Gold Coast “basket case” a good bet for property bargains: David Koch

Gold Coast property investors and estate agents be warned - David Koch is at it again bagging out the struggling Queensland coastal property market.

In January last year the Adelaide-born, Sydney-based financial journalist and Channel 7 breakfast TV host outraged local Gold Coast and Sunshine Coast property players, residents and retirees by calling them “catastrophes” claiming an oversupply of new apartments was having a “devastating” impact on the market and that any sort of recovery was years away.

In his latest commentary for Yahoo7 Finance, ‘Kochie’ says there are "serious bargains" in the property market despite Australian property prices remaining among the most expensive in the world.

Kochie says there are "still pockets of property in Australia, and one postcode in particular, that go against the grain in a big way”.

“If you’re a market watcher you might guess that I’m talking about the Gold Coast,” he writes.

Kochie notes the latest Home Discounts Report from SQM Research, shows there are now over 1,000 properties in the 4217 postcode (Surfers Paradise and surrounds) that have been on the market for more than 60 days.

However, if he really wanted to drive home his point a bit more research would show that average days on market for Gold Coast property is currently nearly four times this at 225 days - down from 239 days according to Australian Property Monitors (APM).

APM also reported that the Gold Coast’s average discount rate for property increased over April to 13.3% from 10.1% in March - the highest discount rate since June 2012 where it was also 13.3%.

“As you can imagine this oversupply has seriously pounded prices,” Kochie goes on to say.

One example he notes is a two-bedroom Gold Coast unit on the market since September 2011 and listed for $350,000, having previously sold for $595,000 in 2005 –a 40% discount.

Kochie says there are “plenty more where this came from”.

“Now, I don’t mean to single the Gold Coast out as a basket case, because there are certainly other regions that have felt the pain of oversupply too.

“But it should serve as a stern reminder for property investors looking at the region, and properties anywhere for that matter, to look very closely at an area before buying,” he adds.

According to the most recent Prodap Report, the Gold Coast unit market fell by 3% in the March quarter, based on 895 settlements following falls of 11.3% of the past two years.

The average unit price of $419,724 is the lowest since June 2003.

According to report author Bill Morris, this reflects significant discounting of liquidation stock, particularly for central Surfers Paradise high rise apartments.

The most recent Midwood Report on the Queensland market recorded only 19 high-rise apartment sales over the November quarter, a 70% plunge from sales figure a year ago with 705 high-rise apartments available for purchase on the Gold Coast, which at current sales rates would take close to a decade to clear.

The Gold Coast detached housing market, which has not been flooded by new developments, is in better shape.

According to the Prodap report, the average Gold Coast house price rose from $515,941 to $554,263 (7.4%) in the March 2013 quarter, matching average prices in Brisbane ($550,000), despite a 27% drop in the volume of house sales. The average price was recorded from a sample of 589 sales.

The increase reversed a 4.5% fall over 2012 and an 8.4% fall over 2011 and 2012 combined.