Despite many of its apartments sitting empty most of the year—including an entire beachfront tower—the Gold Coast has emerged as ground zero for Australia’s housing supply crisis.
Unlocking the city’s under-utilised residences with a “vacancy tax” in a bid to bolster its record low rental stocks is one plan on the table.
But it will by no means be enough.
Unprecedented growth in its population and a huge number of returning overseas students means thousands of new homes need to be built.
However, with an ongoing construction crisis as well as the fallout from rising inflation and interest rates, there is no quick fix for the glitter strip or anywhere else.
“The Gold Coast is a little bit on steroids in relation to the supply crunch, particularly in the rental market,” Real Estate Institute of Australia president Hayden Groves said at an industry roundtable this week in Surfers Paradise.
He said throughout the pandemic, Queensland had a huge influx of people, with almost 85,000 interstate migrants—many of them attracted to livable coastal hubs like the Gold Coast.
“Of course, with this has come many housing challenges for both renters, home buyers and homelessness.”
The city’s vacancy rates plunged from 3.5 per cent pre-pandemic to a record low of under 1 per cent. As a result, in the past year alone its rents have jumped as much as 50 per cent in some areas.
“The Gold Coast is a microcosm example of what is going on around the rest of Australia … it’s an intensified market,” Groves said. “And there’s going to be more people wanting to come to southeast Queensland because of the weather and the lifestyle opportunities that it affords. But housing affordability is going to put some constraint on that.”
He said with a median house price of around $1 million on the Gold Coast “it’s no longer affordable for everybody”.
“I think the Gold Coast will be an interesting study to see how it progresses in the next five years based on various housing policy settings that might be implemented to try and bring more supply into the market.”
But he warned: “ There is no immediate solution to the supply issue”.
Ray White chief economist Nerida Conisbee—who on Linkedin after the roundtable described the Gold Coast as “in many respects, ground zero of the challenges now being faced ”—agreed.
“It’s going to take many years for the housing crisis to be resolved,” she said. “We do have a construction crisis and building approvals are falling … [but] the Gold Coast needs more housing.
“So we need to work out ways to build more homes, we need to try and incentivise investors, particularly mum and dad investors, we also need to look at other long-term solutions such as build-to-rent.”
Groves said another significant challenge compounding the Gold Coast’s housing supply woes is that the city has more short-term accommodation than anywhere else in Australia—with 5400 properties advertised on Airbnb, or other short-stay accommodation websites, as opposed to only 1700 properties in its long-term rental pool.
At the roundtable, imposing taxes and levies on short-term accommodation property owners as well as investors with homes that are not rented out and sit vacant for most of the year were flagged as possible solutions.
Gold Coast mayor Tom Tate cited an entire high-rise sitting empty in the triple tower Jewel development at Surfers Paradise as a example of the level of dormant accommodation that a “vacancy tax” could potentially unlock.
But Groves said such “punitive measures” were not the answer.
“Just like we’re seeing with some of the residential tenancy laws around this nation, that is tipping the scales too far in balance for tenants and away from property owners. And as a result, we’re seeing property owners no longer invest in the same numbers as they were in providing houses for Australians.”
Groves said the Gold Coast’s other challenge was its geographical constraint in terms of urban sprawl.
“It’s very difficult to to expand it and so it’s going to need more density.”
But he said, more broadly, unlocking under-utilised land and incentivising developers to develop that land would be key to more housing supply going forward.
“That can start from a federally funded land audit of all state government and local government owned properties, where there’s excess land that has been under-utilised. There’s a lot of it in our cities.
“And they could have 99-year leases, leasehold stratas that they can build on incorporating social housing and affordable rental accommodation.
“Because if a developer can’t get the numbers to stack up in terms of the feasibility, if they have to pay X dollars for the land, it’s just not going to get out of the ground.
“And that’s what we’re seeing now. There’s so many projects on hold and this pent up supply demand in the market. Notwithstanding, the challenge around finding the right tier builder that is actually going to deliver the product and isn’t currently working on a government project.”
Veteran Gold Coast real estate agent and REIA Queensland spokesperson Andrew Bell said the opportunity for developers was “a no-brainer … if they could find the land to build affordable housing”.
“There’s such demand for the lower end. That’s what’s needed right now.
“More areas need to be released for affordable housing and that will require some zoning changing, so all three levels of government—local, state and national—need to be working in close unison to deliver these outcomes.”
Meanwhile, he said measures such as rental freezes were counterproductive.
“It will only drive investors away, so it will shrink the [rental] pool instead of increasing it. We need to get the balance right.
“But I certainly know what’s happening in the real estate market and we’re not going to get a solution to any of this in the next five years … it’s going to get worse before it gets better.”