Shortage of Cheap Units

The Gold Coast property market could be facing a ‘budget’ unit shortage next year as stock priced below $500,000 is expected to dry up.

Research by Colliers International, in a more robust view of the apartment market than this week’s Midwood Report, has warned that low-priced stock was set for a major supply shortfall next year.

A June quarter apartment report being complied by Colliers is expected to show that the Coast has just 18 months’ supply of new apartments.

This is at odds with the Midwood Report which this week said the city had five years’ supply based on current sales rates.

The most recent Colliers report for the March quarter revealed stocks of new Gold Coast apartments had broadly dropped 30 per cent since June last year, or about 10 per cent per quarter.

This had followed about 150 sales each quarter, well below the Gold Coast average of between 300 and 400 sales a quarter.

The current below-par sales figures followed the ‘worst quarter on record’, December 2008, which produced just 74 sales across seven projects.

“If you had used those (2008) figures, we would have had 11 years’ supply of stock left,” said Colliers’ project marketing director Mark Worth. “But this isn’t the case.”

The Coast is estimated to have 1700 new apartments to sell, and only about 500 of those are priced under $500,000 which is posting the strongest activity.

Southport Central accounts for more than 200 apartments, but these are priced between $600,000 and $800,000 and there appears to be no urgency by Raptis receivers to discount these properties.

Mr Worth said that once the cheaper stock was sold there would be a natural slowdown in overall sales, but he said a handful of developers could be poised to cash in on an expected ‘big hole’ in the budget market next year.

One of the big unknowns is Phil Usher’s H2O twin-tower high rise fronting Marine Parade in Southport. The development has 357 apartments with their release date and price points yet to be disclosed.

Mr Worth said projects such as H2O and Harry Triguboff’s latest tower at Brighton on Broadwater near the Sundale Bridge were poised to capitalise on the stock ‘gap’ he was expecting in 12 to 18 months.

“They are the guys that are going to make money,” he said.

“The same thing happened at the end of the ’90s.”

Mr Worth said developer Mark Howard delivered the Pinnacle high rise at Surfers Paradise in 2002, and sold it out within three months.