While real estate investing has long been a lucrative financial strategy, the volatility of market conditions as of late has people wondering, are Gold Coast apartments a good investment?
Apartments generally attract investors because they’re less risky than standalone houses or other investment assets. And with urban centres across Australia continuing to grow in demand for affordable housing, it’s only natural that units will be the go-to option.
So how can we tell if Gold Coast units are a worthwhile investment? We’ll need to look into factors like the city’s property prices history but also future developments in infrastructure that could impact demand. Shall we dive in?
A look at the Gold Coast housing market
Before the onset of the pandemic, the Gold Coast property market was hot. And while it slowed mid-2020 and at the beginning of 2021 due to global travel restrictions, its popularity continued to surge. And the Gold Coast property market predictions in 2023 are showing the growth isn’t stopping anytime soon.
“The rise of working from home phenomenon has seen south-east Queensland continue to benefit from record high net interstate migration from the southern states, and in particular to the lifestyle regions of the Gold Coast and Sunshine Coast”, Pete Wargent from BuyersBuyers shares.
Migrants from Sydney and Melbourne were first in line here, on the hunt for cheap long term rentals in Gold Coast. One of Gold Coast’s biggest draws was its ‘safe harbour’ from Covid-19, with Queensland able to prevent any large-scale outbreaks.
Sources from the Australian Bureau of Statistics showed that Gold Coast made up 11% of all capital city habitants who moved into regional areas in 2021. This makes it the most popular destination in Australia since September 2020.
House and unit prices continued to increase significantly until about mid-year 2022. Since then, unit prices have dropped 1.7%. Experts are saying this is likely to continue until interest rates begin to stabilise perhaps in Q3 of 2023.
In terms of Gold Coast rentals, prices had risen by 30% since 2020. This incited a rental crisis in the Gold Coast, with high renter demand, low vacancy rates and high prices incurred by high building costs.
But now, more investors are buying up apartments in the Gold Coast, and things seem to be improving for tenants. Units are generally a more affordable entry point for investors. There is less risk involved, more investment choices and the possibility to buy multiple apartments and increase rental income possibility.
Is it worth buying an apartment in Gold Coast?
Before we can answer this, it’s important to understand what makes a good investment property. Factors like future developments, job opportunities and general appreciation are things to consider.
Gold Coast is a lifestyle destination
Cities like the Gold Coast are a lifestyle destination.
When people from Sydney or Melbourne leave their capital cities, it’s often in search of a more laid back lifestyle where beaches and nature are at their doorstep. From outdoor activities in the Gold Coast to major theme parks, the entertainment options are plentiful.
That inherent factor makes Gold Coast a supremely sought after destination, which means it will continue to attract tenants over time. Gold Coast has even beat out Brisbane and the Sunshine Coast in the rental market, with rents increasing by 6% in the past three months.
Moreover, it looks like remote work is here to stay, meaning more professionals moving out of the main cities and into smaller regions like the Gold Coast—a promising aspect when considering an investment property.
In addition, Gold Coast offers access to two airports—Gold Coast Airport and Brisbane Airport. Tourism aside, this makes it ideal for workers still needing to travel to the other capital cities.
Gold Coast is also a pretty safe place to live, which attracts families, young professionals and retirees alike.
Development in infrastructure in Gold Coast
While looking at rental yields and vacancy rates are important, property investors know to also research any city developments which will improve liveability and continue to attract tenants.
Even though experts believe that the Gold Coast unit prices will probably continue to trend down into early 2023, the fast-growing, strong economy will keep it above water. Areas like healthcare, tourism and social services are some of its prominent pillars.
One of the biggest targets for Gold Coast is hosting some of the sports for the 2032 Olympic Games, which will be primarily held in Brisbane. Technology is at the forefront of their objectives, with “smart” and “green” infrastructure projects developing across the coast.
However, there may be a few obstacles in its way. According to Mr. Wargent, “while the Gold Coast apartment market tends to be cyclical, there are few oversupply concerns this time around. The high cost of materials and a shortage of available trades workers has resulted in a number of new projects being scrapped, and some developer insolvencies.”
In spite of these, Mr. Wargent remains positive about the future of Gold Coast’s property market—”demand for living on the Gold Coast is as high as it has ever been, and this is likely to continue over the decade ahead”.
Population growth
Before the pandemic, the city of Gold Coast predicted its population to rise to 1 million by 2041. Zooming out a bit and looking at Queensland as a state, federal budget forecasts expect the population to grow by more than 250,000 in the next four years.
This is a positive sign for investment into units. With more people moving to a city, more dwellings are needed, and standalone houses can only hold so many tenants. Alternatively, apartment buildings and therefore units, are a safe bet.
Gold Coast rental yields
The Gold Coast has very high rental yields according to SQM Research, which lists it at 5.9% for the month of October. This is compared to 4.1% in Sydney and 4.0% in Melbourne across all types of units.
In general, investors would be content with a rental yield of 7-8% in capital cities, and 8.5-11% in more rural areas.
When it comes to finding an investment property, you want to look for areas with low vacancy rates and high rental yield, which is typical of Gold Coast historically.
Gold Coast vacancy rates
It appears vacancy rates are slowly rising in essentially ever Gold Coast suburb. Following that are the decrease in average weekly rent prices as investors add to the supply of units.
Gold Coast suburbs that remain low in vacancy are around the south and west areas, at about 0.5%. The Gold Coast hinterland has also eased to about 0.6%.
In October, rent prices began to stabilise at around an average of $949 per week as compared to a peak of $1,055 in July.
Although rent prices are lowering alongside vacancy rates, Queensland and the Gold Coast have remained attractive for investors because of the value and capital growth opportunity . ABC uncovered that “new apartment sales surged by almost 100%” in 2021. Again, from interstate migrants and seniors looking to downsize.
So are Gold Coast apartments a good investment?
There are a few things that make Gold Coast apartments a solid investment.
Firstly, the draw of capital city migrants. With more white collar employees working remotely, people are longer bound by the commute to the office. The possibility of a sea-change or tree-change has become a reality, and that isn’t about to change anytime soon.
Also, the continuous development of the city. These aspects signal that the property market will grow in the coming years, with the local government paying close attention to the general liveability of the city.
