyst Urbis’s March quarterly report.
New supply is still limited. The Gold Coast had just 634 apartments for sale in the March quarter, the Urbis report said. Of those, most of those were apartments under construction or already completed, rather than being available off-plan new stock.
NOT A LOT OF STOCK COMING
“It shows a very limited available supply of choice,” said Urbis associate director Jon Rivera. “There isn’t a lot of new stock coming onto the market.”
The dearth is also helping the sale of expensive apartments that have languished unsold. Brookfield Multiplex’s Hilton Orchard Tower at Surfers Paradise sold the last five of its 224 apartments – with an average sale price of $1.66 million – during the March quarter, along with the last of its cheaper Hilton Boulevard apartments.
The effect is limited, however. Developer Juniper’s Soul on the Gold Coast also sold 16 more apartments in the quarter, but 76 of the 289 in the development – which go at an average sale price of $1.26 million – remained unsold, Urbis said.
The new apartments coming to the market, such as a 41-storey, 223-apartment development that Singapore developer Ho Bee and Brookfield Multiplex are building on the corner of Surfers Boulevard and Main Beach Parade, are likely to draw outside investors in a way it hasn’t before.
“A lot of the stock is going to transact quite rapidly,” Mr Rivera said. “It’s not going to be sold to the local market or traditional retail. The [Gold] Coast this time will see a lot more international activity from China, as well as from interstate investors in Sydney and Melbourne particularly.”
Local real estate agents are frustrated. “If you just look at the construction side – we haven’t had any new buildings built or started in the past six years,” said Andrew Bell, the chief executive officer of Ray White Surfers Paradise. “This is the longest void of non-construction the [Gold] Coast has experienced in the past 40 years.