Gold Coast auction event falls flat

By Terry Ryder, 25th January 2010

A Gold Coast multi-auction marketed heavily as “The Event” produced a mediocre result at the weekend, with only half the properties selling.

The result, which left 64 disappointed property owners without buyers, demonstrates how poorly auctions work for vendors on the Gold Coast, where clearance rates above 50% are a rarity.

Sadly, but not surprisingly, media has represented the outcome as a stunning success. The Gold Coast Bulletin, which allows the property industry to pretty much dictate editorial content, declared: “The Gold Coast property market looks set for a ripper 2010 if yesterday's record-breaking results at Australia's largest residential auction are anything to go by.”

Ripper? Record-breaking? The event, hosted by a Surfers Paradise agency, offered 129 properties and only 65 properties were sold. In Melbourne this will be regarded as evidence of a market downturn. Apparently 800 attended the occasion but only 8% of them bought real estate. Presumably most in the crowd were tourists or relatives of agency staff (surprisingly common at auctions everywhere).

Many properties went at bargain basement prices, with some Surfers Paradise units selling in the $200,000 to $300,000 range – including a riverfront apartment which fetched just $220,000.

The Gold Coast Bulletin, the most agent-friendly newspaper in the nation, allowed the agency CEO to eulogise his “success”, with considerable talk about breaking records. The only records broken, if any, were the agency’s own records for previous similar events. In other words, earlier multi-auctions achieved even less than a 50% clearance rate. Oh dear.

The newspaper quoted the agency chief as saying: "I think The Event has made a big statement for the Gold Coast property market for 2010, I think everyone has come out a winner."

Everyone except the 64 owners whose properties were not sold. The newspaper did concede: “Not everyone was optimistic about the property market, with two vendors at the auction, who wished to remain anonymous, claiming they fell short by about $130,000 over three Surfers Paradise units they had to sell due to family circumstances. ‘I don't think the confidence is in the market,’ said the vendor.”

However, these vendors are not major advertisers so their feelings were buried under a sea of gush by the agency (which is a conduit of major advertising revenue).

This, regrettably, is all too familiar in terms of media reportage of the real estate industry. It’s why it has become so difficult for investors to access reliable information about the market.

ENDS