While it’s a lovely place to visit, especially on vacation, the Gold Coast has always been a volatile property market. Not an “investment grade” market in my mind.
With what looks like a huge oversupply and a number of big developers going broke, some positive reports have surprised me.
Louis Christopher of SQM Research recently shed an insight into what’s happening in his weekly newsletter.
Recently Queensland’s Gold coast has been a much disputed area in terms of market value. On one hand, we have real estate agents such as Andrew Bell – the Chief Executive Officer of Ray White Surfers Paradise who is claiming that due to the lack of upcoming developments, the Gold Coast is about to enter a period of under supply and so it’s best to get into the market now while you can.
On the other hand, there is the factual data that deems the postcode 4217 and surrounding suburbs as one of the most oversupplied localities in the country. (see stock on market for the Gold Coast here)
The following link takes you to an article where Mr Andrew Bell implies the overall message of “Buy now or regret it later” stating that “we do not have an unlimited supply of new apartments on the market” and “now is the time to move before stock levels continue to dwindle.”
But is this really the case?
What Mr Bell fails to acknowledge (at least within this published article) is one of the possible reasons there is a lack of upcoming new stock on the Gold Coast is that the existing stock is hanging around on the market like a bad smell and there is a considerable amount of it! Research conducted by SQM Research reveals that there are indeed over 2000 listings presently on the market for the postcode of 4217 alone (Surfers Paradise).
And of course, many of these properties have been very heavily discounted.
It would be naturally illogical for developers to commence new projects on the Gold Coast when the completed ones are failing/struggling to sell. It is the opinion of SQM Research that this is less a case of future undersupply and more a case of current oversupply.
Of course, this isn’t the first time good old Andrew has been positive on the Gold Coast Market. The following link is an article from back in early 2009 where he he basically says the same thing, stating that he believed “the worst of the storm for the real estate industry is over” and “buyers should figure out what they want and jump at it.”
This proved not to be the case, at least in terms of property in Queensland’s Surfers Paradise. In fact things only got worse for this Gold Coast suburb as we can see from its current amount of Stock on Market, popularity for this postcode has only further dwindled since then. Indeed, according to Property Data Solutions (PDS Live) Gold Coast house prices are nearly 10% lower than where they were in 2007.
So what do we think?
We think the Gold Coast housing market is a very long way off from recording an undersupply event and that there is no rush for would be buyers to purchase a Gold Coast property right now. For those willing to take a large risk, yes, there could be some bargain opportunities. However we see this market a being highly susceptable to any further interest rate rises, which could mean that bargains found today could certainly be an even greater bargain tomorrow.
The above are all comments by Louis Christopher, director of SQM Research. I suggest you subscribe to his free newsletter at www.sqmresearch.com.au
For me –for the 30 or so years I have been following it, the Gold Coast market has always exhibited extreme volatility –huge swings with big booms and deep crashes. This does not make it a good market for investors. I’d rather invest elsewhere and sleep better at night.
Source: SQM Research
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