Ready for a sea change
Are you looking to buy property on Australia’s sun-drenched coast? Charlotte Cossar provides a market overview and checks out some of the hotspots which are predicted to outperform this year
"Investors taking advantage of the strong buying conditions are likely to be competing with first-time homebuyers; targeting low entry point properties that are also showing strong yields and potential for long-term capital growth"
The Australian property market has proved to be remarkably resilient during 2008, with only modest falls in value being recorded in most capital cities. Across the nation median dwelling values declined by 1.24 percent during 2008 to October, with house values falling by 1.55 percent and unit values declining by 0.29 percent. In comparison, share market values fell by around 40 percent during the same period.
Despite this proven resilience, the residential market is likely to be relatively flat for the large part of 2009. Ongoing economic uncertainty coupled with very low consumer confidence and the likelihood of rising unemployment will continue to have a dampening effect on residential property value growth. At the same time, there are a variety of factors that will act as market drivers: falling interest rates, increasing affordability, rising rental rates, improving investment yields and a worsening undersupply of housing will begin to place some upwards pressure on prices.
The markets that are most likely to record capital growth are those where these drivers will be most apparent: suburbs that are appealing to both first-time homebuyers and investors. The doubling of the First Home Owners Grant (FHOG) for existing dwellings and the tripling for new dwellings has already spurred more first-time homebuyers back into the market. The timeframe for these buyers is relatively short, with the window of opportunity to take advantage of the higher grant closing at the end of the 08/09 financial year.
Investors taking advantage of the strong buying conditions are likely to be competing with first-time homebuyers; targeting low entry point properties that are also showing strong yields and potential for long-term capital growth.
The markets that are most likely to languish will be those generally considered to be affluent where demand has been curbed by poor company profits, lower than expected bonuses, severe pain in equities and financial markets, and a build up of properties being advertised for sale. In addition, those markets popular with holiday homes and tourism-driven investment are likely to under-perform during 2009 simply because owners of these discretionary assets have, in many cases, been forced to sell.
When thinking about where to invest in Australia this year, it’s a good idea to focus on ‘strategic affordability’ - those suburbs that represent good value for money and are also strategically located along transport spines and within close proximity to necessities such as working nodes, shopping, schools and social options. There are many attractive ‘sea change’ areas on the east and south coasts which are within commuting distance of major centres and represent real affordability.
Close to the Great Barrier Reef, Halifax on the North Queensland Coast, just minutes from Lucinda and Hinchinbrook Island, represents a very affordable oceanfront location. The suburb is closer to the ocean than Ingham and is more affordable whilst being less than 16 kilometres from the township. Ingham has many of the modern amenities required and Townsville is located less than 100 kilometres south of Halifax. The affordable median house price of just AU$200,000 (HK$1.1 million) significantly adds to the area’s appeal. Alternatively, Tully is located approximately 140 kilometres south of Cairns and is just 20 kilometres from the growing tourist area of Mission Beach. The house offering has significant renovation potential and with a median price of AU$265,000 it is a very affordable location particularly for retirees.
Sea changers seeking proximity to Brisbane will be hard pressed to beat Iluka, Nambour and Ballina. 220 kilometres south of Brisbane, Iluka is a popular holiday retreat surrounded by World Heritage Listed rainforest. The area is just 51 kilometres north of Grafton so as a holiday getaway it is still close to a major centre. The current median house price of AU$380,000 represents extremely good value for a coastal, lifestyle location. Nearby, Nambour is an equally good bet, since the current median house price sits at just AU$359,000, making it one of the Sunshine Coast’s most affordable suburbs. Despite its affordability, Nambour has a train station linking it to Brisbane and is located only 13 kilometres from Maroochydore. Popular with fishermen and surfers, Ballina is quickly becoming a viable alternative to nearby hotspots, such as Byron Bay and the Gold Coast, and although the current median house price of AU$422,500 may seem expensive it is much more affordable than these other areas. The roads from Brisbane to Ballina (approximately 205 kilometres) have been dramatically improved in recent years making the commute much quicker, easier and safe. Ballina is also set to reap the benefits from the diversion of the Pacific Highway away from the city with work having commenced on the Ballina bypass.
Further south, Cape Woolamai offers a very affordable sea change location on Victoria’s Phillip Island whilst being within an easy commute (approximately 86 kilometres) to Melbourne. The current median house price sits at AU$267,500, which makes it the most affordable suburb in terms of median price on Phillip Island. Cape Woolamai is home to a wide variety of different housing ranging from beach shacks to face-brick homes right up to modern architecturally designed houses, meaning the offering currently available caters to most needs and tastes.
Hayborough is the most affordable suburb in which to purchase a house within the Victor Harbor Local Government Area of South Australia with a median house price of AU$299,000. The suburb is located less than 70 kilometres south of Adelaide and sits on the oceanfront. The housing offering is fairly modest but many properties have substantial renovation potential; true waterfront lots are also available within the suburb.
For more information on Australia’s favourite holiday regions, you can visit our sister website: www.realestate.com.au.
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