Despite much publicised Chinese investment there is no momentum behind Gold Coast market

The Gold Coast has long been a dangerous place for investors and, with the hype machine starting to spit out "buy now" messages; it's timely to look at what's real in this sunny place for shady characters.

Much is being made of the increased level of buying by Chinese investors and the inference from marketers is that Australians should be following their lead. Reports are telling us at Chinese investment in the Gold Coast market has "exploded" in the past year, with a particular focus on high-rise apartments in so-called "prime" locations.

Mayor Tom Tate, who seems intent on building a city for overseas tourists and speculators, has termed this "a remarkable turnaround in the city's fortunes".

Let's be clear about what's happening. Chinese investors aren't targeting the Gold Coast. The Gold Coast is targeting Chinese investors.

They're not scouring the country for the best places to buy and concluding that the Gold Coast has the best prospects for capital growth. Developers and their marketing teams are going to China and telling them the Gold Coast is the best place to buy. And, sadly, some Chinese investors believe them.

Let's look at the past, present and future of the Gold Coast residential market.

Over the past five years, property values have declined - a lot, especially in the unit markets. A vast over-supply, which still lingers, has forced down rents and prices.

Every suburb that has apartments currently has a median unit price below the levels of five years ago - with one exception. According to Australian Property Monitors figures, the median unit price for Broadbeach is the same as it was five years ago.

That means that the best result achieved by a unit market on the Gold Coast since 2008 is no growth.

Everywhere else has delivered a story of decline. The median unit price for Surfers Paradise has dropped from around $400,000 five years ago to about $340,000 now. The median unit price for Main Beach has dropped 25% since 2008 - what was worth $740,000 five years ago is worth around $565,000 today. Mermaid Beach, Runaway Bay, Burleigh Heads, Southport, Coolangatta, Palm Beach, Hope Island - they all have similar stories.

So the past is bad - and the present isn't particularly positive either. Despite the much-publicised burst of Chinese investing, there is no sales momentum in the Gold Coast market. Indeed, that's why developers are targeting Asia. They don't go to the trouble and expense of marketing in China if there are local buyers for their products.

If the Gold Coast was poised to return to price growth, as those with vested interests are claiming, there would be evidence of rising sales volumes.

But there is no such evidence. Some markets still have declining sales numbers. Most are, at best, moving sideways. The only markets showing any improvement in terms of sales activity are inland housing markets like Robina, Benowa and Elanora.

And what of the future? The danger is that the Gold Coast, excited about the expected boost from the 2018 Commonwealth Games, will indulge another frenzy of high-rise development, thereby generating another period of over-supply.

That will certainly happen if Mayor Tate has his way. Not only is he actively encouraging a "reach for the sky" mega tower mentality, but he's building one himself. Tate is a key partner in a venture to build a 60-level tower of apartments and hotel rooms in Surfers Paradise.

No doubt it will be bought by foreign investors and tenanted by foreign tourists - and it will be part of the glut we'll be talking about in 2020.