Rainbow Realty Deal - May 2013

“It had long since come to my attention that people of accomplishment rarely sat back and let things happen to them. They went out and happened to things.” Leonardo da Vinci

If there was ever a time to buy in Rainbow Beach – you would have to say it is now. Less than three years ago, anything within 500 metres of the beach would’ve cost you in excess of $500,000 – but in today’s market you can pick up a three bedroom house within 400 metres of the beach for $300,000. Even closer to the beach (within 200 metres); there has been recent sales activity around the mid $400,000’s for a three bedroom home.

Median house prices have decreased significantly since the market peak in late 2007/early 2008 and with the number of distressed sellers/mortgagee in possession sales increasing; there is a great opportunity to buy a beachside property for less than what you would’ve previously.

Up and down the eastern coastline of Australia – there are above average amounts of stock on the market. ‘Lifestyle’, coastal and small rural properties (or ‘hobby farms’) have been most affected by the economic downturn whilst regions within close proximity to mining towns have continued to see gains in property values over the past four – five years.

Reports from our southern Queensland based real estate agent counterparts on the Sunshine and Gold Coasts herald a mini revival in sales figures with the Gold Coast residential market clawing back some semblance of ‘normal’ after five years of turmoil. Property values on the Gold Coast have dropped by as much as half in the period 2007-2013, leaving receiverships, bankruptcies and jilted property investors in its wake. “Apart from Cairns, no market was affected more than here,” Ray White Surfers Paradise principal Andrew Bell says. (Source: Australian Financial Review February 2013)

Many property prices saw over-inflated rises over the periods 2002-2003 and again in 2006-2007. Some properties doubled in value during that time however; much of this was off the back of debt, borrowings and in some cases – heavily geared borrowing. The property market was on an unsustainable rise during that period and much of the recent price corrections have really been a case of the market adjusting back to sensible and sustainable values.

Luxury apartments on the Sunshine and Gold Coasts were once considered a must-have in millionaire property portfolios. But the asset class lost its sheen during the economic slump as investors who had locked themselves into off-the-plan contracts at 2007 prices watched the value of their asset dwindle. (Source: Australian Financial Review February 2013)

Many property experts view 2013 as a year of stabilisation - when sellers start accepting value levels and buyers less likely to make low offers but are open to negotiation. We should start to see more transactions and before long, there will be resurgence in values.

Generally speaking, coastal and rural property values tend to see a more volatile rise and fall in values over time when compared to metropolitan residential property values. There seems to be more of a ‘boom or bust’ pattern versus a steady growth/minor decline which you tend to see in the cities and larger towns. This is partly due to the sheer number of properties in a given area (which effects the percentage or volume of sales transactions) but is also due to the vagaries of coastal/rural property’s appeal. Ie. When the Baby Boomer generation began the mass “sea change” – coastal properties saw a huge increase in values because demand outstripped supply in many cases.

Fingers crossed we get back to a “normal” market before long and vendors who are keen to sell can find a buyer and the two remaining real estate agencies in Rainbow Beach can survive (it was only five years ago that there were four agencies ).