Sussan Ley's biggest mistake was Gold Coast investment

Sussan Ley's biggest mistake was Gold Coast investment
Sussan Ley's biggest mistake was Gold Coast investment

Sussan Ley’s casual use of public money which cost her a ministerial position was a big mistake, but not her biggest.

Her greatest folly in the travel scandal is that she flew to the Gold Coast to buy a high-rise apartment for $800,000.

She declared that she did so because “the Gold Coast is a great place to invest”. She clearly didn’t do any research – there are few investments with worse records on capital growth than high-rise units on the Gold Coast.

The Gold Coast high-rise suburbs feature prominently in the new 2017 edition of my “No Go Zones” report.

They’re there for a range of good reasons: that terrible track record on capital growth, the location’s tendency to lurch from one boom-bust scenario to the next, and the high level of new supply coming into the market. It’s heading for another bout of oversupply, keeping in the mind that the previous glut took around six years to clear up.

It’s worth repeating a point I’ve made before on Property Observer: that the median apartment price for Surfers Paradise today ($370,000, according to both Domain and CoreLogic) is lower than it was 10 years ago. The same can said about nearby Broadbeach. Main Beach and Southport both have higher medians than a decade ago, but only marginally.

How many major, high-profile markets around Australia have a growth record that bad?

I did a social media post on this and had many responses from property-interested people around Australia. Most were like this one: “I thought the same thing – could not pick a worse place for investing” or this one: “Totally agree. However, she has a huge disposable income to use for negative gearing.”

I thought tax benefits would be cold comfort if, as I expect, the property’s value falls over time.

But there were a number of comments that disagreed. The most striking was this one, which scores highly for naivety: “If she is saying she paid $800,000, you can bet it is really worth over $1 million. You don’t just shell out that kind of money if you haven’t done your research …”

But the reality is that people do shell out big money for real estate without doing thorough research. Many investors believe that absorbing media sound-bytes or reading The Australian is research.

Countless investors have lost money diving into resources-related markets, paying top dollar at the peak of inflated price cycles. Some people I’ve heard from or read about bought multiple properties in high-risk markets like Port Hedland or Moranbah.

It’s apparent from their subsequent comments that they had little awareness that these were, in fact, high-risk markets marked by their volatility and dependence on the continuation of a finite resources investment boom.

It’s happened numerous times in the past. It will happen again in the future, precisely because large numbers of investors are willing to pay big money without doing even the most basic research.

In my view, the worst markets to buy in right now are the Melbourne CBD, the Brisbane CBD and Surfers Paradise. In the past 12 months, according to Domain figures, over 3,300 buyers, mostly investors, have bought apartments in those three locations. 

The Melbourne CBD and nearby markets are headed towards the granddaddy of all oversupplies. The warnings from a host of big-name sources – including the major banks, the Reserve Bank and major research firms – have become a deafening roar, but around 1,300 buyers have ignored the advice in the past year.

Melbourne has been through gluts in the recent past, which is why the current median price is lower than three years ago and no higher than five years ago. 

The median price for the Brisbane CBD is only slightly higher than a decade ago and has dropped 5% in the past 12 months, as the reality of high vacancies (currently around 6 percent, according to SQM Research) and too much new product starts to bite in this market. But almost 500 people, mostly distant investors, have bought in the past year.

Over 1,500 bought a Surfers Paradise apartment in 2016. Susan Ley was just one of them.

If you were the average punter buying the average Surfers unit 10 years ago, you would have paid around $390,000. Today, that unit would be worth around $370,000. That sad scenario is all too common in many of our major unit markets, especially those on the Gold Coast.

Yet you’ll still see comments like this one I received earlier in the week: “I’m surprised at seeing so many short-sighted comments in regard to investing on the Gold Coast.”

It sounds like the voice of vested interest.

Or someone whose (short-sighted) vision has not extended beyond next year’s Commonwealth Games.

Terry Ryder is the founder of You can email him or follow him on Twitter.

Terry Ryder

Terry Ryder

Terry Ryder is the founder of

Gold Coast Sussan Ley

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