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What’s happening to the Gold Cost Property Market – Part 2

The Gold Coast’s population could rise by 135,000 people over the next ten years.  Past trends suggest this means that between 50,000 and 55,000 new dwellings will need to be built over this ten-year period.

Also (and despite the recent 2011 Census babble – a topic for a future missive), it is unlikely that there will be any meaningful change in the composition of the household structure on the Gold Coast over the next decade.

For example, the proportion of couple households without children is projected to increase from 30% today to just 31% by 2021.

Similar minor shifts are forecast across all Gold Coast household types.  This is largely because three-quarters of the population growth on the coast comes from migration and most migrants to the region are young.

Also, the rate of natural increase (i.e. births over deaths) has more than doubled across the Gold Coast over the last ten years.  In the early 2000s, natural increase accounted for just 10% of the population growth across the coast.  Last year its contribution rose to 25%.

This significant increase in births is likely to boost demand for new and affordable detached housing on the Gold Coast in coming years.

Official statistics also suggest that two of the largest growth segments on the Gold Coast over the next ten years will be those aged between 25 and 40 years of age and those aged in their late 60s to early 80s.  Many, in both demographic growth groups, will be financially constrained.

The younger segment will be looking to buy their first home, and the older group to potentially downsize.  Affordable housing options will have the most appeal.  Both groups are expected to take a 25% market share of the population growth projected across the Gold Coast over the next decade.

Some recent new housing trends

  • Just over half (53%) of the new dwelling approvals over the past seven years across the Gold Coast have been for detached houses.  Yet over the last two years, detached housing’s market share has increased to over 60%.
  • Close to two-thirds of the “other dwellings” approved across the Gold Coast, again over the last seven years, have been multi-storey apartments, and most were either in Surfers Paradise or in Southport.  Many target the short-term tourist market.  Just one-third were townhouses.  Townhouses are much more affordable than apartments and are typically built for permanent residents.  In previous decades (the 1980s and 1990s), most (over 60%) of the attached product approved on the Gold Coast was townhouses.  This provided an affordable housing option, which is currently missing on the Gold Coast.
  • Two-thirds of the detached houses approved on the Gold Coast are on allotments sized between 450 and 800 square metres.  Just under half are still on land between 600 and 800 square metres in size.
  • Over the last nine years (calendar 2002 to 2010), there have been 30,500 residential lot approvals (including building units and community title schemes) across the Gold Coast.  Over three-quarters (77%) of these have been approved in larger developments with over 50 or more dwellings.  Just one-in-six (16%) have been in projects containing between 21 and 50 dwellings and just 6% in projects holding fewer than 20 dwellings.
  • Fewer new dwellings, including attached product, are actually being accommodated in “infill” areas across the Gold Coast.  Three years’ worth of data now exists in that regard and it shows that in 2008, 72% of the total new dwellings approved on the Gold Coast were within the city’s existing urban area.  During 2009 this proportion fell to 57% and during 2010 it was just 51%.

Matusik observations

The existing demographic make-up of the Gold Coast, and in particular its emerging shape, strongly suggests the need for more detached housing.  In addition, there are not enough alternate – and more affordable – housing types being supplied onto the Gold Coast market.

These alternate housing types include not only townhouses, but terrace homes, “plexes” and in some cases, suburban-based apartment product.

Current trends suggest that the Gold Coast will not be able to accommodate the projected population growth within its existing urban area.

Most of the new development across the Gold Coast takes place within large developments.  Increasingly, such large-scale developments cannot be accommodated in “infill” situations.

Fragmented ownership plus, now, the rise of NIMBYism, has limited the number of economic development opportunities within the Gold Coast’s existing urban area.  Higher purchase costs, smaller dwelling sizes and buyer/end-user profiles are also making new “infill” development less suited to most Gold Coast residents.

The Gold Coast needs to increase its supply of affordable new housing.  This needs to be supplied in locations where permanent residents can afford to buy or rent.  This can, increasingly, only be achieved outside of the existing urban area and on green-field or broadhectare sites within the urban footprint and in well-serviced locations.

In the immediate and short-term, the market will not bear the entrenched approach, which focuses much of this attention on delivering attached unit dwellings in close proximity to the coast.  A better approach would allow for current market conditions (and emerging demand) by leaving open the possibility of more detached housing-based developments.

The irony is that the Gold Coast is actually one of the most undersupplied housing markets in Australia.  What is supplied has very little demand, and way too much of it is focused around lifestyle and the discretionary spend.  Not enough supply is focused on real life.

The Gold Coast needs to start thinking like a capital rather than a tourist destination or sea change location.

For part 1 of this 2 part series click here.

Michael Matusik is the director of independent property advisory Matusik Property Insights.  Matusik has helped over 550 new residential developments come to fruition and writes the weekly Matusik Missive.  The Matusik Missive is free, however, reprinting, republication or distribution of any portion of this material, or inclusion on any website, is strictly prohibited without the written permission of Matusik Property Insights and may incur a charge.

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Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive


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