Sunday, April 4, 2010

Talking Up A Dead Market on the Gold Coast

Real estate agents are always the optimists. Take this story in the April 3, 2010 Courier Mail (a newspaper that relies on real estate agent advertisements for its profits, so you will only read positive stories in the Courier Mail about real estate). The story is about the Gold Coast off-the-plan apartment market, and is titled "New apartments to dry up". In the story, Julian Sutherland, a director of Ray White Surfers Paradise, says "History will show that buyers who put their foot on product at today's prices will benefit significantly when the supply constraints diminish over the next year or two."

Compare this with a report from March 31, 2010 from Herron Todd White, who are independent registered valuers. In response to the indicator: "Are New Properties Sold at Prices Exceeding Their Potential Resale Value", HTW responds for the Gold Coast apartment market: "Very Frequently". See page 51 of the report.

So, if buying a new apartment on the Gold Coast off-the-plan or recently finished, take care with what real estate agents tell you, because despite Julian Sutherland's positive views, the real story may be otherwise. And Julian earns his commission from selling off-the-plan apartments on behalf of developers, so he is not in any way independent.

HTW also reminds us:

"Like anything in the current economy, when investing in a holiday home, you need to take a softly, softly approach. You need to take your time, look at the fundamentals and make sure that they all add up. With the level of choice out there, it is even more important to select well, remembering profit is most often built into the purchase rather than the future sale."

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