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Gold Coast – Example of the Housing Rental Competing Forces
Many Apartments are sitting empty most of the year, including an entire beachfront tower.
Gold Coast mayor Tom Tate cited an entire high-rise sitting empty in the triple tower Jewel development at Surfers Paradise as an example of the level of dormant accommodation that a “vacancy tax” could potentially unlock.
The Gold Coast also has more short-term accommodation than anywhere else in Australia, with 5,400 properties advertised on Airbnb, or similar websites, compared to only 1,700 rentals in the long-term rental pool.
The city’s vacancy rates plunged from 3.5 per cent pre-pandemic to a record low of under 1 per cent. As a result, in the past year alone its rents have jumped as much as 50 per cent in some areas.
All Victoria Landlords in certain suburbs must notify the Victorian Office of State Revenue if their residential property is vacant for more than 6 months
This annual tax is set at 1% of the capital improved value (CIV) of taxable land. For example, if a vacant home has a CIV of $500,000, the tax will be $5000.
Unprecedented growth in its population and a huge number of returning overseas students means thousands of new homes need to be built.
However, with an ongoing construction crisis as well as the fallout from rising inflation and interest rates, there is no quick fix for the glitter strip or anywhere else.
“The Gold Coast is a little bit on steroids in relation to the supply crunch, particularly in the rental market,” Real Estate Institute of Australia president Hayden Groves said at an industry roundtable this week in Surfers Paradise.
He said throughout the pandemic, Queensland had a huge influx of people, with almost 85,000 interstate migrants—many of them attracted to livable coastal hubs like the Gold Coast.
He said with a median house price of around $1 million on the Gold Coast “it’s no longer affordable for everybody”.
“I think the Gold Coast will be an interesting study to see how it progresses in the next five years based on various housing policy settings that might be implemented to try and bring more supply into the market.”
But he warned: “ There is no immediate solution to the supply issue”.
Ray White chief economist Nerida Conisbee—who on Linkedin after the roundtable described the Gold Coast as “in many respects, ground zero of the challenges now being faced ”—agreed.
“It’s going to take many years for the housing crisis to be resolved,” she said. “We do have a construction crisis and building approvals are falling … [but] the Gold Coast needs more housing.
“So we need to work out ways to build more homes, we need to try and incentivise investors, particularly mum and dad investors, we also need to look at other long-term solutions such as build-to-rent.”
It’s feared that rental caps will only drive investors away, so it will shrink the [rental] pool instead of increasing it. We need to get the balance right.
“But I certainly know what’s happening in the real estate market and we’re not going to get a solution to any of this in the next five years … it’s going to get worse before it gets better.”
If you are looking to invest in residential investment properties in holiday locations as a future retirement living plan, ensure you plan how these types of properties are used for the short and longer-term rental markets.
Need advice, please contact Garry Wolnarek our principal property tax advisor