Demand for land in Gold Coast has collapsed

Demand for land in the Gold Coast and the Sunshine Coast has collapsed with lot production levels at less than a third of levels in 2007 and 2008, according to research firm BIS Shrapnel.

A 30-year low for net interstate migration into Queensland in 2010/11 compounded by an excess dwelling supply and a reduced affordability advantage over Brisbane has slashed demand for new dwellings, BIS Shrapnel says.

It says supply is further constrained by limited access to finance for developers due to lingering financial constraints after the global financial crisis.

“We expect any upturn in the both the Gold Coast and Sunshine Coast markets to be relatively slow,” BIS Shrapnel’s Angie Zigomanis says.

“There is little pent up demand in both markets despite the low level of new dwelling supply, while local economic conditions remain weak.

“Two of the main economic drivers of both regions are tourism and construction, and while there is some light at the end of the tunnel with large social infrastructure projects commencing in both regions, it will be some time before these two sectors can contribute substantially to employment growth.”

But he says low level of new dwelling activity means excess stock is being absorbed and vacancy rates are rising which will lead to an improvement in residential demand.

But any recovery hinges on stronger conditions in Brisbane.

He forecasts a rise in lot production levels in 2013/14 – although he says activity will remain painfully low until stronger rises emerge from 2014/15.

Lot production will double to 2,600 lots in the Gold Coast and 2,100 lots in the Sunshine Coast by 2016/17 but will remain well below the peak of 2006/07, BIS Shrapnel predicts.

He says developers may reduce lot sizes to boost affordability though new lifestyle home buyers may not accept smaller lots.