The Gold Coast apartment market has transitioned into the Covid-19 crisis in a much better position than it was going into the global financial crisis, planning and advisory firm Urbis says.

In its latest quarterly survey, Urbis found that the Gold Coast market was tracking well, recording 265 sales in the first quarter of 2020, sitting above the two-year quarterly average of 238 sales.

The weighted average sales price also lifted by 10 per cent over the quarter to $809,811, buoyed by strong pre-Covid sales.

Urbis said that over the year the Southern Beaches Precinct recorded the highest sales rate, yet a recently launched projects in Surfers Paradise had rebooted enquiry and transactions in the Gold Coast Central Precinct.

Over the quarter 64 per cent of a sales were to owner occupiers and only five per cent to overseas buyers, while interstate investors accounted for 19 per cent of sales.

Urbis senior consultant Lynda Campbell said the current environment had pushed developers to reassess projects to ensure they are ready for changes in the market.

“It is more important now to make sure projects are targeting buyer demand in order to weather the storm,” Campbell said.

“Projects with a high exposure to the investment market will need to put in place solid pre-settlement work to maintain a strong settlement rate.”

Urbis said the city had also benefited from a shift in sentiment in recent years, favourably trending away from large developments targeting international investors and instead towards smaller boutique projects, targeting owner occupiers.

Moving forward the market is tipped to remain resilient, further supported by low interest rates, a low level of supply and a higher level of product aimed at the owner occupier market.

Worryingly, the supply of new apartments remained relatively weak at 1,000 apartments, the lowest level recorded in over five years.

“There is a pipeline of projects ready to launch over the next six months, but whether they do will be something to watch,” Campbell said.

“If project launches slow, this will put pressure on the current supply.”

Urbis said it would be watching fourteen forthcoming projects containing approximately 1,160 apartments due to settle throughout 2020 closely to see if the Covid-19 border restrictions were impacting the market.

“The next quarter’s results will be highly anticipated,” Campbell said.

“Interest rates are still low, and there is not a large volume of expensive product aimed at investors, as was the case going into the GFC.

“Though we expect sales to slow, conversations with developers suggest that enquiry is still strong.”

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Given the positive final quarter of 2019, the central Gold Coast area is anticipated to remain fairly buoyant throughout the first half of 2020, according to a recent Herron Todd White (HTW) residential report.

The valuation firm ask their valuers to give an educated outlook on the residential market in their service areas.

The report notes sales activity spiked during September and October 2019 and local agents have reported that good levels of demand continued throughout holiday period for a broad range of property.

The stable market conditions in the Sydney and Melbourne property markets along with the low interest rate environment and easing of lending policy has given confidence to local buyers, particularly those seeking to purchase property priced in the higher price brackets.

“Burleigh Heads and Burleigh Waters remain hot spots, however more recently we have noticed good sales activity in the suburbs of Miami and in Sorrento (Bundall),” the valuation firm said.

A two bedroom beach styled dimples in Miami has recently been sold for $670,000.

Situated at 2/10 Cantwell Court (pictured below), it comes renovated bath and kitchen, indoor and outdoor living space and backyard.

Set on a 372sqm block, the house is only 900m away from Miami beach.

The report notes it will be interesting to see how property will perform within the Isle of Capri (Surfers Paradise) over the year.

The Isle of Capri is regarded as one of the preferred residential waterfront areas within the established areas of the central Gold Coast, being within close proximity to the Surfers Paradise CBD.

A fairly large infrastructure project (road bridge upgrade) has commenced which aims to improve traffic flow through the locality (to and from the CBD area). The expected completion of the project according to local council is mid 2021.

In the meantime, residents are likely to be disrupted by the project due to increased traffic congestion caused by the ongoing road works.

“We will wait to see if the project has any significant impact on property sales in this pocket,” the valuation firm stated.

A waterfront house in Isle of Capri was sold for $4.5 million in January.

The four bedroom, three bathroom house is situated at 25 The Corso (pictured below).

The home comes with indoor and outdoor living space, swimming pool, open plan gourmet kitchen and four car garage.

The unit market may experience slightly tougher conditions in 2020 compared with 2019, according to the HTW residential report. This market (particularly within Surfers Paradise and Broadbeach) is heavily reliant on investors from interstate and overseas.

With a good volume of new unit stock introduced in 2019 and more high density projects due to be completed this year on the central Gold Coast, there is some concern about a potential oversupply in this area.

“On a more positive note, general feedback from local real estate agencies suggests that demand for rental properties has remained firm and rental values are trending upwards,” the valuation firm said.

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Some home insurers will no longer touch parts of the Gold Coast, leaving residents with unaffordable premiums or without insurance as what experts call the “red-zone” phenomenon expands.

It comes after the Gold Coast experienced a major flooding event earlier this month, with more than 120 millimetres of rain falling in one day. Rainfall records were also smashed earlier this year.

Quote requests lodged with Youi, Budget Direct and other budget insurers were denied for properties in Harris Court, Currumbin Waters, which is in a City of Gold Coast designated flood zone.

Other, larger, insurers offer quotes for policies, but the premiums could be as high as $9000 a year for just the house if storm surge coverage is included.

For policies where storm surge coverage was not immediately clear, the price was between $2500 to $2900.

One resident in the area, who declined to be named, told Domain that Youi declared there was no option to renew their policy when it expired.

Red zones are where home insurance becomes prohibitively expensive due to the high risk of natural disaster, or insurers decline to offer coverage at all.

In parts of Surfers Paradise, the situation is similar. In a flood zone in River Drive, both Youi and Budget Direct did not issue online quotes.

On Rapallo Avenue, Surfers Paradise, on a block partially in the flood zone, Youi will not complete a quote and Budget Direct would quote about $1100 a year but would not include flood cover.

Youi said in a statement the company was “selective about issuing new policies in Currumbin Waters because of the high risk of water inundation, a decision based on both independent flood mapping data and previous claims experience.”

The insurer did not answer the question about whether a Currumbin Waters resident could take out a policy at all, or why others were unable to renew. It did not address Surfers Paradise.

Budget Direct did not respond by deadline.

Climate change consultancy Climate Risk’s director Karl Mallon said the relatively unaffordable insurance rates or unwillingness to insure altogether was troubling.

“They could just turn down the flood cover, but reputationally it just doesn’t look good when a flood comes and people don’t get paid out,” he said. “They say, ‘we just don’t want to know.’

“If they’ve come to that view, what happens if other insurers do? You’re creeping towards uninsurability.”

Insurance premiums of up to $3000 were approaching unaffordability, Dr Mallon said.

“That’s indicating the market rate for flood,” he said. “Last I looked, the median wage in Australia is $60,000, it’s not actually that high.

“That’s 5 per cent of someone’s wage, that’s a lot of money. A few people are starting to baulk at the price.”

Dr Mallon said the $1100 a year figure, quoted by Budget Direct in Rapallo Avene, Surfers Paradise, was still a cause for concern.

“It’s a little bit on the high side but a normal sort of a price,” he said. “[But] when you try to add flood cover, they just won’t do it.”

The $9000 per year quote was provided by NRMA Insurance. A spokesman said in a statement the price was because their data modelling suggested a flood event was likely, but the premium could increase or decrease as new information became available.

“Our customers’ premiums are assessed at their individual property level and reflect their exposure to a range of risks, including flood, as well as other natural disasters,” he said. “NRMA Insurance Home policies automatically provide cover for flood, rainwater run-off and storm surge, which we believe is critical for our customers in coastal areas.”

Dr Mallon said the figure was close to a “real” price for the risk of insuring in these areas, but it amounted to red-zoning.

“If they’re coming in at $9000, that’s exactly a red-zone number for us. We think a lot of people may not be able to afford that,” he said. “There are only really two reasons. One is they genuinely believe that’s the right price they have to charge so they don’t make a loss.

“The only other explanation is they actively don’t want people to take their contract.”

Dr Mallon said he would think twice before buying a property in an area where insurance was that expensive.

If I was a home buyer and I was going into an area like this … this is a pretty big warning sign,” he said. “That’s for this year, that’s not even for the future with climate change.

“Someone buying a house is locking themselves in for 30 years, and the world is changing pretty fast.”

Youi’s statement said there was a need to restrict the construction of new homes in areas at risk of natural disasters, to ensure insurance would remain affordable.

Dr Mallon agreed.

“The big agreement [within the insurance industry] is that buildings are being built where they shouldn’t and with materials, they shouldn’t. It’s not acceptable,” he said.

“The idea we’re allowing the property sector to get away with building high-risk properties is like allowing people to put arsenic in one in 100 tubs of baby formula.”

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