‘Holding pattern’: Fate of major towers revealed
THE Gold Coast’s multi-billion dollar development industry will be in a “holding pattern” for at least a year, as property experts warn rental vacancies will remain at historic lows.
The war in Ukraine and China’s zero-Covid policy are being blamed for developers hitting the pause button on projects
It comes as a new report by REA Group released on Wednesday revealed the pressures facing the city’s property industry, including rental demands for the city increasing by nearly 30 per cent in the past year.
Colliers International residential director for the Gold Coast, David Higgins said the rate of development was slowing in the face of international factors, while demand for rentals and migration remained high.
“The development sector is in a holding pattern while we come to terms of higher costs and until we get some certainty we will see a fair few projects on hold,” he said.
“China’s Covid policy, the war in Ukraine and all these issues
are affecting the construction process so the talk in the industry at a high level is that there will be some relief in about 12 months time, once things stabilise.”
The Bulletin this week revealed the city faced years of pain, with development already failing to keep pace with population growth.
The Coast is at the epicentre of dropping dwelling approvals, which fell 17.2 per cent across the country in July 2022 according to new data released this month by the Australian Bureau of Statistics.
The REA Group report, which analyses the state of the Gold Coast property market since mid-2020, revealed the city had remained resilient, despite falling property values and slowing development across the country.
It found:
Rental demand has increased by almost 30 per cent in houses and apartments since the start of the pandemic, as migration from the southern states has driven demand.
House rents on the Gold Coast have risen 29.6 per cent since 2020, while unit rents are up 27.9 per cent.
Annual sales figures still show healthy gains in both apartment and house prices over the past year, with increases for the year to July running at 21.2 per cent and 21.4 per cent respectively.
REA Group economic research director Cameron Kusher said he expected rental vacancy rates, currently sitting at 0.6 per cent, to remain at record lows for the foreseeable future.
“The rental vacancy rate will stay low and there has not been a huge amount of construction recently, certainly not for the investor market and that will create more pressure on rents,” he said.
“Interest rates are already having an impact and they are rising very quickly while the biggest challenge (for builders) is the cost of materials.”