Rainbow Beach Property Update
“Real estate is at the core of almost every business, and it's certainly at the core of most people's wealth. In order to build your wealth and improve your business smarts, you need to know about real estate.”
Donald Trump, Think Like A Billionaire
There has arguably never been a better time to buy in Rainbow Beach. With the (generally speaking) over-inflated market of late 2007/early 2008 long gone, we are now looking at good value across all sectors of the property market from units to established houses. Vacant land appears to have held its value more so than both units and houses with blocks recently selling for prices similar prices to those that were achieved by comparable properties in early 2008.
Property prices in coastal and regional areas have tended to bear the brunt of the correction in values, mostly due to the absence of confidence by investors. Many punters close to retirement age felt the pain of the share market losses last year and reeled in their discretionary spending on luxury items, ie. flash car/big boat/holiday house at the beach.
Conservative thinking will always err on the side of caution and when financial experts are warning us about the banks tightening their lending criteria and the likes of Professor Keen predicting property values will fall up to 40% across the nation – you need to have a bit of self confidence and rational thought to move forward with your plan of buying an investment property outside of a metropolitan area.
Rainbow Beach will benefit from the growth of nearby regional centres such as Gympie – which is expanding at an unprecedented rate and is also encouraging big business into town. (The recent opening of Harvey Norman is a good indication of where Gympie is headed in terms of growth). Our close proximity to such a centre allows us to benefit from the strong fundamentals of the South East Queensland residential property market overall. Ie. Our current population growth is increasing at the fastest rate of any urban region in Australia, there is a large deficiency of housing stock in relation to demand and State Government infrastructure improvements are underway or planned for the near future. A good example of the last point is the upgrade of the Bruce Highway between Brisbane and Gympie which will cut travel time for all those ‘city slickers’ who come and visit us on weekends. (Whom we welcome with open arms incidentally!)
According to the Department of Infrastructure and Planning, “Queensland is attracting strong population growth and increased by 97,957 people from 2007 to 2008, to reach a population of 4.3 million. This represents an increase of around 1,900 people per week and an annual growth rate of 2.3 percent. This is a huge change from 10 years ago when the population was growing by 66,000 per annum.” Many of the state’s new residents moved to Queensland for the climate and many relocated due to work opportunities. These are the people that will drive the property market onwards and upwards in all areas of the state and particularly in regions which represent value to investors (either through rental returns or future capital gains).
We believe this population growth coupled with an aging population and strong growth in the mining industry position Rainbow Beach for very strong capital growth. Not only will it become more popular as a destination it is sure to benefit financially. In terms of investing in Rainbow Beach for future capital gains you would have to consider it a ‘no brainer’.
The expectations of buyers haven’t changed – they are still looking for a great house at a bargain price whilst sellers “don’t want to give away” their property. The fundamentals of the market don’t change – regardless of the economic climate. The current state of the residential property market in Rainbow Beach still sees an oversupply of stock and relatively low demand however this is beginning to change with more genuine enquiry and commitment over the past couple of months. Since late September, there has been a return to “normal” sales volumes (based on a 20 year average). This is mostly a result of increased confidence from buyers combined with realistic expectations from sellers.
Whilst the local real estate market is likely to take a breather as interest rates rise, once home buyers and investors realise the rises will be relatively moderate, further growth can be expected. So if you’re sitting on the sidelines waiting for the perfect opportunity to buy – you’ll probably miss it.
Sunday, November 22, 2009
Monday, October 26, 2009
Rainbow Beach Property Report
The property market (and economics in general), operates under a basic system of supply and demand. It’s not complicated; however, it does tend to fluctuate on a reliably irregular basis, particularly in geographic areas outside of the metropolitan centres (and even more so in coastal zones where discretionary assets such as holiday homes are vulnerable to the demand and supply phenomenon).
Residential real estate has been a strong asset performer over centuries and it is in times like these, when the local property market is relatively quiet and somewhat lackluster, that there are some serious opportunities to take advantage of. Head of property research at RPData, Tim Lawless, recently stated that “popular coastal markets are still much more affordable than they once were”.
Without being overly pessimistic, we do need to present the facts as they are – and be warned – its’ not all pretty. From a regional perspective, the Fraser Coast has not sailed through the economic downturn unscathed and many developers have been left ‘high and dry’ with stock still available from projects completed in 2007 and 2008. As they say, “it’s only when the tide goes out that you get to see who’s been swimming naked”.
Herron Todd White (the largest independent property valuation and advisory group in Australia) recently reported on the state of the market for Bundaberg and Hervey Bay (most relevant to Rainbow Beach and surrounds: “Coastal units in the town of Bargara have been the most affected. Market values for units rose significantly and peaked in and around early 2008. Since then, values have fallen steadily to current levels. This has been compounded by a couple of factors, namely a current oversupply combined with low demand. There are in excess of 100 units currently listed for sale, with isolated receiver and mortgagee sales. Most unit sales recorded in 2009 have been below original purchase prices, some up to 15-20% below. It is considered a buyers market at present….”
The report goes on to discuss Hervey Bay specifically: “Current demand appears to be static with only limited sales occurring at a slow/sporadic pace. …. Another large apartment complex positioned along the Esplanade also completed in 2007, has struggled to offload stock to date. …. Statistics reveal only 18 have sold from a total of 40 units (45%) since completion two years ago, with only one of these sales occurring in 2008 and none to date this year. Older unit developments are also bearing the brunt of slower sales activity and are competing with new stock, forcing vendors to reduce asking prices to achieve a sale.”
Given the grim facts from our nearby neighbours, we can hardly expect that our local property market could “buck the trend” and avoid the fallout of the global financial crisis by maintaining values with such a significant reduction in demand from buyers. Our stunning surrounds and unique location provide us with a small a safety net in terms of value (ie. Buyers will always see the long term benefits of purchasing in such a pristine and exclusive area) however, with the recent announcement that Rainbow Shores Stage II will not proceed – the consequences present a double edged sword.
Ultimately, if there is to be no substantial future development in Rainbow Beach – this makes the existing properties more unique and arguably more valuable. But – and it’s a pretty big BUT – well researched and discerning investors recognise that ‘no future development’ = no future. No additional infrastructure, jobs or economic growth = no scope for significant capital growth.
Overall, the factors required to return us to a steady property market are: buyer confidence and less stock for sale. The number of properties listed for sale in Rainbow Beach is still at an historical high and without the buyers to absorb that level of stock, the current level of sales volumes are likely to continue as buyers sit back and wait for the bottom of the market (which, quite frankly, no one can ever accurately pick ….. :-))
The worst does appear to be behind us with a number of recent sales and genuine buyer enquiries increasing since mid-September. Generally, buyers are recognising that there are many properties listed for sale that represent good value in the current market. Properties that are listed at a realistic price have been receiving legitimate interest and offers to purchase by well-researched home-hunters who are acutely aware that this ‘buyer’s market’ will not continue indefinitely.
Residential real estate has been a strong asset performer over centuries and it is in times like these, when the local property market is relatively quiet and somewhat lackluster, that there are some serious opportunities to take advantage of. Head of property research at RPData, Tim Lawless, recently stated that “popular coastal markets are still much more affordable than they once were”.
Without being overly pessimistic, we do need to present the facts as they are – and be warned – its’ not all pretty. From a regional perspective, the Fraser Coast has not sailed through the economic downturn unscathed and many developers have been left ‘high and dry’ with stock still available from projects completed in 2007 and 2008. As they say, “it’s only when the tide goes out that you get to see who’s been swimming naked”.
Herron Todd White (the largest independent property valuation and advisory group in Australia) recently reported on the state of the market for Bundaberg and Hervey Bay (most relevant to Rainbow Beach and surrounds: “Coastal units in the town of Bargara have been the most affected. Market values for units rose significantly and peaked in and around early 2008. Since then, values have fallen steadily to current levels. This has been compounded by a couple of factors, namely a current oversupply combined with low demand. There are in excess of 100 units currently listed for sale, with isolated receiver and mortgagee sales. Most unit sales recorded in 2009 have been below original purchase prices, some up to 15-20% below. It is considered a buyers market at present….”
The report goes on to discuss Hervey Bay specifically: “Current demand appears to be static with only limited sales occurring at a slow/sporadic pace. …. Another large apartment complex positioned along the Esplanade also completed in 2007, has struggled to offload stock to date. …. Statistics reveal only 18 have sold from a total of 40 units (45%) since completion two years ago, with only one of these sales occurring in 2008 and none to date this year. Older unit developments are also bearing the brunt of slower sales activity and are competing with new stock, forcing vendors to reduce asking prices to achieve a sale.”
Given the grim facts from our nearby neighbours, we can hardly expect that our local property market could “buck the trend” and avoid the fallout of the global financial crisis by maintaining values with such a significant reduction in demand from buyers. Our stunning surrounds and unique location provide us with a small a safety net in terms of value (ie. Buyers will always see the long term benefits of purchasing in such a pristine and exclusive area) however, with the recent announcement that Rainbow Shores Stage II will not proceed – the consequences present a double edged sword.
Ultimately, if there is to be no substantial future development in Rainbow Beach – this makes the existing properties more unique and arguably more valuable. But – and it’s a pretty big BUT – well researched and discerning investors recognise that ‘no future development’ = no future. No additional infrastructure, jobs or economic growth = no scope for significant capital growth.
Overall, the factors required to return us to a steady property market are: buyer confidence and less stock for sale. The number of properties listed for sale in Rainbow Beach is still at an historical high and without the buyers to absorb that level of stock, the current level of sales volumes are likely to continue as buyers sit back and wait for the bottom of the market (which, quite frankly, no one can ever accurately pick ….. :-))
The worst does appear to be behind us with a number of recent sales and genuine buyer enquiries increasing since mid-September. Generally, buyers are recognising that there are many properties listed for sale that represent good value in the current market. Properties that are listed at a realistic price have been receiving legitimate interest and offers to purchase by well-researched home-hunters who are acutely aware that this ‘buyer’s market’ will not continue indefinitely.
Sunday, September 27, 2009
Rainbow Beach Development
It used to be that you could commit to an idea, engage the experience of experts and move forward with a plan. Now it appears that all you have to do to stop a project that you don’t agree with is to imply that there’s been some sort of corruption or political deception involved and all of a sudden there’s a media circus and everyone involved is tarred with the proverbial rotten egg brush.
Even those who consider themselves fence-sitters or genuinely couldn’t care less whether or not Rainbow Shores Stage Two goes ahead should have an opinion on the events of the past few weeks. A volley of emails and letters have appeared in local and national newspapers and Rainbow Beach has made the six o’clock news more than once of late.
Amidst the backdrop of the: ‘he said/she said’, personal vendettas, environmental concerns, ulterior motives and fundamentalist anti-development lobbyists – there has been absolutely zero community consultation. No Master Plan, no presentation of facts and no opportunity for those most affected by the proposed development to voice their opinion: either for or against.
With the State Government’s current financial position best described as ‘dire’ at present, one would think that any proposal providing: jobs, infrastructure and ultimately revenue raising through Stamp Duty and Rates, should be given more than a just a cursory once-over.
To announce that Rainbow Shores Stage Two will not proceed on the basis of environmental conservation is a smoke screen. The Government has been on the back foot for weeks over allegations of corruption and ‘mates doing deals for mates’ behind closed doors. To deny a community of future growth to get yourself out of political trouble is just as unjust and unethical as attempting to circumvent due process by using ‘connections with power and influence’.
We might live in a small town, but we’re not all small-minded. It appears to be both coincidental and hypocritical for the Government to reject a development on the basis of environmental concerns when; less than 100km away they are planning a dam which will detrimentally effect the native habitat of the Mary River cod, Queensland lungfish and the Mary River turtle. The dam - incidentally, is planned to supply to water to the ever-expanding development of other parts of south-east Queensland.
For Rainbow Beach to survive there must be some scope for growth. Our population of just over 1000 permanent residents is largely dependent upon the success of local business. The vast majority of these businesses rely upon visitors to the town to support their income stream. If Rainbow Beach is to see no future development or growth, many of these businesses will recognise that their bottom line is likely to recede than improve over time as there will be no opportunity to expand or make progress.
Any new development should meet the strictest of environmental and conservation guidelines as it is vital for us to protect of our native flora and fauna. After all, our natural surroundings are what draw thousands of visitors every year to our region. It would be irresponsible and short-sighted to allow unsustainable development to occur in such a pristine environment. Given that Rainbow Shores Stage One has proven to be both ecologically and environmentally friendly, the precedence has been set that we can achieve a ‘win-win’ with developers.
Considered discussion between stakeholders armed with all the facts -should result in a rational, well-thought out decision based on statistical data and credible evidence. (Not knee-jerk press releases based on media hype and opinion poll pressure).The people of Rainbow Beach deserve to know these facts as well and be given the opportunity to understand both the benefits and disadvantages of any future development.
Even those who consider themselves fence-sitters or genuinely couldn’t care less whether or not Rainbow Shores Stage Two goes ahead should have an opinion on the events of the past few weeks. A volley of emails and letters have appeared in local and national newspapers and Rainbow Beach has made the six o’clock news more than once of late.
Amidst the backdrop of the: ‘he said/she said’, personal vendettas, environmental concerns, ulterior motives and fundamentalist anti-development lobbyists – there has been absolutely zero community consultation. No Master Plan, no presentation of facts and no opportunity for those most affected by the proposed development to voice their opinion: either for or against.
With the State Government’s current financial position best described as ‘dire’ at present, one would think that any proposal providing: jobs, infrastructure and ultimately revenue raising through Stamp Duty and Rates, should be given more than a just a cursory once-over.
To announce that Rainbow Shores Stage Two will not proceed on the basis of environmental conservation is a smoke screen. The Government has been on the back foot for weeks over allegations of corruption and ‘mates doing deals for mates’ behind closed doors. To deny a community of future growth to get yourself out of political trouble is just as unjust and unethical as attempting to circumvent due process by using ‘connections with power and influence’.
We might live in a small town, but we’re not all small-minded. It appears to be both coincidental and hypocritical for the Government to reject a development on the basis of environmental concerns when; less than 100km away they are planning a dam which will detrimentally effect the native habitat of the Mary River cod, Queensland lungfish and the Mary River turtle. The dam - incidentally, is planned to supply to water to the ever-expanding development of other parts of south-east Queensland.
For Rainbow Beach to survive there must be some scope for growth. Our population of just over 1000 permanent residents is largely dependent upon the success of local business. The vast majority of these businesses rely upon visitors to the town to support their income stream. If Rainbow Beach is to see no future development or growth, many of these businesses will recognise that their bottom line is likely to recede than improve over time as there will be no opportunity to expand or make progress.
Any new development should meet the strictest of environmental and conservation guidelines as it is vital for us to protect of our native flora and fauna. After all, our natural surroundings are what draw thousands of visitors every year to our region. It would be irresponsible and short-sighted to allow unsustainable development to occur in such a pristine environment. Given that Rainbow Shores Stage One has proven to be both ecologically and environmentally friendly, the precedence has been set that we can achieve a ‘win-win’ with developers.
Considered discussion between stakeholders armed with all the facts -should result in a rational, well-thought out decision based on statistical data and credible evidence. (Not knee-jerk press releases based on media hype and opinion poll pressure).The people of Rainbow Beach deserve to know these facts as well and be given the opportunity to understand both the benefits and disadvantages of any future development.
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