Rainbow Beach Property Update December 2009

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.