Overstated Oversupply

Claims of dramatic oversupply for new apartments on the Gold Coast are certainly alarmist.Media speculation over the last fortnight in both the local and national property press has suggested we have more than 2000 new apartments to sell – representing an oversupply of stock that will take an estimated five to seven years to clear.But new figures released by the Midwood Report show that the supply of new high-rise apartments is at its lowest level since 2005, with only 723 apartments remaining for sale.The Midwood Report said that in the past two years, new high rise apartment stock had been absorbed by the market, with sales activity reducing new apartment volumes from 1298 apartments to 723 apartments, representing a decrease of 44 per cent.The data shows us that contrary to reports of low sales volumes, sales rates have been steady over the last 24 months and have chewed into what was, back then, an oversupplied marketplace.The real story lies in the fact that there are few apartment projects in the pipeline once the current new apartment stock is absorbed by the market – a market which includes extremely well priced mortgagee stock which is currently boosting sales take-up rates.There is only one major project on the drawing board and that is City Plan Partners and Hyundai Amco’s $700 million twin tower apartment project at Surfers Paradise.After the current projects like Soul and Hilton in Surfers Paradise are completed there will be very few new apartments to choose from.So, what does this mean for the marketplace?Buyers interested in purchasing new apartments on the Gold Coast will need to move relatively quickly to ensure they can buy in a building they like, in an area where they see value.While take-up rates may have slowed in the past couple of years, buyers are starting to see the real value of the Gold Coast new apartment market, particularly as mortgagee stock becomes available at prices significantly lower than two or three years ago.The city has less stock now than at any other time over the last six years and with bargain apartments coming onto the market, sales volumes are increasing and supply levels will continue to diminish.So, it’s not all doom and gloom – it just depends which camp you are in.If you purchased a new Gold Coast apartment at prices of three years ago, you’re in trouble. Especially if you are yet to settle as the banks are unlikely to give you the money you require to complete the purchase based on current valuations.Then if you decide to forfeit your deposit because you can’t settle, you might be sued by the developer or the financiers looking to recoup their losses and enforce a sale by legal avenues.But if you have the capacity to buy (ie you have some equity to play with and are friendly with your local bank manager) there are some fantastic buying opportunities.