Rainbow Beach Property Market Predictions

“Interest rates are going to go up because employment is going to go up. If employment goes up, then our apartments get filled. And if employment goes up, our office buildings get filled. The reality is that increased economic activity combined with increased interest rates is basically bullish for real estate.”
Sam Zell

Ok, so this month we’re going to (figuratively) go out on a limb and suggest that we think their might be a light at the end of this tunnel and that we should probably be seeing it soon. What we are referring to by the term ‘tunnel’ is the significant reduction in both sales volumes and values within Rainbow Beach over the past 2 years. Since the first quarter of 2008, Rainbow Beach has had less than half the amount of sales that would normally be recorded (based on the average from 2001). For example - the number of sales in both 2008 and 2009 combined was only 75% ofthe total number of sales for the entire 2007 calendar year.

From the sales figures, it can be extrapolated that the past two calendar years have seen a significant downturn in the local property market and this has seen an increased number of properties on the market for extended periods.

The reduction in sales volumes in Rainbow Beach coincided with the Global Financial Crisis and the fallout was that those in the higher income earning demographic reined in spending and became much more conservative with their financial decisions. This was coupled with the fact that some holiday house/unit owners made the decision to sell their property in order to become less exposed to debt. This led to the lethal combination of high stock levels and lower buyer demand.

Based on recent national economic data, both consumer and business confidence levels are on the rise. For the property market these are positive signs. High levels of confidence generally translate to higher levels of market activity as more consumers are willing to make such a high commitment decision as purchasing a property.

Many coastal and regional areas have generally seen stronger price growth during the last ten years thanks to mining and resource booms coupled with the fact that their prices have come from a very low base.

The mining and resources boom looks set to continue so we would expect that many of the existing areas plus new ones which will undoubtedly evolve will continue to have a solid capital growth. “In ten years time we’d also expect that given our growing population which is heavily centralised, areas closer to major capital cities will probably fare much better in terms of price growth than they have during the last decade.” (Source: RP Date Property Pulse 19 March 2010)

Plans for mining projects in the Galilee Basin (western Queensland near Emerald/Barcaldine) include major infrastructure and expansion including the construction of additional rail lines as well as jobs for thousands for workers over the next 10-20 years and this will have a flow on effect for the rest of Queensland.

Low unemployment levels and higher median incomes means more discretionary spending which is good news for luxury car and boat dealers as well as real estate in coastal and regional areas. Once people are confident that their income is secure, lifestyle purchases go back on the agenda and the economy in general moves back onto an even keel. We aren’t there yet, but all the signs indicate that we’re heading in the right direction!

Based on the table displaying sales volumes in Rainbow Beach over the past decade, historical evidence proves that a significant number of properties can change hands over the course of any given year. On average, 96 properties have sold in Rainbow Beach each calendar year since 2001 and there is no doubt that there will be a return to these figures. The high number of sales over the period 2002/2003 seemingly came without warning and this will happen again. So, if you are a buyer sitting on the sidelines waiting for the perfect time to buy …. don’t wait too long or you might just miss your opportunity.