This Week in Real Estate – 17th November 2023
Gold Coast Population To Surge
The Gold Coast’s northern suburbs are tipped to surge in the next twenty years with predictions the region’s population could rise by up to 75%.
Social researcher Mark McCrindle says the Gold Coast will become home to more than 1 million people by 2046 on the back of surging domestic and international migration and the vast bulk of those people will live in the northern suburbs.
“The total Gold Coast population is just approaching 650,000 and if we forecast forward to 2046, a decade and a bit past the Olympics of 2032, we are looking at the Gold Coast having a population of 1 million people,” he says.
“But what’s most remarkable is the growth of the northern part of the Gold Coast which has a current population of just under 300,000 but in 2046, it will have a population of 500,000 in its own right.”
The region includes the three ABS statistical areas of Ormeau/Oxenford, Gold Coast North, and Southport.
Buyers Swarm To The Gold Coast
New apartment sales more than doubled on the Gold Coast, in the September quarter.
Research from Urbis shows there were 470 unit sales in the quarter, a 135% increase on the June quarter.
The biggest selling project was Lagoon at Main Beach, which recorded 124 sales across its two towers.
Cienna, at Varsity Lakes had 85 sales and 26 Vista at Surfers Paradise had 80 sales.
The report says there are nearly 1800 apartments available for sale on the Gold Coast, the majority of which are in Surfers Paradise, Main Beach and Broadbeach.
Urbis director Paul Riga says the demand for apartments remains strong.
“This is great for the property market, underpins property prices, but creates further problems with supply – meaning if new projects don’t get underway, the supply will continue to diminish.”
He says some developers have decided to convert their projects from build to rent to build to sell projects to take advantage of current demand.
Rate Rise Won’t Dent Prices
The November interest rate rise increase is unlikely to dampen the pace of property price growth, according to industry analysts.
PEXA chief economist Julie Toth says prices may drop temporarily but they will also rebound just as quickly.
“We may see a welcome pause in price increases, but I doubt we’ll see another fall. On the flip side, we’ll probably see a burst of activity in refinancing,” Toth says.
CoreLogic research director, Tim Lawless, thinks price drops are unlikely, although he says confidence may take a slight hit.
“While the decision could prompt an increase in listings of owners forced to sell and weaker demand from would-be buyers now able to borrow less than they could before, the rise was not enough to trigger price falls,” he says.
“The still-burgeoning undersupply should keep a floor under housing to some extent. At least for the medium term this probably means more that price growth will continue to slow but remain positive rather than move into negative territory.”
Vacancy Rates Tumble Again
The national vacancy rate continues to tumble, hitting a record low for the second consecutive month.
It fell to 0.8% in October according to Domain’s latest Vacancy Rate report. The report says between 40,000 to 70,000 rentals are needed to achieve a balanced vacancy rate of between 2% and 3%.
Domain chief of research and economics, Dr Nicola Powell, says dwindling rental stock has visibly suffered because of a lack of investor activity, ongoing development undersupply and higher construction costs.
Powell says vacancy rates were low in capital cities and regional centres. Adelaide and Pert have the lowest vacancy rate of just 0.3%, while Canberra’s is the highest at just 1.6%.
“(In Perth and Adelaide) Rental supply is at an all-time low, emphasising the need for a significant boost in supply to see a change in these tight conditions.” Powell says.
She says investors need to be encouraged into the market to ease the shortage of rental properties.
Clearance Rates Drop
The national auction clearance rate dropped last week, hitting its second-lowest level since Easter.
CoreLogic figures show only 63.8% of homes sold under the hammer.
For much of the year, the clearance rate has sat above 70%.
Some of the drop can be explained by a reduction in properties being offered for auction in Melbourne, which is Australia’s biggest auction market, as a result of the Melbourne Cup festivities and public holiday.
There were 2,023 homes taken to auction across the combined capital cities last week, down from 3,381 the previous week which was the busiest auction week in more than 18 months.
CoreLogic predicts the number of properties being offered for auction this week will increase by almost 40% with about 2690 homes set to go under the hammer, making it the second busiest auction week of the year.
There are 1,218 homes scheduled for auction in Melbourne, up 160.3% on last week’s very low 468 properties.
QUOTE OF THE WEEK
Domain chief of research and economics, Dr Nicola Powell
“Rental supply is at an all-time low, emphasising the need for a significant boost in supply to see a change in these tight conditions.”