Apartments feel crunch
By Mike Bruce chief reporter
High-rise apartment sales on the Gold Coast have plunged to their lowest level in more than nine years, according to a recent property report.
Just 37 Gold Coast high-rise apartments were sold in the three months to November, compared to 215 in the same period last year, making it the quietest three months since September 1999, according to Bill Morris, author of the November quarter Midwood Queensland Investment Report.
The November quarter was equally dire when compared with the three previous quarters in 2008 – in August 142 units were sold, in May. 268, and in February, 345.
“The market is abysmal because people can just see prices falling and in that declining market people won’t buy – they will only buy in a rising market,” said Mr. Morris.
His research showed that there were 1383 high-rise apartments for sale on the Gold Coast, which at the November quarter sales levels would take almost nine years to clear.
The grim news came in a week when Mr. Morris predicted the Gold Coast property market would fall a further 20 percent on top of the 3.7 percent drop in the median house price in the three months to November.
Mr. Morris said while the November period for high-rise apartment sales had been heavily battered by the collapse of Surfers Paradise’s Pacific Resort project in October which saw the cancellation of 199 contracts, the paltry November result was an accurate reflection of the property market in general.
But unlike property busts of the past, the market was not falling due to rising unemployment or falling wages but rather the global liquidity crisis.
“People just can’t borrow money, that’s the biggest influence on prices at the moment,” said Mr. Morris.
“It’s not as if demand has fallen by the wayside either . . . it’s a classic credit squeeze which we haven’t seen the likes of in Australia since 1961.”
In the 16 ‘low-rise’ developments across the Coast, project marketers sold only 29 units.
And medium-rise apartment sales fared little better with only 40 unconditional sales across 26 projects the three months to November.
Mr. Morris said the high-rise market had been particularly affected by the downturn because it was a market with a greater degree of discretionary spending and apartments and holiday units were often the first assets to suffer in tough times.
“High rises are generally seen as discretionary assets,” he said.
“It’s the same as the prestige boat market or the luxury car market.”
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