"The Supreme Court has ruled that they cannot have a nativity scene in Washington, D.C. This wasn't for any religious reasons. They couldn't find three wise men and a virgin."
Jay Leno.
The team at Cooloola Coast Realty takes great pleasure in welcoming Rieke Doell to the newly established full time position of Holiday Letting Manager. Rieke has been living in Rainbow Beach for the past three years and has a wealth of experience from previously working in Event Management and the Tourism Industry – both in Australia and in Europe.
We wish Kerry Leyland all the best and thank her for her tireless efforts over the past 2+ years in the role of Holiday Letting Manager. We are sure that she will enjoy spending more time with her young son, Kye (who will be off to School before we know it) and her husband, Grant.
Not many more sleeps now until the much anticipated wait is over for Santa to deliver his cheer! Christmas came early for us at Cooloola Coast Realty having enjoyed a fantastic Staff Christmas Party at Arco on the 25th of November. ‘Secret Santa’ gave out some wonderful presents and everyone had a great evening.
Whilst 2011 has proved to be another very challenging year in real estate, Cooloola Coast Realty is in an enviable position to ride out the lows as we have a sizable rent roll including permanent rentals, holiday properties as well as secure storage and parking. With three full-time staff and two owner-operators, we are well positioned to provide unrivalled, professional and experienced property management and real estate sales services to Rainbow Beach.
Over the past three years, Rainbow Beach has gone from having four separate real estate offices to just two. Given that we are a town of only 1,200 permanent residents; two real estate offices is realistically all that is sustainable over the long term.
The volume of residential sales in Rainbow Beach over the past three years has been well below average and coupled with a reduction in property values; this has meant that sales commissions have been down approximately 65% over the past two-three years (compared to the 20 year average).
Essentially, the current state of the economy is putting immense pressure on small (and large business), particularly those that have no association or derive no benefit from the mining boom. We just spent a couple of days in Brisbane and were quite surprised to find that the real estate market there is quite depressed also. Real estate colleagues of ours are reporting significant reductions in sales volumes and there has been a notable increase in Receiver Sales and Mortgagee in Possession sales as well.
Fingers crossed that we get further reductions in interest rates over the next few months and that should relieve some pressure on families and businesses alike.
Now, before you head off out of town for your Christmas break (not that you would want to be anywhere else other than Rainbow! J), just remember – we have a very safe, quiet and low crime rate town BUT you are better to be safe than sorry. So, although Christmas is a time to rejoice, let your hair down and enjoy the company of family and friends; if you are planning to be away from your home over this period we would like to remind you of some holiday security tips:
Ÿ Keep Christmas trees and presents hidden from outside view
Ÿ Remove all ladders and climbing objects from around the house
Ÿ Notify neighbours that you are going away and have them keep an eye on your place whilst you are not there
Ÿ Leave a light on inside (connecting it to a timer is even better)
Ÿ Hide all money, jewellery and valuables
Ÿ Don’t hide a key outside your property or leave notes!
To all past, present and future clients, we would like to take the time to wish everyone a very Merry Christmas and hope that all of you and your loved ones remain safe throughout the Christmas period.
One of the real joys of the festive season is the opportunity to say thank you and wish you the very best for the New Year.
Thursday, December 1, 2011
Rainbow Beach Real Estate News November 2011
"It's just as unpleasant to get more than you bargain for as to get less”
George Bernard Shaw
We weren’t sure whether we should give this article the title “A Dose of Reality” or “The Cracks Are Beginning To Show”…. In the end we decided just to provide some commentary on the current state of the local property market. There has been a significant reduction in sales volumes over the past three years and residential property sales have been extremely difficult to achieve since the slow since the GFC hit in the latter half of 2008.
However, in the past few months there have been a number of sales locally including: Unit 14 at Rainbow Shores Resort, which has been on the market for well over a year and reduced in price several times, has just settled at $155,000. (Settlement date was 3/10/11). Unit 14 is an older style unit (within Baden North) and features high ceilings with exposed beams and included the standard furniture package.
24 Naiad Court, a vacant block of land (1,003m2) within Rainbow Shores Estate is currently Under Contract at $495,000. A comparable block of land on Ibis Court sold for $720,000 at the end of 2008. This is a price difference of -31%.
Unit 49 Rainbow Shores Resort is currently listed at $215,000 including all furniture and chattels. We can report that this unit is now Under Contract at an agreed price of $202,000. In addition, Unit 7 Rainbow Shores Resort has a current list price of $220,000 including all furniture and chattels. These particular units would’ve been appraised at (and similar units sold for) in excess of $250,000 - $290,000 back in 2008.
Comparatively, the Getaway Resort currently has a three bedroom, two bathroom unit with single lock up garage on the market for $220,000. Similar units within the same complex have sold for up to $299,000 even in the past two years.
With regard to units within Resort complexes, most are presented with similar furniture/fittings and have similar (if not identical) floor plans and layouts (within the same complex). The units also have similar overhead/holding costs (ie. Body Corporate Fees and Council Rates) and if holiday let or permanently rented, would be yielding similar rental returns.
Even at the drastically reduced prices to which some properties have fallen, in the current market and tenuous economic climate, potential buyers are few and sales are difficult to achieve. Based on the current information, we have been recommending Vendors either consider reducing the list price of their property or remove the property from sale until the market shows sign of improvement and it becomes viable to achieve their current listed price. ‘
When properties such as 20 Belle Court in Rainbow Shores, (3 storey home with 3 bedrooms, 3 bathrooms, 4 car accommodation) boasting a pool, ocean glimpses, 120 metres walk to the beach on a huge 1,136m2 block) are reduced to $750,000 – that is a pretty clear indication that the market has taken a significant step backwards in terms of value. The same property would’ve easily been appraised in excess of $1million back in late 2008 and even at $750,000 – it may not find a buyer.
Property transactions may well be few and far between in the current climate however, there has been more than required to indicate a trend (as opposed to a succession of ‘anomalies’). Current vendor discounting is at unprecedented levels and even with significantly reduced list prices, some properties simply refuse to be sold.
On a national and international level, new data shows that inflation, rising labor costs and government debt are adding to the slowdown of economic growth (particularly in China which Australia is heavily dependent upon in terms of exports). Several economists in China have recently lowered their growth forecasts for this year and next year to about 8.5 percent, down from earlier forecasts of 9 to 10 percent, while also warning about the possibility of a sharp rise in nonperforming loans at the nation’s big state-owned banks.
Data recently released by the Chinese central bank showed that credit in China had expanded at “alarming levels,” far more than previous government estimates suggested. Credit Suisse downgraded its profit forecasts for Chinese companies and state-owned banks, as it warned of slowing growth for the overall economy. The reports come at a time of heightened concern about slower growth in other parts of the world, including the United States, Europe and Japan.
Back in July, we reported that there were approximately 150 residential properties for sale in Rainbow Beach (this includes houses, units and land). Currently, there are just over 170 residential properties for sale in Rainbow Beach. Based on the average time on the market in Rainbow Beach being well over 12 months now and the number of sales recorded annually over the past three years, it will take more than 15 years for the amount of stock on the market to return to ‘normal’ levels (ie. pre GFC).
The current economic climate has seen a huge increase in the amount of stock on the property market and buyers simply have way too much choice for sellers to avoid having to reduce their asking price in most circumstances. Even when a property presents a unique opportunity/proposition, for example, ocean views or close proximity to the beach; buyers are not necessarily enticed to pay a premium (or what would be considered a premium in today’s market) as there is almost invariably a vendor more motivated to sell at a discounted price in order to secure a sale. Ie. Unless a buyer is completely motivated by emotion in their purchase, they will tend to opt for the ‘cheaper option’ and perhaps compromise on their ‘wants and needs’ in a house when making a decision to purchase a property.
George Bernard Shaw
We weren’t sure whether we should give this article the title “A Dose of Reality” or “The Cracks Are Beginning To Show”…. In the end we decided just to provide some commentary on the current state of the local property market. There has been a significant reduction in sales volumes over the past three years and residential property sales have been extremely difficult to achieve since the slow since the GFC hit in the latter half of 2008.
However, in the past few months there have been a number of sales locally including: Unit 14 at Rainbow Shores Resort, which has been on the market for well over a year and reduced in price several times, has just settled at $155,000. (Settlement date was 3/10/11). Unit 14 is an older style unit (within Baden North) and features high ceilings with exposed beams and included the standard furniture package.
24 Naiad Court, a vacant block of land (1,003m2) within Rainbow Shores Estate is currently Under Contract at $495,000. A comparable block of land on Ibis Court sold for $720,000 at the end of 2008. This is a price difference of -31%.
Unit 49 Rainbow Shores Resort is currently listed at $215,000 including all furniture and chattels. We can report that this unit is now Under Contract at an agreed price of $202,000. In addition, Unit 7 Rainbow Shores Resort has a current list price of $220,000 including all furniture and chattels. These particular units would’ve been appraised at (and similar units sold for) in excess of $250,000 - $290,000 back in 2008.
Comparatively, the Getaway Resort currently has a three bedroom, two bathroom unit with single lock up garage on the market for $220,000. Similar units within the same complex have sold for up to $299,000 even in the past two years.
With regard to units within Resort complexes, most are presented with similar furniture/fittings and have similar (if not identical) floor plans and layouts (within the same complex). The units also have similar overhead/holding costs (ie. Body Corporate Fees and Council Rates) and if holiday let or permanently rented, would be yielding similar rental returns.
Even at the drastically reduced prices to which some properties have fallen, in the current market and tenuous economic climate, potential buyers are few and sales are difficult to achieve. Based on the current information, we have been recommending Vendors either consider reducing the list price of their property or remove the property from sale until the market shows sign of improvement and it becomes viable to achieve their current listed price. ‘
When properties such as 20 Belle Court in Rainbow Shores, (3 storey home with 3 bedrooms, 3 bathrooms, 4 car accommodation) boasting a pool, ocean glimpses, 120 metres walk to the beach on a huge 1,136m2 block) are reduced to $750,000 – that is a pretty clear indication that the market has taken a significant step backwards in terms of value. The same property would’ve easily been appraised in excess of $1million back in late 2008 and even at $750,000 – it may not find a buyer.
Property transactions may well be few and far between in the current climate however, there has been more than required to indicate a trend (as opposed to a succession of ‘anomalies’). Current vendor discounting is at unprecedented levels and even with significantly reduced list prices, some properties simply refuse to be sold.
On a national and international level, new data shows that inflation, rising labor costs and government debt are adding to the slowdown of economic growth (particularly in China which Australia is heavily dependent upon in terms of exports). Several economists in China have recently lowered their growth forecasts for this year and next year to about 8.5 percent, down from earlier forecasts of 9 to 10 percent, while also warning about the possibility of a sharp rise in nonperforming loans at the nation’s big state-owned banks.
Data recently released by the Chinese central bank showed that credit in China had expanded at “alarming levels,” far more than previous government estimates suggested. Credit Suisse downgraded its profit forecasts for Chinese companies and state-owned banks, as it warned of slowing growth for the overall economy. The reports come at a time of heightened concern about slower growth in other parts of the world, including the United States, Europe and Japan.
Back in July, we reported that there were approximately 150 residential properties for sale in Rainbow Beach (this includes houses, units and land). Currently, there are just over 170 residential properties for sale in Rainbow Beach. Based on the average time on the market in Rainbow Beach being well over 12 months now and the number of sales recorded annually over the past three years, it will take more than 15 years for the amount of stock on the market to return to ‘normal’ levels (ie. pre GFC).
The current economic climate has seen a huge increase in the amount of stock on the property market and buyers simply have way too much choice for sellers to avoid having to reduce their asking price in most circumstances. Even when a property presents a unique opportunity/proposition, for example, ocean views or close proximity to the beach; buyers are not necessarily enticed to pay a premium (or what would be considered a premium in today’s market) as there is almost invariably a vendor more motivated to sell at a discounted price in order to secure a sale. Ie. Unless a buyer is completely motivated by emotion in their purchase, they will tend to opt for the ‘cheaper option’ and perhaps compromise on their ‘wants and needs’ in a house when making a decision to purchase a property.
Rainbow Beach Real Estate News October 2011
"I once wanted to become an atheist, but I gave up - they have no holidays”
Henny Youngman
There has been a minor increase in buyer enquiry over the past 2 – 3 weeks, which has coincided with the warmer weather. However, generally speaking, prospective buyers remain somewhat cautious and have are still adopting the “we’ll just wait and see what happens” approach which is somewhat frustrating.
The media is doing its best to scare the pants off people and if you didn’t believe that the “sky was falling” just spend about 30 minutes watching something like ABC News 24 on any given night and you’ll find yourself worrying about all sorts of possible financial disasters. Both the US and the UK have run out of ideas on how to stimulate their economies and with ridiculously low interest rates, there is very little room for movement in terms of trying to instill confidence in consumers and business.
Our feeling is that although the Australian property market is currently experiencing slow sales and vendors are having to discount their price in order to meet the market – we cannot foresee a full scale price crash. Whilst in overseas property markets (eg across Europe and parts of the US) there have been sharp price falls (over 20%) since the GFC, national property prices in Australia have remained relatively steady.
Being out of step with other housing markets across the world is causing some prospective buyers to be quite nervous. The pessimists among us believe it is only a matter of time before house values plummet here in Australia. But there are a myriad of reasons why they won’t fall significantly any time soon:
Population growth - Whilst it has slowed in recent years, we maintain strong population growth. Our domestic population is aging, but our migrant intake is largely in the 20s to late-30s cohort, which means increasing household formation and greater demand for dwellings down the line. (Source: Micheal Matusik, July 2011)
Prudent lending practices - Our interest rates have room to move downwards and as previously mentioned in this article, many countries do not have this buffer. We also have full recourse loans in Australia, allowing lenders the right to take any assets of the borrowers if repayment is not made. Many overseas markets which experienced a housing crash have non-recourse loans, which essentially allow borrowers to walk away from debt if things get too tough. Quite literally in the US during the latter part of 2008 and early 2009, there was a well-known practice of sending “jingle mail” – which was when the mortgagor would post their house keys to their mortgagee and simply leave their house empty. The bank would then have an asset on their hands which had lost close to half of its value; no one wanted to buy and the person/s who had taken out the loan to buy the property in the first place simply moved out and got on with their lives.
Relatively high equity - Current loan-to-value ratios in Australia are around 53%, reflecting our conservative position towards debt. The long-term average is around 65%. According to the latest official statistics, Australia’s housing debt to housing assets is 29%, and our debt to overall assets is just 19%. So in other words, we, as a nation, own around 70% of our homes – a far cry from the “jingle” loans that typified the US housing market collapse. (Often, mortgages on houses in the US were up to 90% or even 100% of the value of the property).
In addition, household balance sheets are being strengthened by additional savings. We are currently saving 10% of our disposable income, which amounted to a staggering $74 billion last year alone. This improved state of our personal finances further reduces the risk of house prices collapsing as there will be less “fire sales” occurring.
Under supply – Not necessarily for every dwelling type and in every geographic area – but certainly at the bottom third of the market. This helps place a buffer under property values. Due to a range of reasons, mostly political, (ie. cost of new development etc) there is an under supply of basic, affordable housing across our capital cities and now in our major regional centres too.
Economy growth - Whilst many of us would like to earn more money, and some feel poorer today than a few years back, nearly all of us can find work. Housing markets usually crash in conjunction with significant falls in employment levels.
Low unemployment - As long as our unemployment rate stays below 8%, then wholesale falls in property values are very unlikely. It is currently 5.3%. (Source: Australian Bureau of Statistics Aug 11)
Few mortgage defaults - Whilst recent headlines in the media screamed, “Rising mortgage arrears”, the latest figures show just 1.37% of home loans across Australia are 30-days in arrears and 0.54% are three months behind in mortgage payments. The trend is upward, from 1.30% and 0.48% respectively on the previous quarter, but the number of home loans technically in default across Australia is very low.
It certainly pays to take a long-term view. Residential property values – when looking at resale performance rather than simplistic medians – have risen across Queensland by just over 10% each year over the last decade. Over the last five years this has dropped to about a 6% annual gain and during the last 12 months, values have declined slightly by about 1%.
There is little doubt that values are now falling. How far they will continue to fall is unknown but we don’t think it will be anywhere near as far as most property pessimists believe.
Henny Youngman
There has been a minor increase in buyer enquiry over the past 2 – 3 weeks, which has coincided with the warmer weather. However, generally speaking, prospective buyers remain somewhat cautious and have are still adopting the “we’ll just wait and see what happens” approach which is somewhat frustrating.
The media is doing its best to scare the pants off people and if you didn’t believe that the “sky was falling” just spend about 30 minutes watching something like ABC News 24 on any given night and you’ll find yourself worrying about all sorts of possible financial disasters. Both the US and the UK have run out of ideas on how to stimulate their economies and with ridiculously low interest rates, there is very little room for movement in terms of trying to instill confidence in consumers and business.
Our feeling is that although the Australian property market is currently experiencing slow sales and vendors are having to discount their price in order to meet the market – we cannot foresee a full scale price crash. Whilst in overseas property markets (eg across Europe and parts of the US) there have been sharp price falls (over 20%) since the GFC, national property prices in Australia have remained relatively steady.
Being out of step with other housing markets across the world is causing some prospective buyers to be quite nervous. The pessimists among us believe it is only a matter of time before house values plummet here in Australia. But there are a myriad of reasons why they won’t fall significantly any time soon:
Population growth - Whilst it has slowed in recent years, we maintain strong population growth. Our domestic population is aging, but our migrant intake is largely in the 20s to late-30s cohort, which means increasing household formation and greater demand for dwellings down the line. (Source: Micheal Matusik, July 2011)
Prudent lending practices - Our interest rates have room to move downwards and as previously mentioned in this article, many countries do not have this buffer. We also have full recourse loans in Australia, allowing lenders the right to take any assets of the borrowers if repayment is not made. Many overseas markets which experienced a housing crash have non-recourse loans, which essentially allow borrowers to walk away from debt if things get too tough. Quite literally in the US during the latter part of 2008 and early 2009, there was a well-known practice of sending “jingle mail” – which was when the mortgagor would post their house keys to their mortgagee and simply leave their house empty. The bank would then have an asset on their hands which had lost close to half of its value; no one wanted to buy and the person/s who had taken out the loan to buy the property in the first place simply moved out and got on with their lives.
Relatively high equity - Current loan-to-value ratios in Australia are around 53%, reflecting our conservative position towards debt. The long-term average is around 65%. According to the latest official statistics, Australia’s housing debt to housing assets is 29%, and our debt to overall assets is just 19%. So in other words, we, as a nation, own around 70% of our homes – a far cry from the “jingle” loans that typified the US housing market collapse. (Often, mortgages on houses in the US were up to 90% or even 100% of the value of the property).
In addition, household balance sheets are being strengthened by additional savings. We are currently saving 10% of our disposable income, which amounted to a staggering $74 billion last year alone. This improved state of our personal finances further reduces the risk of house prices collapsing as there will be less “fire sales” occurring.
Under supply – Not necessarily for every dwelling type and in every geographic area – but certainly at the bottom third of the market. This helps place a buffer under property values. Due to a range of reasons, mostly political, (ie. cost of new development etc) there is an under supply of basic, affordable housing across our capital cities and now in our major regional centres too.
Economy growth - Whilst many of us would like to earn more money, and some feel poorer today than a few years back, nearly all of us can find work. Housing markets usually crash in conjunction with significant falls in employment levels.
Low unemployment - As long as our unemployment rate stays below 8%, then wholesale falls in property values are very unlikely. It is currently 5.3%. (Source: Australian Bureau of Statistics Aug 11)
Few mortgage defaults - Whilst recent headlines in the media screamed, “Rising mortgage arrears”, the latest figures show just 1.37% of home loans across Australia are 30-days in arrears and 0.54% are three months behind in mortgage payments. The trend is upward, from 1.30% and 0.48% respectively on the previous quarter, but the number of home loans technically in default across Australia is very low.
It certainly pays to take a long-term view. Residential property values – when looking at resale performance rather than simplistic medians – have risen across Queensland by just over 10% each year over the last decade. Over the last five years this has dropped to about a 6% annual gain and during the last 12 months, values have declined slightly by about 1%.
There is little doubt that values are now falling. How far they will continue to fall is unknown but we don’t think it will be anywhere near as far as most property pessimists believe.
Tuesday, August 30, 2011
Rainbow Beach Real Estate News
"Genius is one per cent inspiration, ninety-nine per cent perspiration.”
Thomas A. Edison
Well, it is probably stating the obvious that the local property market is quiet at the moment, having seen an average 60% reduction in sales activity over the past 12 months (compared to the previous FY 09/10). There have been a number of local real estate agents close down over the past year and Rainbow Beach itself has gone from four real estate agencies in 2008 to only two today.
LJ Hooker at Cooloola Cove has shut their doors, as has Cooloola Realty at Tin Can Bay. Real estate agents in Gympie are reporting a significant drop in sales enquiry across all price ranges (including the lower range of properties under $350,000). Local retail stores are also doing it tough with shops such as ‘Inferno Pizza’, ‘Tin Can Bay Shoes’, ‘Cooloola Home Video’ closing their doors over the past couple of years.
Generally speaking, our take on the current economic climate is that people are simply holding onto their money and not making any major financial decisions in light of global economic uncertainty. This is despite the fact that as a nation, Australia boasts an extremely robust economy which flies in the face of the generally negative media commentary, consumer uncertainty and volatile share market conditions.
It appears that the negative issues are overwhelming the positive fundamental base of the national economy. We have to remind ourselves that we have a fundamentally strong economy based on solid employment figures and an abundance of natural resources. With our low unemployment, healthy gross domestic product (GDP) growth, relatively low inflation and historically low interest rates, we have a lot to be happy about in terms of our nation’s economic health.
Still, Australian consumers remain uncertain and they are choosing to increase their savings rather than spend up on luxury items including everything from a new TV or fridge up to a new car, boat or house. At a time of global volatility, people are worried that things will get worse before they get better so they are holding onto every spare dollar “just in case”.
Over the last two years, we’ve watched events pan out on the other side of the world that reinforce the importance of managing our own personal debt carefully. Unrest in Greece, tough economic measures in Ireland, and now a so-called austerity budget in Italy are all legacies of the irresponsible use of debt. These issues may involve governments rather than households but the key message remains the same – don’t take on more debt than you can comfortably manage.
It can be hard to comprehend how an entire nation ends up going broke. Yet, that is what some of Europe’s smaller nations have done and they have had to source additional credit to get them through. Thankfully, here in Australia our national debt is at quite manageable levels. Nonetheless the latest Consumer Credit Expectations Survey by credit agency Dun & Bradstreet shows that many households may be facing a debt crisis of their own. (Source: Paul Clitheroe, July 2011)
According to the survey, almost one third of Australians (30%) will struggle to meet their debt repayments over the next three months.
Worryingly, 37% of respondents say they’ll use their credit card to buy something they couldn’t otherwise afford. And 21% expect their household debt will increase over the coming quarter.
The news isn’t all bad though. On the plus side, we’re putting the brakes on new debt. Only 19 per cent of Australians intend to apply for a new home loan, personal loan or credit card over the next three months, down from 33 per cent in June 2009. Among those of us who hold a credit card, only 8 per cent intend to apply for a credit limit increase over the coming quarter.
Mortgage sales fell 3.7 per cent in July, on the back of fears of an interest rate rise and the new carbon tax (which looks certain to become law within the next few months). The Australian Finance Group (AFG) Mortgage Index showed the greatest fall was in Victoria (7.4 per cent), with losses also recorded in NSW (5.9 per cent), Western Australia (5.0 per cent) and Queensland (0.5 per cent).
AFG general manager of sales and operations Mark Hewitt says home borrowers have gone into their shells since the most recent cash rate rise in November 2010. He says the figures show Australians are still worried about their financial future. "Domestic financial news is dominated by talk of rate rises and the carbon tax," Mr Hewitt said in a statement accompanying the index's release on Thursday. "Gloomy international financial news has seen stock markets slump. We're all looking for strong economic leadership to provide the market with some much needed confidence."
The data shows refinancing remains the most active part of the mortgage market, making up 39.1 per cent of loans in July. The proportion of owner-occupiers arranging mortgages to move or upgrade their homes was 11.7 per cent of all mortgages in the month.
We have certainly seen an increase in local property owners looking to sell their home or unit in Rainbow Beach with a view to moving closer to either: Brisbane, the Sunshine Coast, or even Gympie. Many older residents are looking to move closer to medical facilities whilst younger families with teenagers often move out of town to be closer to the children’s high school.
With Year 7 moving to high school in 2013, our local Rainbow Beach State School will only cater for Prep-Year 6 students – which may also have an impact on the longevity of younger families within the town.
The construction of the new Town Hall and Aquatic Centre in Rainbow certainly adds to the level of infrastructure we have access to in our local community however it would be fantastic to see more job opportunities within Rainbow Beach in order for the population to grow and reach the ‘critical mass’ so needed for the town to be sustainable over the long term.
Our natural attractions are what bring visitors to the area and our tourism industry is very much based on our beautiful surroundings (Carlo Sandblow, Carlo Point, Searys Creek, Fraser Island, Sandy Straits, Double Island Point, etc). Ultimately though, there is a need for a static population to sustain businesses such as the grocery stores, cafes/restaurants, real estate, clothing shops, bakeries etc. The town needs growth in order to survive as small businesses cannot continue to struggle from peak period to peak period indefinitely.
Thomas A. Edison
Well, it is probably stating the obvious that the local property market is quiet at the moment, having seen an average 60% reduction in sales activity over the past 12 months (compared to the previous FY 09/10). There have been a number of local real estate agents close down over the past year and Rainbow Beach itself has gone from four real estate agencies in 2008 to only two today.
LJ Hooker at Cooloola Cove has shut their doors, as has Cooloola Realty at Tin Can Bay. Real estate agents in Gympie are reporting a significant drop in sales enquiry across all price ranges (including the lower range of properties under $350,000). Local retail stores are also doing it tough with shops such as ‘Inferno Pizza’, ‘Tin Can Bay Shoes’, ‘Cooloola Home Video’ closing their doors over the past couple of years.
Generally speaking, our take on the current economic climate is that people are simply holding onto their money and not making any major financial decisions in light of global economic uncertainty. This is despite the fact that as a nation, Australia boasts an extremely robust economy which flies in the face of the generally negative media commentary, consumer uncertainty and volatile share market conditions.
It appears that the negative issues are overwhelming the positive fundamental base of the national economy. We have to remind ourselves that we have a fundamentally strong economy based on solid employment figures and an abundance of natural resources. With our low unemployment, healthy gross domestic product (GDP) growth, relatively low inflation and historically low interest rates, we have a lot to be happy about in terms of our nation’s economic health.
Still, Australian consumers remain uncertain and they are choosing to increase their savings rather than spend up on luxury items including everything from a new TV or fridge up to a new car, boat or house. At a time of global volatility, people are worried that things will get worse before they get better so they are holding onto every spare dollar “just in case”.
Over the last two years, we’ve watched events pan out on the other side of the world that reinforce the importance of managing our own personal debt carefully. Unrest in Greece, tough economic measures in Ireland, and now a so-called austerity budget in Italy are all legacies of the irresponsible use of debt. These issues may involve governments rather than households but the key message remains the same – don’t take on more debt than you can comfortably manage.
It can be hard to comprehend how an entire nation ends up going broke. Yet, that is what some of Europe’s smaller nations have done and they have had to source additional credit to get them through. Thankfully, here in Australia our national debt is at quite manageable levels. Nonetheless the latest Consumer Credit Expectations Survey by credit agency Dun & Bradstreet shows that many households may be facing a debt crisis of their own. (Source: Paul Clitheroe, July 2011)
According to the survey, almost one third of Australians (30%) will struggle to meet their debt repayments over the next three months.
Worryingly, 37% of respondents say they’ll use their credit card to buy something they couldn’t otherwise afford. And 21% expect their household debt will increase over the coming quarter.
The news isn’t all bad though. On the plus side, we’re putting the brakes on new debt. Only 19 per cent of Australians intend to apply for a new home loan, personal loan or credit card over the next three months, down from 33 per cent in June 2009. Among those of us who hold a credit card, only 8 per cent intend to apply for a credit limit increase over the coming quarter.
Mortgage sales fell 3.7 per cent in July, on the back of fears of an interest rate rise and the new carbon tax (which looks certain to become law within the next few months). The Australian Finance Group (AFG) Mortgage Index showed the greatest fall was in Victoria (7.4 per cent), with losses also recorded in NSW (5.9 per cent), Western Australia (5.0 per cent) and Queensland (0.5 per cent).
AFG general manager of sales and operations Mark Hewitt says home borrowers have gone into their shells since the most recent cash rate rise in November 2010. He says the figures show Australians are still worried about their financial future. "Domestic financial news is dominated by talk of rate rises and the carbon tax," Mr Hewitt said in a statement accompanying the index's release on Thursday. "Gloomy international financial news has seen stock markets slump. We're all looking for strong economic leadership to provide the market with some much needed confidence."
The data shows refinancing remains the most active part of the mortgage market, making up 39.1 per cent of loans in July. The proportion of owner-occupiers arranging mortgages to move or upgrade their homes was 11.7 per cent of all mortgages in the month.
We have certainly seen an increase in local property owners looking to sell their home or unit in Rainbow Beach with a view to moving closer to either: Brisbane, the Sunshine Coast, or even Gympie. Many older residents are looking to move closer to medical facilities whilst younger families with teenagers often move out of town to be closer to the children’s high school.
With Year 7 moving to high school in 2013, our local Rainbow Beach State School will only cater for Prep-Year 6 students – which may also have an impact on the longevity of younger families within the town.
The construction of the new Town Hall and Aquatic Centre in Rainbow certainly adds to the level of infrastructure we have access to in our local community however it would be fantastic to see more job opportunities within Rainbow Beach in order for the population to grow and reach the ‘critical mass’ so needed for the town to be sustainable over the long term.
Our natural attractions are what bring visitors to the area and our tourism industry is very much based on our beautiful surroundings (Carlo Sandblow, Carlo Point, Searys Creek, Fraser Island, Sandy Straits, Double Island Point, etc). Ultimately though, there is a need for a static population to sustain businesses such as the grocery stores, cafes/restaurants, real estate, clothing shops, bakeries etc. The town needs growth in order to survive as small businesses cannot continue to struggle from peak period to peak period indefinitely.
Friday, July 8, 2011
Rainbow Beach Real Estate News July 2011
"Credit should be compared to alcohol whereof constant consumption (usage) on a frequent and regular basis is classified as abuse rather than responsible utilization.”
Rohan Lamprecht
Currently, there are just over 150 residential properties for sale in Rainbow Beach (this includes houses, units and land). You would be forgiven for thinking there is many more than 150 as the popular website: www.realestate.com.au displays over
230 residential listings in Rainbow Beach.
Why is there such a discrepancy you may ask? Well – the main reason is that some individual properties appear on the website 2, 3 or even 4 times; listed with separate real estate agencies. This practice is not uncommon and results from sellers ‘open listing’ their property for sale. Unfortunately, the net result is that Rainbow Beach looks like it has a massive amount of property for sale. (Arguably 150 residential properties is a lot, however, the marketing makes it look like there is almost 50% more than that for sale).
Generally speaking, properties are listed ‘Exclusively’ with an agent in more urban areas and in capital cities. This means that one agency is responsible for the marketing and sale of a property. A property can only remain ‘Exclusive’ with an agency for a maximum period of 60 days before the seller has to resign their ‘Exclusive’ agreement with the agency.
When a seller decides to list their property with more than one agency, they effectively make it more difficult for a buyer to find their property (as their house/unit/land appears to get lost in amongst so many other listings). Issues also arise with the accuracy and consistency of information relating to the properties attributes and in some cases the list price for a property may be different according to different agencies. No single agent is accountable to the seller for marketing or inspection feedback etc and in many cases; buyers perceive that a seller must be “desperate” if they have listed their property with multiple agencies. (Unfortunately, it does not increase the chances of securing a sale by having 4 or 5 ‘For Sale’ signs erected in the front yard).
Traditionally, the local real estate agent/agency is who a prospective buyer will contact if they are looking at purchasing a property in a particular area. Over the past decade, over 90% of local properties have been sold by a local agent. Generally speaking, if a prospective buyer is looking for information regarding properties for sale in town, they do not head to Gympie or Noosa or elsewhere. They contact a local agent to discuss local information which many out of area agents do not have access to or simply do not understand the dynamics of the town.
Anecdotally, we recently visited Cairns and travelled north to Port Douglas (approximately a one hour drive north of Cairns city). We spent the day in Port Douglas and saw a lot of property on the market whilst we were there. There was a nice looking unit just back from the beach and we called the agent off the ‘For Sale’ sign to ask for some more details regarding the property. The agent answered our questions but indicated that he wouldn’t be able to show us through the unit that day as it was a long drive for him from Cairns (2 hour round trip). Unfortunately we have heard the same story from prospective buyers more than once here in Rainbow Beach when they have contacted ‘out of area’ agents who are based in either Gympie or Noosa – or even Brisbane.
Despite the commonly held perception that the property market in Rainbow Beach is DEAD (or at least on life support), there have actually been a few sales over the past month or so. There has been minor movement in the market with properties in the $350,000 - $700,000 bracket going “Under Contract” in recent weeks. Our observation is that the market may see some sales over the next 6 – 12 months however there is no evidence of a recovery in terms of property values/prices.
Recent media coverage showing that there are currently record high numbers of individuals and businesses with money owing to the Australian Taxation Office indicates that the health of the national economy is not great at the moment. It is almost as if there are two separate economies running side by side at present with the mining and resource sector going “great guns” and the rest of us struggling with the increased costs of living including groceries, fuel and electricity. Unfortunately the Gillard Government appears intent on dragging Australia out of deficit by relying on the 10% of the nation who is actually making some money by taxing the heck out of them and their businesses.
So called “luxury items” such as boats, motorbikes, jet skis, horses, etc have plummeted in value over the past couple of years as people look to tighten their belts and chop some expenses out of their budget. Unfortunately, the beach house or unit often comes under the heading “luxury item” and hence, sales have significantly reduced over the past 2 – 3 years since the dreaded GFC hit.
The current economic climate has seen a huge increase in the amount of stock on the property market and buyers simply have way too much choice for sellers to avoid having to reduce their asking price in most circumstances. There will have to be a major take up of excess stock on the market, not just in Rainbow Beach, but across Queensland in order for market conditions to improve significantly.
Rohan Lamprecht
Currently, there are just over 150 residential properties for sale in Rainbow Beach (this includes houses, units and land). You would be forgiven for thinking there is many more than 150 as the popular website: www.realestate.com.au displays over
230 residential listings in Rainbow Beach.
Why is there such a discrepancy you may ask? Well – the main reason is that some individual properties appear on the website 2, 3 or even 4 times; listed with separate real estate agencies. This practice is not uncommon and results from sellers ‘open listing’ their property for sale. Unfortunately, the net result is that Rainbow Beach looks like it has a massive amount of property for sale. (Arguably 150 residential properties is a lot, however, the marketing makes it look like there is almost 50% more than that for sale).
Generally speaking, properties are listed ‘Exclusively’ with an agent in more urban areas and in capital cities. This means that one agency is responsible for the marketing and sale of a property. A property can only remain ‘Exclusive’ with an agency for a maximum period of 60 days before the seller has to resign their ‘Exclusive’ agreement with the agency.
When a seller decides to list their property with more than one agency, they effectively make it more difficult for a buyer to find their property (as their house/unit/land appears to get lost in amongst so many other listings). Issues also arise with the accuracy and consistency of information relating to the properties attributes and in some cases the list price for a property may be different according to different agencies. No single agent is accountable to the seller for marketing or inspection feedback etc and in many cases; buyers perceive that a seller must be “desperate” if they have listed their property with multiple agencies. (Unfortunately, it does not increase the chances of securing a sale by having 4 or 5 ‘For Sale’ signs erected in the front yard).
Traditionally, the local real estate agent/agency is who a prospective buyer will contact if they are looking at purchasing a property in a particular area. Over the past decade, over 90% of local properties have been sold by a local agent. Generally speaking, if a prospective buyer is looking for information regarding properties for sale in town, they do not head to Gympie or Noosa or elsewhere. They contact a local agent to discuss local information which many out of area agents do not have access to or simply do not understand the dynamics of the town.
Anecdotally, we recently visited Cairns and travelled north to Port Douglas (approximately a one hour drive north of Cairns city). We spent the day in Port Douglas and saw a lot of property on the market whilst we were there. There was a nice looking unit just back from the beach and we called the agent off the ‘For Sale’ sign to ask for some more details regarding the property. The agent answered our questions but indicated that he wouldn’t be able to show us through the unit that day as it was a long drive for him from Cairns (2 hour round trip). Unfortunately we have heard the same story from prospective buyers more than once here in Rainbow Beach when they have contacted ‘out of area’ agents who are based in either Gympie or Noosa – or even Brisbane.
Despite the commonly held perception that the property market in Rainbow Beach is DEAD (or at least on life support), there have actually been a few sales over the past month or so. There has been minor movement in the market with properties in the $350,000 - $700,000 bracket going “Under Contract” in recent weeks. Our observation is that the market may see some sales over the next 6 – 12 months however there is no evidence of a recovery in terms of property values/prices.
Recent media coverage showing that there are currently record high numbers of individuals and businesses with money owing to the Australian Taxation Office indicates that the health of the national economy is not great at the moment. It is almost as if there are two separate economies running side by side at present with the mining and resource sector going “great guns” and the rest of us struggling with the increased costs of living including groceries, fuel and electricity. Unfortunately the Gillard Government appears intent on dragging Australia out of deficit by relying on the 10% of the nation who is actually making some money by taxing the heck out of them and their businesses.
So called “luxury items” such as boats, motorbikes, jet skis, horses, etc have plummeted in value over the past couple of years as people look to tighten their belts and chop some expenses out of their budget. Unfortunately, the beach house or unit often comes under the heading “luxury item” and hence, sales have significantly reduced over the past 2 – 3 years since the dreaded GFC hit.
The current economic climate has seen a huge increase in the amount of stock on the property market and buyers simply have way too much choice for sellers to avoid having to reduce their asking price in most circumstances. There will have to be a major take up of excess stock on the market, not just in Rainbow Beach, but across Queensland in order for market conditions to improve significantly.
Wednesday, June 8, 2011
The Realty Deal June 2011
“Isn't it interesting that the same people who laugh at science fiction listen to weather forecasts and economists?”
Kelvin Throop III
Capital city home prices have posted their biggest quarterly fall in at least 12 years, as more stock in the housing market allows prospective buyers to wait for bargains, a recent survey by RP Data shows. Capital city dwelling values fell by a seasonally adjusted 2.1 per cent in the first quarter of the year, according to the latest RP Data-Rismark Home Value Index. The quarterly change was the steepest since the index series began in June 1999, (Source: RP Data Research Director Tim Lawless).
Part of the reason for the fall in property values is simply the lack of property transactions over the past 12 – 18 months. (Ie. In many suburbs, ‘higher end’ houses and units have been turning over less often since the GFC hit whilst properties under $400,000 have continued to sell).
Prices were flat in the month of March and down 0.6 per cent over the past 12 months, with the national city dwelling value median price at $455,000. The numbers were being dragged down by a recent rapid build-up of housing stock into the market, Mr Lawless indicated. "The amount of properties being advertised for sale is about 30 per cent higher than what it was last year," Mr Lawless said. With more dwellings available for sale, prospective buyers are negotiating for lower prices much more than they used to. Mr Lawless also explained: "The simple fact that there's so much stock to choose from for prospective buyers is resulting in more negotiation in the markets and sellers are having to sell at lower than what their expectations were”.
Sellers were now selling properties about 6.5 per cent lower than the original asking price on average, compared with about 5.2 per cent the same time last year. (Source: RP Data May 2011). Recent extreme weather events, including the flooding in Queensland, may also be impacting on the lower numbers, Mr Lawless said. "Also, you have the fact that interest rate speculation seems to be building that they're going to be going up sooner rather than later, particularly with the CPI figures out just recently."
We may have managed to get a temporary reprieve on an interest rate rise with recent employment figures not looking as good as hoped (or predicted). Nationally, the tourism industry is suffering from the high Aussie dollar and very poor weather conditions over the summer of 2010/2011. Large scale natural disasters such as the earthquake/s in New Zealand and the earthquake/tsunami in Japan have also impacted on people’s spending habits – both practically and psychologically. (ie. people are generally feeling somewhat nervous and are more likely to hold onto/save their money in times of uncertainty and upheaval).
On a local level, house prices in Rainbow Beach have dropped by up to 20 per cent since the peak of the market in 2007/2008 whilst Tin Can Bay property prices are down approximately 10 per cent. It has also been revealed that Gympie and the Mary Valley haven’t been immune from the slight weakening of the housing sector either. John Logan and Associates Valuer, Blair Fuller, recently indicated that the number of house sales in Gympie had slowed during 2010 and this had led to a slight dip in real estate values, of approximately 10 per cent.
Mr Fuller also indicated that in Gympie, the lower end of the market had been hit harder by the drop in prices while high end executive homes had held their value, “there are a lot of homes under $250,000 on the market at the moment and a lack of buyers. - It is a buyer’s market – no doubt about it.” He also believes that if home owners wanted to sell their properties they would have to meet the market and that unfortunately meant some property owners would have to reduce the price of their properties or risk not selling them.
Many local real estate agents agree with this sentiment and believe that right now is a great time to grab a bargain in the Rainbow Beach/Gympie area and surrounds. Essentially, buyers in this market are price driven and it is a matter of owners meeting that market. If they get an offer, they have to decide whether to act on it or risk maybe having to wait another six to twelve months to sell.
The major banks appear to have reviewed their lending practices and criteria as a result of the Global Financial Crisis and this has also impacted on some prospective buyers’ ability to purchase (particularly for an investment property). Despite evidence to suggest that not everyone is doing great financially in the current economic climate, the resources boom continues to go ‘gangbusters’ and there are plenty of people out there with money – they just don’t appear to be spending it on coastal properties right now!
Locally, the Developers of the Plantation Resort Apartments are looking to liquidate some of their assets within the complex with four of the top quality apartments going to Auction on the Queen’s Birthday long weekend in June (Auction scheduled for Saturday the 11th of June at this stage). With very few property transactions in excess of $500,000 occurring over the past three years; the Auction will provide a good gauge of current buyer sentiment and the level of demand for ‘high end’ units. The Auction will certainly provide an investor a great opportunity to snap up a bargain with the price point expected to be almost half of that which the apartments where originally marketed at off the plan.
Most local property owners recently received their land valuation notices in the mail and generally speaking, most property owners are a bit perplexed as to how the Queensland Valuer-General, Neil Bray, worked out his figures. Most regional land values had increased (on paper) since the last assessment in 2008 yet property owners are not seeing any evidence of an increase in sale prices in the current market. In fact, arguably it is very difficult to justify increases or decreases in current land values based on the lack of sales data from the past two years.
Overall, the first six months of 2011 have seen very little property sales activity on a local level and reduced property transactions across the state. Various events and sentiments have influenced the market during that time; probably most significantly, nature itself. In an article entitled ‘Nature calls the shots’ which appeared in the March 2011 issue of the magazine ‘Smart Property Investment’, the chief economist of AMP, Shane Oliver, predicted that the combined impact of the Queensland floods and Cyclone Yasi will add to inflation across the March and June quarters. He also indicated that the Federal Government’s response of sourcing rebuilding funds from a temporary levy on taxpayers will not increase consumer spending. Such issues will obviously have an impact on the Reserve Bank of Australia’s interest rate decisions over the next couple of months.
Kelvin Throop III
Capital city home prices have posted their biggest quarterly fall in at least 12 years, as more stock in the housing market allows prospective buyers to wait for bargains, a recent survey by RP Data shows. Capital city dwelling values fell by a seasonally adjusted 2.1 per cent in the first quarter of the year, according to the latest RP Data-Rismark Home Value Index. The quarterly change was the steepest since the index series began in June 1999, (Source: RP Data Research Director Tim Lawless).
Part of the reason for the fall in property values is simply the lack of property transactions over the past 12 – 18 months. (Ie. In many suburbs, ‘higher end’ houses and units have been turning over less often since the GFC hit whilst properties under $400,000 have continued to sell).
Prices were flat in the month of March and down 0.6 per cent over the past 12 months, with the national city dwelling value median price at $455,000. The numbers were being dragged down by a recent rapid build-up of housing stock into the market, Mr Lawless indicated. "The amount of properties being advertised for sale is about 30 per cent higher than what it was last year," Mr Lawless said. With more dwellings available for sale, prospective buyers are negotiating for lower prices much more than they used to. Mr Lawless also explained: "The simple fact that there's so much stock to choose from for prospective buyers is resulting in more negotiation in the markets and sellers are having to sell at lower than what their expectations were”.
Sellers were now selling properties about 6.5 per cent lower than the original asking price on average, compared with about 5.2 per cent the same time last year. (Source: RP Data May 2011). Recent extreme weather events, including the flooding in Queensland, may also be impacting on the lower numbers, Mr Lawless said. "Also, you have the fact that interest rate speculation seems to be building that they're going to be going up sooner rather than later, particularly with the CPI figures out just recently."
We may have managed to get a temporary reprieve on an interest rate rise with recent employment figures not looking as good as hoped (or predicted). Nationally, the tourism industry is suffering from the high Aussie dollar and very poor weather conditions over the summer of 2010/2011. Large scale natural disasters such as the earthquake/s in New Zealand and the earthquake/tsunami in Japan have also impacted on people’s spending habits – both practically and psychologically. (ie. people are generally feeling somewhat nervous and are more likely to hold onto/save their money in times of uncertainty and upheaval).
On a local level, house prices in Rainbow Beach have dropped by up to 20 per cent since the peak of the market in 2007/2008 whilst Tin Can Bay property prices are down approximately 10 per cent. It has also been revealed that Gympie and the Mary Valley haven’t been immune from the slight weakening of the housing sector either. John Logan and Associates Valuer, Blair Fuller, recently indicated that the number of house sales in Gympie had slowed during 2010 and this had led to a slight dip in real estate values, of approximately 10 per cent.
Mr Fuller also indicated that in Gympie, the lower end of the market had been hit harder by the drop in prices while high end executive homes had held their value, “there are a lot of homes under $250,000 on the market at the moment and a lack of buyers. - It is a buyer’s market – no doubt about it.” He also believes that if home owners wanted to sell their properties they would have to meet the market and that unfortunately meant some property owners would have to reduce the price of their properties or risk not selling them.
Many local real estate agents agree with this sentiment and believe that right now is a great time to grab a bargain in the Rainbow Beach/Gympie area and surrounds. Essentially, buyers in this market are price driven and it is a matter of owners meeting that market. If they get an offer, they have to decide whether to act on it or risk maybe having to wait another six to twelve months to sell.
The major banks appear to have reviewed their lending practices and criteria as a result of the Global Financial Crisis and this has also impacted on some prospective buyers’ ability to purchase (particularly for an investment property). Despite evidence to suggest that not everyone is doing great financially in the current economic climate, the resources boom continues to go ‘gangbusters’ and there are plenty of people out there with money – they just don’t appear to be spending it on coastal properties right now!
Locally, the Developers of the Plantation Resort Apartments are looking to liquidate some of their assets within the complex with four of the top quality apartments going to Auction on the Queen’s Birthday long weekend in June (Auction scheduled for Saturday the 11th of June at this stage). With very few property transactions in excess of $500,000 occurring over the past three years; the Auction will provide a good gauge of current buyer sentiment and the level of demand for ‘high end’ units. The Auction will certainly provide an investor a great opportunity to snap up a bargain with the price point expected to be almost half of that which the apartments where originally marketed at off the plan.
Most local property owners recently received their land valuation notices in the mail and generally speaking, most property owners are a bit perplexed as to how the Queensland Valuer-General, Neil Bray, worked out his figures. Most regional land values had increased (on paper) since the last assessment in 2008 yet property owners are not seeing any evidence of an increase in sale prices in the current market. In fact, arguably it is very difficult to justify increases or decreases in current land values based on the lack of sales data from the past two years.
Overall, the first six months of 2011 have seen very little property sales activity on a local level and reduced property transactions across the state. Various events and sentiments have influenced the market during that time; probably most significantly, nature itself. In an article entitled ‘Nature calls the shots’ which appeared in the March 2011 issue of the magazine ‘Smart Property Investment’, the chief economist of AMP, Shane Oliver, predicted that the combined impact of the Queensland floods and Cyclone Yasi will add to inflation across the March and June quarters. He also indicated that the Federal Government’s response of sourcing rebuilding funds from a temporary levy on taxpayers will not increase consumer spending. Such issues will obviously have an impact on the Reserve Bank of Australia’s interest rate decisions over the next couple of months.
Wednesday, May 4, 2011
Rainbow Realty Deal May 2011
“Plan for the future, because that is where you are going to spend the rest of your life.”
Mark Twain
Easter has come and gone for another year and most businesses in town are now looking towards the June/July School Holidays for their next cash injection. The past six months have been less than stellar in terms of local tourism and many local businesses are starting to feel the strain.
There are now quite a few permanent rental properties in Rainbow Beach (particularly units) which are vacant as there has been a trend for some renters to move in with one another and share rather than rent on their own. As workers hours are cut back as a result of a lack of visitor numbers to town, many people are no longer in a position to afford the weekly rent without sharing with a friend or co-worker. There has also been some instances where tenants have chosen to leave Rainbow Beach altogether as they simply cannot secure enough work here in town.
In what is sure to be unwelcome news for state and local governments, the 2010-11 financial year looks set to see a drop in property related taxation revenues. Between May 2010 and February 2011 capital city dwelling values have fallen by -1.6% and sales volumes during 2010 were their lowest on an annual basis since 1996. As a result of these current soft conditions we expect that state and local governments will experience a budgetary hole at the end of this financial year due to fewer transactions within the sector which accounts for their greatest source of taxation revenue.
In the 12 months to February, property values in the combined capital cities increased by only 0.8 per cent. Considering inflation last year was 2.7 per cent, properties became more affordable in real terms. Values in Brisbane fell by 5.3 per cent in the year to February - the weakest of any capital. (The median house price in Brisbane is $451,000 and the median unit price is $380,000).
The Australian property market is undergoing a correction but we don't expect a significant drop in values. The reasons for this belief include:
* Nationally we still have a constrained supply of new housing at a time of above-average population growth
* The number of mortgage arrears in southeast Queensland, although higher than most regions in the country, remains very low
* Australia has recourse lending, which means choosing to default on a mortgage can involve losing much more than just the house
* Unemployment is at 5 per cent nationally and 5.6 per cent in Queensland, so most people who want a job, have one
* Wages are growing faster than inflation (3.9 per cent against 2.7 per cent)
Most of the country has a diversified economy that doesn't rely on just a couple of sectors (although tourism, resources and construction industries are very important). Many regional areas of Queensland are somewhat resource-dependent and those that are mainly focussed on resources are generally faring well due to the current strong demand for raw materials. Coastal markets; however, have been underperforming since the beginning of 2008. (Source: The Sunday Mail, 17 April 2011)
There are a number of factors behind this, including:
* A weak tourism sector in general (thanks in the most part to the dreaded GFC)
* A high Australian dollar, which is detrimentally effecting foreign and domestic tourism; and
* A lack of "sea changer" activity, which has historically underpinned areas such as Rainbow Beach
Consumers are extremely cautious at the moment and are paying down debt rather than selling their capital city homes and moving to the coast. Until consumer sentiment improves and/or tourism bounces back, we don't expect a significant recovery in the regional areas. (Source: The Sunday Mail, 17 April 2011)
What will result from the current economic conditions is improved affordability within the property sector. Buyers who have been considering purchasing within popular coastal areas such as Rainbow may have previously been reluctant to commit to a purchase due to the high initial capital outlay. With values falling back anywhere between 10 – 25% over the past three years; there is now an opportunity to purchase a property at a price similar to that of 2005 values.
This situation is not likely to be sustained as the economy improves. Historically Australia has entered a period of recession every seven to nine years. ‘Recoveries’, ‘booms’ and ‘corrections’ have occurred in varying intervals over centuries and it is almost impossible to predict the cycle.
Many forward-thinking individuals are making moves right now to purchase property in the location they are looking to retire in. We have had many experiences recently with prospective purchasers looking to buy a house or unit in Rainbow Beach through their self-managed Superannuation Fund with a view to renting it out over the next 3 – 5 years and then move here permanently themselves. There is an understanding and underlying belief that if they were to wait 5 years prior to purchasing, they may not be able to afford to get into the market at all then.
The key message to prospective buyers is: Act now!
We have a finite amount of useable residential land which will ultimately put upward pressure on prices.
Mark Twain
Easter has come and gone for another year and most businesses in town are now looking towards the June/July School Holidays for their next cash injection. The past six months have been less than stellar in terms of local tourism and many local businesses are starting to feel the strain.
There are now quite a few permanent rental properties in Rainbow Beach (particularly units) which are vacant as there has been a trend for some renters to move in with one another and share rather than rent on their own. As workers hours are cut back as a result of a lack of visitor numbers to town, many people are no longer in a position to afford the weekly rent without sharing with a friend or co-worker. There has also been some instances where tenants have chosen to leave Rainbow Beach altogether as they simply cannot secure enough work here in town.
In what is sure to be unwelcome news for state and local governments, the 2010-11 financial year looks set to see a drop in property related taxation revenues. Between May 2010 and February 2011 capital city dwelling values have fallen by -1.6% and sales volumes during 2010 were their lowest on an annual basis since 1996. As a result of these current soft conditions we expect that state and local governments will experience a budgetary hole at the end of this financial year due to fewer transactions within the sector which accounts for their greatest source of taxation revenue.
In the 12 months to February, property values in the combined capital cities increased by only 0.8 per cent. Considering inflation last year was 2.7 per cent, properties became more affordable in real terms. Values in Brisbane fell by 5.3 per cent in the year to February - the weakest of any capital. (The median house price in Brisbane is $451,000 and the median unit price is $380,000).
The Australian property market is undergoing a correction but we don't expect a significant drop in values. The reasons for this belief include:
* Nationally we still have a constrained supply of new housing at a time of above-average population growth
* The number of mortgage arrears in southeast Queensland, although higher than most regions in the country, remains very low
* Australia has recourse lending, which means choosing to default on a mortgage can involve losing much more than just the house
* Unemployment is at 5 per cent nationally and 5.6 per cent in Queensland, so most people who want a job, have one
* Wages are growing faster than inflation (3.9 per cent against 2.7 per cent)
Most of the country has a diversified economy that doesn't rely on just a couple of sectors (although tourism, resources and construction industries are very important). Many regional areas of Queensland are somewhat resource-dependent and those that are mainly focussed on resources are generally faring well due to the current strong demand for raw materials. Coastal markets; however, have been underperforming since the beginning of 2008. (Source: The Sunday Mail, 17 April 2011)
There are a number of factors behind this, including:
* A weak tourism sector in general (thanks in the most part to the dreaded GFC)
* A high Australian dollar, which is detrimentally effecting foreign and domestic tourism; and
* A lack of "sea changer" activity, which has historically underpinned areas such as Rainbow Beach
Consumers are extremely cautious at the moment and are paying down debt rather than selling their capital city homes and moving to the coast. Until consumer sentiment improves and/or tourism bounces back, we don't expect a significant recovery in the regional areas. (Source: The Sunday Mail, 17 April 2011)
What will result from the current economic conditions is improved affordability within the property sector. Buyers who have been considering purchasing within popular coastal areas such as Rainbow may have previously been reluctant to commit to a purchase due to the high initial capital outlay. With values falling back anywhere between 10 – 25% over the past three years; there is now an opportunity to purchase a property at a price similar to that of 2005 values.
This situation is not likely to be sustained as the economy improves. Historically Australia has entered a period of recession every seven to nine years. ‘Recoveries’, ‘booms’ and ‘corrections’ have occurred in varying intervals over centuries and it is almost impossible to predict the cycle.
Many forward-thinking individuals are making moves right now to purchase property in the location they are looking to retire in. We have had many experiences recently with prospective purchasers looking to buy a house or unit in Rainbow Beach through their self-managed Superannuation Fund with a view to renting it out over the next 3 – 5 years and then move here permanently themselves. There is an understanding and underlying belief that if they were to wait 5 years prior to purchasing, they may not be able to afford to get into the market at all then.
The key message to prospective buyers is: Act now!
We have a finite amount of useable residential land which will ultimately put upward pressure on prices.
Sunday, March 6, 2011
Let's Start Talking About the Recovery
“Take calculated risks. That is quite different from being rash”
George S. Patton
OK…. enough with the pessimism, the ‘doom and gloom’ and the GFC…. Life is actually not that bad and the sky is not actually about to fall down; despite the predictions of some economists and so called “experts”. There is no doubt that the local property market is very slow at present and much of south-east Queensland (and particularly the Sunshine and Gold Coasts) have had a significant reduction in sales volumes over the past two years.
However, the fundamentals that underpin property values are still there and in many respects – nothing has changed since that fateful day in September 2008 when the ASX took a nose dive. Although, have you noticed that we are back above 5,000 points on the ASX now incidentally?
* Unemployment levels are still relatively low from a historical perspective. In fact, our northerly regional neighbours in the Wide Bay have just recorded a decrease in unemployment rates over the last quarter.
* China’s appetite for our minerals and natural resources appears to be insatiable and this is subsequently producing jobs and stimulating the economy in numerous ways with plenty of money sloshing around central and western parts of Queensland.
The sheer infrastructure and logistics that needs to plug in to a mine site is mind-boggling; from truck drivers, to cooks, to payroll staff… and when we are talking about companies like BHP, Rio Tinto and XStrata dealing with literally billions of dollars in contracts to export minerals and resources offshore – even the guy that peels the potatoes in the kitchen is on pretty good dollars.
We have definitely noticed an increase in ‘fly-in-fly-out’ employees coming to Rainbow Beach (and other coastal communities) and either looking to rent or buy here so that they can have their two weeks off work in a laid back town and enjoy the natural attractions this area has to offer. Without having to commute to work every day – the two weeks on/two weeks off concept lends itself to having workers choose exactly where they want to live; without being constrained by travel distances.
* Interest rates are still historically very low which means the cost of borrowing is also relatively small. This is particularly true for investment properties as any expenses are tax deductible (including interest expenses) as part of negative gearing.
* Property prices in countries such as the United States have fallen dramatically over the past two years with some areas recording a decrease in values of over 30%. The US property market has suffered from an oversupply of housing which was created during the unprecedented boom between 1997 and 2005. Developers constructed hundreds of thousands of homes in an effort to “cash in” on the rising property market during the late 1990s and early 2000s and when the inevitable housing bubble burst – there were simply too many houses and not enough buyers.
Australia, in stark contrast, has a conservatively estimated shortfall of over 50,000 homes nationwide which translates into continued demand. Obviously, this demand is focused mostly towards metropolitan areas; however, the overall number of properties required has not yet been satisfied according to key property experts including Tim Lawless of RP Data.
* The old adage “they’re not making any more land” is relevant to coastal towns such as Rainbow Beach. Surrounded by National Park and bordered by the Pacific Ocean, there is extremely limited scope for growth and expansion. It stands to reason that the more unique and ‘hard to come by’ a commodity is, the more attractive and therefore valuable it is.
* The current economic climate presents an excellent opportunity to “trade up”. Some property owners have worked out that getting a bigger home and upgrading in a slow market can save you money. How? If prices were down 10%, your $500,000 home has dropped $50,000, but if you’re buying an $800,000 place it’s down $80,000. You might be $30,000 better off than if you had traded up during the boom. And right now the lower end prices are strong and the higher end properties are down anywhere up to 20-25%, so for many the trade up equation is even better.
Regardless of economic news the world goes about its business. People are born and people die, couples join and split and the normal demands affecting the real estate market continue. We don’t think the market is on fire but we do think that now is a great time to buy as all the evidence suggests that prices will not get any lower than they are right now.
George S. Patton
OK…. enough with the pessimism, the ‘doom and gloom’ and the GFC…. Life is actually not that bad and the sky is not actually about to fall down; despite the predictions of some economists and so called “experts”. There is no doubt that the local property market is very slow at present and much of south-east Queensland (and particularly the Sunshine and Gold Coasts) have had a significant reduction in sales volumes over the past two years.
However, the fundamentals that underpin property values are still there and in many respects – nothing has changed since that fateful day in September 2008 when the ASX took a nose dive. Although, have you noticed that we are back above 5,000 points on the ASX now incidentally?
* Unemployment levels are still relatively low from a historical perspective. In fact, our northerly regional neighbours in the Wide Bay have just recorded a decrease in unemployment rates over the last quarter.
* China’s appetite for our minerals and natural resources appears to be insatiable and this is subsequently producing jobs and stimulating the economy in numerous ways with plenty of money sloshing around central and western parts of Queensland.
The sheer infrastructure and logistics that needs to plug in to a mine site is mind-boggling; from truck drivers, to cooks, to payroll staff… and when we are talking about companies like BHP, Rio Tinto and XStrata dealing with literally billions of dollars in contracts to export minerals and resources offshore – even the guy that peels the potatoes in the kitchen is on pretty good dollars.
We have definitely noticed an increase in ‘fly-in-fly-out’ employees coming to Rainbow Beach (and other coastal communities) and either looking to rent or buy here so that they can have their two weeks off work in a laid back town and enjoy the natural attractions this area has to offer. Without having to commute to work every day – the two weeks on/two weeks off concept lends itself to having workers choose exactly where they want to live; without being constrained by travel distances.
* Interest rates are still historically very low which means the cost of borrowing is also relatively small. This is particularly true for investment properties as any expenses are tax deductible (including interest expenses) as part of negative gearing.
* Property prices in countries such as the United States have fallen dramatically over the past two years with some areas recording a decrease in values of over 30%. The US property market has suffered from an oversupply of housing which was created during the unprecedented boom between 1997 and 2005. Developers constructed hundreds of thousands of homes in an effort to “cash in” on the rising property market during the late 1990s and early 2000s and when the inevitable housing bubble burst – there were simply too many houses and not enough buyers.
Australia, in stark contrast, has a conservatively estimated shortfall of over 50,000 homes nationwide which translates into continued demand. Obviously, this demand is focused mostly towards metropolitan areas; however, the overall number of properties required has not yet been satisfied according to key property experts including Tim Lawless of RP Data.
* The old adage “they’re not making any more land” is relevant to coastal towns such as Rainbow Beach. Surrounded by National Park and bordered by the Pacific Ocean, there is extremely limited scope for growth and expansion. It stands to reason that the more unique and ‘hard to come by’ a commodity is, the more attractive and therefore valuable it is.
* The current economic climate presents an excellent opportunity to “trade up”. Some property owners have worked out that getting a bigger home and upgrading in a slow market can save you money. How? If prices were down 10%, your $500,000 home has dropped $50,000, but if you’re buying an $800,000 place it’s down $80,000. You might be $30,000 better off than if you had traded up during the boom. And right now the lower end prices are strong and the higher end properties are down anywhere up to 20-25%, so for many the trade up equation is even better.
Regardless of economic news the world goes about its business. People are born and people die, couples join and split and the normal demands affecting the real estate market continue. We don’t think the market is on fire but we do think that now is a great time to buy as all the evidence suggests that prices will not get any lower than they are right now.
Friday, January 7, 2011
The Realty Deal January 2011
“A bank is a place that will lend you money if you can prove that you don't need it”
Bob Hope
We hope everyone had a very happy and safe Christmas and we wish you all a Happy New Year for 2011. We would like to give a special thank you to Andrew Smith, Nick Fitzgerald, Nina Lynch-Doyle and Ray and Val Brown for their efforts in maintaining all areas of their tenancy throughout 2010 and to their landlords for their lovely gifts of acknowledgement.
Kim would also like to thank all those tenants not mentioned, yet no less deserving .... “maybe your turn will be next year”.
Bob Hope
We hope everyone had a very happy and safe Christmas and we wish you all a Happy New Year for 2011. We would like to give a special thank you to Andrew Smith, Nick Fitzgerald, Nina Lynch-Doyle and Ray and Val Brown for their efforts in maintaining all areas of their tenancy throughout 2010 and to their landlords for their lovely gifts of acknowledgement.
Kim would also like to thank all those tenants not mentioned, yet no less deserving .... “maybe your turn will be next year”.
Much of 2010 was spent analysing the effects of the global financial crisis and its impact on local property values and subsequently sales. It is difficult to accurately predict the future of residential property values, however, with the evidence at hand it is reasonable to assume that there will be a modest (albeit almost indiscernible) recovery during 2011.
Unfortunately, many coastal towns have suffered significant capital value declines over the past 12 – 24 months as investors who perhaps borrowed more than they should have become ‘unstuck’. With an increase in ‘mortgagee in possession’ sales and a seemingly never-ending supply of desperate vendors; buyers have found themselves in the box seat – being able to drive a hard bargain and negotiate a sale price often well below what would’ve been reasonably considered as a ‘fair price’. The fact is however, the market value of a property is always going to be what someone is prepared to pay for it – even if that figure is below that which a bank or certified Valuer calculates.
Rainbow Beach properties for sale are also competing against hundreds of comparable properties along the east coast of Australia. Houses and units from Airlie Beach in the north to Peregian Springs in the south of Queensland are being advertised at discounted prices often with guaranteed returns and other incentives attached.
Fortunately, we have a point of difference, being our unique location and natural attractions. We may not be able to offer as high a return on investment as metropolitan areas; however, we can boast proven capital growth over time as well as a fantastic lifestyle investment. Rainbow Beach has become a destination in its own right.
There are also a number of indicators that point towards favourable property conditions and increases in property values over time. There has been positive government spending on infrastructure within the south east corner of Queensland (including the upgrade of the Bruce Highway between Cooroy and Curra). In addition there is a significant predicted increase in population of nearby Gympie and the resources boom is gaining more momentum in our region.
Best wishes to everyone for 2011 and we hope that this year brings prosperity to all.
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