Gold Coast fails to learn lessons of the past

Posted on 18/08/2013  
Gold Coast fails to learn lessons of the past

A Queensland bureaucrat created a storm in a teacup in January when he made a joke about the Gold Coast property market while speaking at a Brisbane business function.

He asked: What’s the difference between herpes and the Gold Coast property market? The answer: You can fix herpes.

Everyone should have laughed and moved on, but people who take themselves way too seriously got upset about it.

One of the people who blew a gasket was Gold Coast mayor Tom Tate. Letters of complaint were sent to Queensland Premier Campbell Newman and Deputy Premier Jeff Seeney.

The only thing more laughable than the joke itself was the fact that the bureaucrat was forced to apologise to people who were stupid enough to be offended.

The thing is, the substance of the joke was essentially right. Perhaps that’s why Gold Coast business people were so incensed.

And the Gold Coast mayor is part of the reason why herpes is easier to fix than the property market on the glitter strip.

Tate has just announced his grant vision for the Gold Coast. He wants to see the coastscape littered with super towers. He wants zones where there is no height limit. He’s asking the Sultan of Brunei to build something massive. He’s flying off to Dubai and Qatar to encourage investment in iconic developments that reach for the sky.

There you have, in a nutshell, why the Gold Coast market is less attractive than a nasty social disease.

The people who live and breathe this place seem to get drunk on hype and reckless ambition.

They see the Gold Coast as an amusement park, rather than a city. They want to build mega monuments to their egos, rather than the ordinary infrastructure than drives economies and creates lasting jobs.

The Gold Coast needs owner-occupier housing, not skyrise apartments sold to gullible investors and rented to short-stay visitors – and then sold at a loss.

The Gold Coast is the Titanic of the Australian property industry. It’s a great lumbering top-heavy thing that many thought was unsinkable, but sink it most definitely did. Ambitious people have tried to raise it from the trough in which it rests, but without success. Some have tried to re-create it. But inevitably the Titanic of real estate sinks, weighed down by its own arrogant disregard for fundamentals.

Its property market has been one of Queensland’s worst performers over the past five years. It has been mired in over-supply, which has dragged down values and rents - affecting not only the high-rise market but all residential sectors across the coast.

Now, just as the surplus looks like being soaked up, developers are at it again, hatching the plans that will create the next suffocating over-supply, aided and abetted by politicians who let their egos do their thinking for them.

Look at some of numbers, courtesy of the Real Estate Institute of Queensland. The median house price for Gold Coast City is till 5% below the level of five years ago. Its median price for apartments is 9% lower than in 2008. Few markets anywhere in Australia have done that badly.

But individual locations within the city have done much worse than the average. The median price for a Surfers Paradise apartment is still 12% below the level of five years ago. Runaway Bay is down 17% and Southport is 23% lower than in 2008. Hope Island is down 30% on 2008. There are dozens of examples.

This is disastrous for the investors who bought into this market amid all the hype that oozes out of the Gold Coast in good times and bad.

This sunny place for shady people never seems to learn the lessons of the past. If mayor Tate has his way, it will repeat previous mistakes, only this time on a grander scale.

God help the Gold Coast and anyone who buys there.

 

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