Addressing the Real Estate Crisis: A Closer Look at the Challenges and Opportunities

Pleasingly, we are starting to put a lot of the distractions behind us that existed over the last six weeks. First and foremost was our Federal Election, but also a series of short weeks, long weekends and holidays that all proved very disrupting for businesses—and of course, everyone trying to absorb the impact of the US Trade Tariffs, which are now showing signs of settling. Hopefully, this will lead to more peace talks. But I guess all of the above is just a picture of the world we live in these days, where so much is happening, and so often of large magnitude proportions.

There is no question the real estate market slowed a little over the past five or so weeks, but it is pleasing to see that straight after the election, it sparked back to life again.

What we have to remember about the real estate market is that we continue to be in the grips of a severe housing undersupply, with demand far outstripping the new homes being built—and with no quick fix to that big issue.

We know that governments have been open about the fact that Australia needs around 240,000 new homes per annum to meet demand, but from our latest figures we see that annual completions were just over 170,000—a shortfall of 70,000.

All of the promises made by both sides of government during the election campaign did not truly change the supply issue. Rather, all policies recommended were actually going to trigger even larger demand. Not the solution. Until we deal with the fact that construction costs are up between 30%–40% in most areas, and that we have a shortage of skilled labour, overly complex planning and zoning restrictions, and banks wary of financing developers, then this supply problem is going to continue. Remember: 70,000 last year, and one would assume 70,000 this year and next year—so you can see the compounding effect that is going to take a decade or more to fix.

Here on the Gold Coast, one of the approaches to try and keep development going is for developers to build smaller projects. Instead of buildings of 200+ apartments, they are more likely to be looking to do buildings half the size. Whilst this doesn’t help supply significantly, one good aspect is that we might see buildings built faster.

We are also faced with affordability issues. For example, Surfers Paradise has seen a 120% increase in the median house price since 2020, with a 37% increase in just the past year. Believe it or not, the median price in Surfers Paradise is now $4,000,000, which is why people are casting their eyes outside of Surfers Paradise for new opportunities.

Two other quick points:

1. It is great to see that whilst Western Australia is positioned as Australia’s strongest State Economy for the second consecutive quarter—leading in five of the eight key economic indicators including retail spending and unemployment—Queensland has climbed to share second place with South Australia, while also claiming the top spot for economic momentum in CommSec’s latest State of the States Report. Good to see some new energy that is bunkering down and getting the job done, and hopefully we will see that momentum continuing.

2. And lastly, some exciting news for us. Whilst we operated Ray White Surfers Paradise for the past 35 years, we wanted to break out of our perceived perception of only operating in the Surfers Paradise marketplace. As such, we have parted company with our Ray White Surfers Paradise offices and are stepping into a whole new concept: the Ray White Bell Group.

This new structure includes five distinct operations:

Residential Sales operating across the entire Gold Coast

Ray White Commercial Gold Coast

Ray White Project Marketing, operating throughout South East Queensland

Ray White Advisory, providing guidance and direction to all Gold Coasters for any real estate needs

Our powerhouse property management division, covering both residential and commercial, servicing South East Queensland, Northern New South Wales, and even with an office in Sydney

It’s a truly exciting time for us as we beef up operations and bring a new level of expertise across all divisions. We’re positioning our head office in the Gold Coast CBD, as a significant statement that we are in the heartbeat of the city, ready and available for all real estate needs.

If you have any particular questions about this exciting new chapter, please do not hesitate to contact me. I look forward to being back with you again in two weeks.

Warm regards,
Andrew Bell

Andrew Bell

Andrew Bell, OAM
Chairman
The Ray White Bell Group