“A cynic is just a man who found out when he was about ten that there wasn't any Santa Claus, and he's still upset.”
James Gould Cozzens
Queensland home buyers and property investors are being cautious with their cash with more than a third of sales for houses during the last quarter priced under $350,000. Quarterly median house price figures released recently by the Real Estate Institute of Queensland (REIQ) show that sales of homes priced at less than $350,000 had grown in the September quarter.
At the same time the number of buyers spending up big - more than $2 million - was down, with only 22 transactions. Despite the low number of multi-million-dollar sales, there are still plenty of suburbs in Queensland with a median house price of over $1 million (albeit mostly in Brisbane). Despite an abundance of properties on the market, almost a third of the 145 suburbs in the Brisbane statistical division did not record enough sales to provide the REIQ with a reliable median for the September quarter. (Ten sales are needed to set the median house price). To put that into local prospective; there were only five sales recorded in Rainbow Beach for the July – September quarter.
REIQ managing director Dan Molloy said that whilst sales volumes were down and there were some drops in median house prices over the quarter - the year-on-year picture was much better. Strong performers in Brisbane were mostly suburbs in the middle ring and ‘upgrader’ suburbs such as Warner, Murrumba Downs and North Lakes. Gold Coast median house prices took a dive over the quarter dropping 3% cent to $480,000 but year on year recorded a reasonable 8.5 per cent increase.
Broadbeach Waters and Burleigh Heads took a battering with drops of more than 20 per cent, whilst Surfers Paradise values dropped over the year and quarter. Mr Molloy said that given the current conditions the Gold Coast results were fairly good. "The Gold Coast performance has been held back I guess because of the tourism issues and the Australian dollar," he said.
He also said that whilst there was a lower volume of sales throughout the state, prices seemed to be holding up reasonably well. "There is a lot of stock at the moment and some sellers are obviously having to adjust their expectations in terms of prices. I think what we are going to see is in the next couple of quarters we will start to see these sellers becoming a bit more philosophical (about prices).” Mr Molloy said the September quarter figures were affected by interest rate increases and uncertainty surrounding the outcome of the federal election. There also was an absence of first-home buyers and investors. (Source: Courier Mail 20 November 2010).
Again, to put the local real estate market into perspective; Rainbow Beach currently has 53 houses, 61 units/apartments/duplexes and 20 blocks of land for sale (as at 22 Nov 10). More than half of these properties have been on the market for over 12 months. Our local market has also been affected by the combined negative impacts of the GFC, lower tourism numbers and a general cautiousness from buyers.
In conjunction with this, it seems that the ‘sea change’, has lost some popularity over the past two to three years also due to the GFC and the corresponding coastal property market volatility across the nation. Many retired and sem-retired people are now looking for more of a ‘tree change’. Some of the drivers behind this green change phenomenon include Australia's ageing population, the growth in self-managed super funds and the back-to-basics movement which seems to be regaining popularity.
Baby boomers appear keen to unlock equity in their urban homes or investment properties in order to deliver lifestyle advantages. Recent statistics show that they, on average, have about $500,000 to spend, (which is purchasing less and less in many coastal markets). Hence, buying something inland, by default sometimes, is of increasing appeal.
Also, self-managed superannuation funds are looking for steady returns and ethical investments. Australia's 420,000 self-managed super funds are controlled predominantly by couples in their mid-50s, who are financially literate. Green tourist-orientated developments, with proven track records, appeal to this market segment. If you are considering buying into a green change investment opportunity, and you are looking to maximise resale potential, the following ingredient is important: proven growth in tourist demand. (Source: Michael Matusik, Courier Mail 15 November 2010).
Locations such as Rainbow Beach and the wider Gympie Regional Council area appeal to many people albeit for different reasons. Generally speaking, the area appeals to couples and families enjoying long weekends and empty nesters on longer breaks. Our area can also tap into additional markets, such as conferences and international visitors. Most visitors to our location come from the immediate area or closest major capital city (we actually have a relatively low number of international visitors in comparison to many coastal regions such as Far North Queensland).
Another key strength of our location is the unique natural attractions, which many visitors and property investors are looking for. Features such as a National Park, facilities such as a unique dining experience and/or the nature of the area itself or its surrounds (being either boutique/historic/scenic or all three in nature) also add to the appeal of a coastal or ‘tree change’ location.
Property analyst and expert, Michael Matusik has also cited the following items in a checklist when making a decision to purchase in a ‘sea change’ or ‘tree change’ area:
* buy within 200km of a capital city if possible
* close proximity to an airport
* small, yet functional, nearby town centre
* several visitor activities in the area
* at least one unique point of difference
* known location
* ability to sustain repeat tourism, and
* the ability to accommodate future growth without compromising the integrity of the place itself.
Rainbow Beach actually scores pretty well based on the above checklist in terms of where to invest long term – all we need now is for some realistic optimism to return to the property market.
In closing, Merry Christmas and Happy New Year to all from the team at Cooloola Coast Realty!
Wednesday, November 24, 2010
The Future For Growth
“While we stop to think, we often miss our opportunity.”
Publilius Syrus (~100BC)
In recent times the capital city residential property markets have been recording strong levels of property value growth, but this hasn’t necessarily been reflected in those regions outside of the capitals. The performance of some of the major coastal markets has not been as impressive as markets such as Melbourne or Sydney over the past 12 – 18 months.
According to the RP Data-Rismark Home Value Index results for June 2010 capital city property values increased by a total of 10.5% over the year. House values increased by 10.3% and unit values were up 11.4%. That Index release also highlighted that the performance of the housing market outside of the capital cities was significantly different with house values in regional areas increasing by just 5.1% over the 12 months. Generally speaking, property prices in metropolitan areas tend to edge up steadily whilst coastal and regional areas have more of a pattern of ‘spikes’ and ‘troughs’. This ‘concertina effect’ means coastal property prices appear more volatile; however, increases in property values over time are very similar in terms of percentage gains when comparing metropolitan areas to coastal regions.
Over the last 10 years house prices in coastal markets have typically seen strong levels of growth; however, over the last 12 months the performance has been much less impressive. In the majority of instances house prices within these regions have recorded annual growth of less than 10% over the last year. The largest falls have been recorded in: Cairns (-2.7%), Whitsunday (-2.5%) and Fraser Coast (-1.6%) all of which are in Queensland and heavily reliant on tourism and retirees and/or sea changers. Anecdotal reports from areas such as Airlie Beach indicate that buyer demand has significantly dropped back since the relative boom of 2008.
Coastal markets are typically heavily reliant upon tourism and retirees/sea changers to boost their prospects and to create demand and upwards pressure on property prices. The current strong Australian dollar (at a 27 year high) is making it difficult for these regions as holidaying in Australia becomes more expensive for those from overseas and for Australian’s the strong exchange rate makes holidaying abroad significantly more appealing and affordable. The weakness in the tourism sector has the added affect of higher unemployment and fewer tourism related jobs.
Federal and State Government initiatives, in conjunction with local Commerce and Tourism bodies are working hard to promote destinations such as Rainbow Beach and the Fraser Coast in order to increase visitor numbers and improve the bottom line for tourism-reliant business communities. These initiatives include marketing campaigns targeted at domestic and international visitors; highlighting the unique natural attractions of our region.
It is clear that many tourism-reliant towns will continue to struggle as a result of the current economic climate therefore; investing in the promotion of these areas will assist in maintaining and creating jobs within the local tourism industry.
The market for sea changers/retirees has eased since the GFC struck. Many people who were looking to make the move have seen the value of their equity investments as well as their superannuation balances decline and have become more cautious about making the move as a result.
Looking forward, most coastal markets appear to have reached their lows and are now on the improve (Source: RP Data Oct 10). The softness in the tourism sector will temporarily hinder the prospects of significant improvements in most of these markets; however, those coastal markets with more diversified economies or linked with the resources sector are likely to have the strongest capital growth prospects going forward.
Areas such as Rainbow Beach will benefit from mining projects in regions such as Gladstone. Also, many ‘fly-in-fly-out’ mine workers have begun looking further afield for lifestyle investments with property prices in Rainbow Beach representing good value in many cases compared to similar style properties in Noosa, Coolum or Peregian etc.
Property market experts, realestate.com.au, recently released a Consumer Insights Report which showed a huge swing in buyer sentiment compared to this time last year.
Highlights of the report included the following statistics:
• 25% of investors were searching for properties to buy in the $500,000+ price range (up from 16% in April 2009)
• 1 in 2 property seekers now believe the market is rising (a result not observed for more than two years)
• The perceived reasons for growth included a shortage of properties (54% of respondents) and a growing economy (40% of respondents)
The future for coastal property markets such as Rainbow Beach is bright in terms of capital growth. Strategically, the nearby town of Gympie with a current population of approximately 50,000 is geared to grow to 80,000 over the next 20 years (Source: Gympie Times July 10, reference State Treasurer Andrew Fraser). Gympie’s population growth will have positive flow on effects to townships such as Rainbow with an increase in employment opportunities for those wishing to reside here. In addition, there will be increased visitor numbers with many people living in and around Gympie, looking to Rainbow Beach as a weekend destination.
Publilius Syrus (~100BC)
In recent times the capital city residential property markets have been recording strong levels of property value growth, but this hasn’t necessarily been reflected in those regions outside of the capitals. The performance of some of the major coastal markets has not been as impressive as markets such as Melbourne or Sydney over the past 12 – 18 months.
According to the RP Data-Rismark Home Value Index results for June 2010 capital city property values increased by a total of 10.5% over the year. House values increased by 10.3% and unit values were up 11.4%. That Index release also highlighted that the performance of the housing market outside of the capital cities was significantly different with house values in regional areas increasing by just 5.1% over the 12 months. Generally speaking, property prices in metropolitan areas tend to edge up steadily whilst coastal and regional areas have more of a pattern of ‘spikes’ and ‘troughs’. This ‘concertina effect’ means coastal property prices appear more volatile; however, increases in property values over time are very similar in terms of percentage gains when comparing metropolitan areas to coastal regions.
Over the last 10 years house prices in coastal markets have typically seen strong levels of growth; however, over the last 12 months the performance has been much less impressive. In the majority of instances house prices within these regions have recorded annual growth of less than 10% over the last year. The largest falls have been recorded in: Cairns (-2.7%), Whitsunday (-2.5%) and Fraser Coast (-1.6%) all of which are in Queensland and heavily reliant on tourism and retirees and/or sea changers. Anecdotal reports from areas such as Airlie Beach indicate that buyer demand has significantly dropped back since the relative boom of 2008.
Coastal markets are typically heavily reliant upon tourism and retirees/sea changers to boost their prospects and to create demand and upwards pressure on property prices. The current strong Australian dollar (at a 27 year high) is making it difficult for these regions as holidaying in Australia becomes more expensive for those from overseas and for Australian’s the strong exchange rate makes holidaying abroad significantly more appealing and affordable. The weakness in the tourism sector has the added affect of higher unemployment and fewer tourism related jobs.
Federal and State Government initiatives, in conjunction with local Commerce and Tourism bodies are working hard to promote destinations such as Rainbow Beach and the Fraser Coast in order to increase visitor numbers and improve the bottom line for tourism-reliant business communities. These initiatives include marketing campaigns targeted at domestic and international visitors; highlighting the unique natural attractions of our region.
It is clear that many tourism-reliant towns will continue to struggle as a result of the current economic climate therefore; investing in the promotion of these areas will assist in maintaining and creating jobs within the local tourism industry.
The market for sea changers/retirees has eased since the GFC struck. Many people who were looking to make the move have seen the value of their equity investments as well as their superannuation balances decline and have become more cautious about making the move as a result.
Looking forward, most coastal markets appear to have reached their lows and are now on the improve (Source: RP Data Oct 10). The softness in the tourism sector will temporarily hinder the prospects of significant improvements in most of these markets; however, those coastal markets with more diversified economies or linked with the resources sector are likely to have the strongest capital growth prospects going forward.
Areas such as Rainbow Beach will benefit from mining projects in regions such as Gladstone. Also, many ‘fly-in-fly-out’ mine workers have begun looking further afield for lifestyle investments with property prices in Rainbow Beach representing good value in many cases compared to similar style properties in Noosa, Coolum or Peregian etc.
Property market experts, realestate.com.au, recently released a Consumer Insights Report which showed a huge swing in buyer sentiment compared to this time last year.
Highlights of the report included the following statistics:
• 25% of investors were searching for properties to buy in the $500,000+ price range (up from 16% in April 2009)
• 1 in 2 property seekers now believe the market is rising (a result not observed for more than two years)
• The perceived reasons for growth included a shortage of properties (54% of respondents) and a growing economy (40% of respondents)
The future for coastal property markets such as Rainbow Beach is bright in terms of capital growth. Strategically, the nearby town of Gympie with a current population of approximately 50,000 is geared to grow to 80,000 over the next 20 years (Source: Gympie Times July 10, reference State Treasurer Andrew Fraser). Gympie’s population growth will have positive flow on effects to townships such as Rainbow with an increase in employment opportunities for those wishing to reside here. In addition, there will be increased visitor numbers with many people living in and around Gympie, looking to Rainbow Beach as a weekend destination.
Lifestyle Investments - A Long Term Approach
"I'm a great believer in luck, and I find the harder I work the more I have of it."
Thomas Jefferson (3rd President of USA. 1743 – 1826)
Over the last three decades Australian house prices have recorded periods of extreme growth contrasted with periods of weakness. With the benefit of time, the peaks and troughs of house price growth tend to even out, with Australian house prices recording an average annual rate of growth of 8.4% (since 1980).
The Australian property market moves in cycles which are influenced by a wide range of factors including unemployment, interest rates, consumer confidence and of course previous rates of growth that impact on rental yields and levels of affordability on the consumer and particularly business investment.
Over the last three decades Australian house prices have increased at the average annual rate of 8.4%. That’s a pretty decent rate of growth when you consider that prices double every ten years based on an annual compounding rate of 7.2%. In comparison, the rate of inflation has averaged about 4.6% over the last 30 years and 3.2% over the last decade.
Of course, there have been some periods where growth rates have well and truly eclipsed this average rate of growth and periods where prices have underperformed.
As an example of one of the weakest periods for Australian house prices, over the five years from 1990 to 1995 the median house price across Australia increased by just 2.8% per annum. The soft market conditions came at a time when Australia was entering the “the recession we had to have” and unemployment raced upwards from 5.8% in January 1990 to peak at 10.9% in December 1992. Mortgage rates during this five year period averaged 11.75% and peaked at 17%. (And we think interest rates are high now!)
At the other end of the spectrum, the most spectacular five year run was recorded during the ‘boom’ which ran from 2001-03 around most areas of Australia. Despite a slowing in growth rates between 2004/05, the five year period ending July 2005 saw average house price growth of 13.9% per annum. In Rainbow Beach itself, house prices went up in the order of 30% within two years – this growth was unsustainable and has since seen a correction with prices receding approximately 10-15% since the peak of late 2007.
Currently the residential housing market is transitioning out of a strong growth phase, whilst economically the country is just starting to ramp up. Gross domestic product figures show the economy is once again growing at about 3.2%, unemployment is trending downwards, consumer confidence remains high and rental yields are showing the first signs of improvement after being eroded by value growth and lower rental rates during 2009. The Reserve Bank is signaling that they may be forced to increase interest rates as a result of strong inflation figures mostly due to the mining resources boom.
In contrast to the broad market drivers outlined above, we can expect there also to be factors that will dampen market demand. Interest rates are likely to increase at least once over the coming six months after increasing by 150 basis points since October last year. Population growth appears to have peaked and will most likely fall further as the proposed cuts to immigration are implemented and housing affordability is likely to become more of an issue in the larger metropolitan markets around Australia.
For prospective buyers it is worthwhile considering the long term trends in the market. The average length of tenure for Australian home owners is about 7.3 years; a time frame that is likely to smooth out the peaks and troughs of price growth encountered through the cycles. The economic and demographic foundations of the market remain solid which suggests that we are likely to see ongoing improvements in Australian house prices, albeit at a much more modest rate than we have seen in the past five years.
The key to success in investing in the residential property market is having a long term approach. Buying and selling property with a quick turn over approach limits the amount of capital growth the investment will realise and also incurs more costs such as sales commission, legal fees and stamp duty etc.
Purchasing an investment property in a coastal or regional area, as opposed to metropolitan areas, requires research and an ability to withstand the volatility of supply and demand cycles. The yield (rental return) is generally lower compared to properties in metropolitan areas due to demographic constraints. Ie. people living in coastal and regional areas are generally on lower incomes than people living in the city or more built up areas.
Advantages of purchasing a ‘lifestyle investment’ include the ability to utilise the property yourself whilst still having the ability to negative gear the asset and claim associated costs as a tax deduction. For example, you may plan your annual family holiday to include a week’s stay at your own beach side house or unit, whilst holiday letting the property for the remainder of the financial year. You could then claim interest expenses, maintenance and upkeep costs etc associated with the property as it is actually a rental property.
The great Australian dream of home ownership extends to a beach house and many families have invested in a coastal property, some as part of a syndicate or combined family purchase in order to reduce the individual cost of the acquisition. This option may work for many investors and allows individuals the opportunity to ‘get into the market’ with a view to potentially moving to the property permanently in the future or buying out the other parties to own the investment property outright.
There are no guarantees in life and that includes the potential gains to be made from investing in property but the statistics from the past three decades certainly point towards the positive when it comes to capital growth – across Australia and in coastal regions such as Rainbow Beach.
Thomas Jefferson (3rd President of USA. 1743 – 1826)
Over the last three decades Australian house prices have recorded periods of extreme growth contrasted with periods of weakness. With the benefit of time, the peaks and troughs of house price growth tend to even out, with Australian house prices recording an average annual rate of growth of 8.4% (since 1980).
The Australian property market moves in cycles which are influenced by a wide range of factors including unemployment, interest rates, consumer confidence and of course previous rates of growth that impact on rental yields and levels of affordability on the consumer and particularly business investment.
Over the last three decades Australian house prices have increased at the average annual rate of 8.4%. That’s a pretty decent rate of growth when you consider that prices double every ten years based on an annual compounding rate of 7.2%. In comparison, the rate of inflation has averaged about 4.6% over the last 30 years and 3.2% over the last decade.
Of course, there have been some periods where growth rates have well and truly eclipsed this average rate of growth and periods where prices have underperformed.
As an example of one of the weakest periods for Australian house prices, over the five years from 1990 to 1995 the median house price across Australia increased by just 2.8% per annum. The soft market conditions came at a time when Australia was entering the “the recession we had to have” and unemployment raced upwards from 5.8% in January 1990 to peak at 10.9% in December 1992. Mortgage rates during this five year period averaged 11.75% and peaked at 17%. (And we think interest rates are high now!)
At the other end of the spectrum, the most spectacular five year run was recorded during the ‘boom’ which ran from 2001-03 around most areas of Australia. Despite a slowing in growth rates between 2004/05, the five year period ending July 2005 saw average house price growth of 13.9% per annum. In Rainbow Beach itself, house prices went up in the order of 30% within two years – this growth was unsustainable and has since seen a correction with prices receding approximately 10-15% since the peak of late 2007.
Currently the residential housing market is transitioning out of a strong growth phase, whilst economically the country is just starting to ramp up. Gross domestic product figures show the economy is once again growing at about 3.2%, unemployment is trending downwards, consumer confidence remains high and rental yields are showing the first signs of improvement after being eroded by value growth and lower rental rates during 2009. The Reserve Bank is signaling that they may be forced to increase interest rates as a result of strong inflation figures mostly due to the mining resources boom.
In contrast to the broad market drivers outlined above, we can expect there also to be factors that will dampen market demand. Interest rates are likely to increase at least once over the coming six months after increasing by 150 basis points since October last year. Population growth appears to have peaked and will most likely fall further as the proposed cuts to immigration are implemented and housing affordability is likely to become more of an issue in the larger metropolitan markets around Australia.
For prospective buyers it is worthwhile considering the long term trends in the market. The average length of tenure for Australian home owners is about 7.3 years; a time frame that is likely to smooth out the peaks and troughs of price growth encountered through the cycles. The economic and demographic foundations of the market remain solid which suggests that we are likely to see ongoing improvements in Australian house prices, albeit at a much more modest rate than we have seen in the past five years.
The key to success in investing in the residential property market is having a long term approach. Buying and selling property with a quick turn over approach limits the amount of capital growth the investment will realise and also incurs more costs such as sales commission, legal fees and stamp duty etc.
Purchasing an investment property in a coastal or regional area, as opposed to metropolitan areas, requires research and an ability to withstand the volatility of supply and demand cycles. The yield (rental return) is generally lower compared to properties in metropolitan areas due to demographic constraints. Ie. people living in coastal and regional areas are generally on lower incomes than people living in the city or more built up areas.
Advantages of purchasing a ‘lifestyle investment’ include the ability to utilise the property yourself whilst still having the ability to negative gear the asset and claim associated costs as a tax deduction. For example, you may plan your annual family holiday to include a week’s stay at your own beach side house or unit, whilst holiday letting the property for the remainder of the financial year. You could then claim interest expenses, maintenance and upkeep costs etc associated with the property as it is actually a rental property.
The great Australian dream of home ownership extends to a beach house and many families have invested in a coastal property, some as part of a syndicate or combined family purchase in order to reduce the individual cost of the acquisition. This option may work for many investors and allows individuals the opportunity to ‘get into the market’ with a view to potentially moving to the property permanently in the future or buying out the other parties to own the investment property outright.
There are no guarantees in life and that includes the potential gains to be made from investing in property but the statistics from the past three decades certainly point towards the positive when it comes to capital growth – across Australia and in coastal regions such as Rainbow Beach.
Lifestyle Investments - A Long Term Approach
"I'm a great believer in luck, and I find the harder I work the more I have of it."
Thomas Jefferson (3rd President of USA. 1743 – 1826)
Over the last three decades Australian house prices have recorded periods of extreme growth contrasted with periods of weakness. With the benefit of time, the peaks and troughs of house price growth tend to even out, with Australian house prices recording an average annual rate of growth of 8.4% (since 1980).
The Australian property market moves in cycles which are influenced by a wide range of factors including unemployment, interest rates, consumer confidence and of course previous rates of growth that impact on rental yields and levels of affordability on the consumer and particularly business investment.
Over the last three decades Australian house prices have increased at the average annual rate of 8.4%. That’s a pretty decent rate of growth when you consider that prices double every ten years based on an annual compounding rate of 7.2%. In comparison, the rate of inflation has averaged about 4.6% over the last 30 years and 3.2% over the last decade.
Of course, there have been some periods where growth rates have well and truly eclipsed this average rate of growth and periods where prices have underperformed.
As an example of one of the weakest periods for Australian house prices, over the five years from 1990 to 1995 the median house price across Australia increased by just 2.8% per annum. The soft market conditions came at a time when Australia was entering the “the recession we had to have” and unemployment raced upwards from 5.8% in January 1990 to peak at 10.9% in December 1992. Mortgage rates during this five year period averaged 11.75% and peaked at 17%. (And we think interest rates are high now!)
At the other end of the spectrum, the most spectacular five year run was recorded during the ‘boom’ which ran from 2001-03 around most areas of Australia. Despite a slowing in growth rates between 2004/05, the five year period ending July 2005 saw average house price growth of 13.9% per annum. In Rainbow Beach itself, house prices went up in the order of 30% within two years – this growth was unsustainable and has since seen a correction with prices receding approximately 10-15% since the peak of late 2007.
Currently the residential housing market is transitioning out of a strong growth phase, whilst economically the country is just starting to ramp up. Gross domestic product figures show the economy is once again growing at about 3.2%, unemployment is trending downwards, consumer confidence remains high and rental yields are showing the first signs of improvement after being eroded by value growth and lower rental rates during 2009. The Reserve Bank is signaling that they may be forced to increase interest rates as a result of strong inflation figures mostly due to the mining resources boom.
In contrast to the broad market drivers outlined above, we can expect there also to be factors that will dampen market demand. Interest rates are likely to increase at least once over the coming six months after increasing by 150 basis points since October last year. Population growth appears to have peaked and will most likely fall further as the proposed cuts to immigration are implemented and housing affordability is likely to become more of an issue in the larger metropolitan markets around Australia.
For prospective buyers it is worthwhile considering the long term trends in the market. The average length of tenure for Australian home owners is about 7.3 years; a time frame that is likely to smooth out the peaks and troughs of price growth encountered through the cycles. The economic and demographic foundations of the market remain solid which suggests that we are likely to see ongoing improvements in Australian house prices, albeit at a much more modest rate than we have seen in the past five years.
The key to success in investing in the residential property market is having a long term approach. Buying and selling property with a quick turn over approach limits the amount of capital growth the investment will realise and also incurs more costs such as sales commission, legal fees and stamp duty etc.
Purchasing an investment property in a coastal or regional area, as opposed to metropolitan areas, requires research and an ability to withstand the volatility of supply and demand cycles. The yield (rental return) is generally lower compared to properties in metropolitan areas due to demographic constraints. Ie. people living in coastal and regional areas are generally on lower incomes than people living in the city or more built up areas.
Advantages of purchasing a ‘lifestyle investment’ include the ability to utilise the property yourself whilst still having the ability to negative gear the asset and claim associated costs as a tax deduction. For example, you may plan your annual family holiday to include a week’s stay at your own beach side house or unit, whilst holiday letting the property for the remainder of the financial year. You could then claim interest expenses, maintenance and upkeep costs etc associated with the property as it is actually a rental property.
The great Australian dream of home ownership extends to a beach house and many families have invested in a coastal property, some as part of a syndicate or combined family purchase in order to reduce the individual cost of the acquisition. This option may work for many investors and allows individuals the opportunity to ‘get into the market’ with a view to potentially moving to the property permanently in the future or buying out the other parties to own the investment property outright.
There are no guarantees in life and that includes the potential gains to be made from investing in property but the statistics from the past three decades certainly point towards the positive when it comes to capital growth – across Australia and in coastal regions such as Rainbow Beach.
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