What happened to the Gold Coast’s apartment oversupply?

It’s a trend the southeast Queensland expert expects to continue for the next decade, as was recently laid out in the firm’s property insights report, compiled in conjunction with industry analyst Michael Matusik.

According to Kollosche, the strong forecast for apartment price growth across the city is due to several market drivers, rather than one single element that could easily be swayed by change.

First and foremost, the deficit in housing supply in general is putting pressure on prices for all types of housing. Southeast Queensland, which has been one of the biggest recipients of new residents off the back of record internal migration, has faced particular pressure on housing in the last few years.

On the Gold Coast, that’s meant demand from sea-changers seeking a new lifestyle, as well as “cashed-up buyers from Melbourne and Sydney purchasing secondary residences”, according to Kollosche.

Downsizers transitioning to apartment living when their children leave home have been another driver of the apartment market, except in this case downsizing doesn’t necessarily mean transitioning to a smaller living space, rather to a home that requires less maintenance.

“We have seen a shift towards developers delivering larger, half and full-floor apartments in boutique residential-only buildings to cater for those moving from larger homes, who don’t want to compromise on size and quality,” Kollosche noted.

Unfortunately, local reports of “youth crime” have also driven part of the change, with older residents in particular seeking out living options that include increased safety features.

“Security is something many now feel that they must consider when moving,” Kollosche said, noting that this is the factor with perhaps the greatest room for change in the near future.

“The public has been very vocal about the issue for the past few years with little solutions presented or actions taken. It is certainly going to be a contentious issue for the sitting government at the next election,” the longtime Gold Coast local noted.

According to the agency’s research, Gold Coast apartment prices have registered growth for the past 10 years, lifting in real terms by 15 per cent annually over that period. Compared to the national average, apartment prices in the city have risen 98 per cent in that time frame, compared with 43 per cent across the country.

Kollosche said it’s “no wonder that apartments are performing so well”, given the high level of demand that’s active in the popular lifestyle location.

With new dwelling construction continuing to face headwinds in Australia, Kollosche predicted that those looking to buy in wouldn’t be met with a sudden influx of stock anytime soon.

“The fact that there is so much public infrastructure works going on and so few builders in the market is obviously a key consideration in why supply levels are drying up,” he said.

“Therefore, buyers are going to have to pay a premium to get a completed product or to secure an opportunity in a building that is actually going to be delivered.”

The real estate veteran noted that the market in his local area is a far cry from where it was even five years ago.

“We used to have an oversupply of apartments on the Gold Coast. A lot was being built and that supply had not been taken up. However, during the pandemic, we saw a massive increase in net migration, which absorbed that surplus stock. Now, with the building crisis and lack of labour, we simply cannot meet buyer demand,” he said.

“Meanwhile, people who are buying apartments now are holding on to them, so we are in a market where there is just very limited stock. I do not see that changing any time in the foreseeable future and the data supports that.”