August 09 BPS
Hi Everybody,
Its only 2 days after winter equinox and it looks like spring is here already?
Is it finally time to crawl out of our underground bunkers and survival sanctuaries? Is the worst of the GFC finally behind us? Well, time will tell but there is definitely a spring in the step of the Northern Rivers property market. If the worst is behind us lets hope that we can learn from past mistakes and do not go back into the mismanagement and excesses of the past.
All in all, Byron and surrounds have weathered the storm remarkably well and there is good news and positive data everywhere. There has been more than a 4% rise in median prices in all capital cities for the June quarter. Australian Property Monitors say this area has had a 10% rise in most coastal areas while Lismore, Kyogle and others have had a 5% rise. Most agents are complaining about a lack of stock. Bargain hunters are being replaced by serious buyers and our area has remained resilient with very few distressed sales.
Good Buying Out there!
As I go to e-press, the Reserve Bank has decided to leave interest rates on hold at 3% again and the prediction is that rates will remain low till well into next year. We are still able to get good Lo Doc and Full Doc rates for as low as 5.14%. (Please ignore the promos for Honeymoon rates at 4% or lower - not a good deal!)
Economists are now saying we may only having only V downturn and not an extended U. Whatever the future holds, right now may be the best time to buy a home or an investment property. Especially for First Home Buyers as this is one of the few periods I can remember where it can be cheaper to be paying a mortgage rather than renting.
Demand for entry level housing under $500K is still strong in this area. Below I will outline a few options. The booster for the First Home Owner Grant finishes on October 1st when we go back to the original $7000 subsidy for an existing home and $14,000 for a new home.
Pessimists are predicting that many of these new homeowners will not be able to sustain a sharp rise in unemployment or rates. True - the government's largesse has pushed many into the market a bit prematurely and they may not be so resilient if economy remains volatile. I don't think we will see too much carnage as it is unlikely we will see both unemployment and rates rising at the same time. If there is high unemployment the Gov will try to stimulate the economy by keeping rates low.
Off the plan - not off the wall!
I usually don't recommend 'off the plan' units or town houses but I think this is a good time to look at them for two reasons. I have recently inspected two developments that are in good locations and are well priced as entry level properties or a good rental.
The other reason is as I mentioned in a previous newsletter. Freehold houses have had such an increase that the difference in purchase price is now more pronounced and units and town houses will now increase to lessen the gap. Also rental yield on a 3-bed house is only slightly better than a good new townhouse. But don't forget to factor in body corporate fees before doing the rental calculation.
One development is in Ocean Shores and one is in Byron Bay. Let me know if you are interested and I will send you more info. The one in Byron has 3 bed townhouses starting for around $470K. One unit in an earlier stage of the development is renting for $580 a week. So they could be cash flow positive fairly quickly. The one in Ocean Shores is priced around $370,000 for a 3 X bed, 2 bath. Be quick as they are selling fast.
I have a list of other good options that I have come across in my travels:
- 2 Bed house on 600 M2 block in Fern Beach 200 metres from the beach for $450K.
- Huonbrook, I know of a few good value properties in this beautiful rainforest valley going for good value.
- Alcorn St (non beach side) Suffolk Park reduced from $1.25 to $990K.
- Investors are moving into Ballina in a big way. Be one of the last to get a house on the island for under $400K - I know of a few.
TOP END IS GOOD TOO!
If I were a cashed up buyer and had confidence that we had passed the worst of these tumultuous times then the top end would be where you could do well. This is where there has been the heaviest discounting and I see no reason why the original prices should not, over time, find the prices seen a year or so again.
If you want to look at some of the interesting properties for sale around here visit this site:
www.uniqueestates.com.au
If you have a spare 2 or 3 million and you buy something don't forget to tell Nicolette I sent you so I can get a free lunch.
Just a sample of what is on offer:
Sedona, Federal - architect house with mega rural views has been listed for $3.5 but will go to auction next month for 2 something.
Koonyum Lodge, Mullum - spectacular house on high ridge overlooking the entire Bay. Had $5M (dreaming!) on it at one time now needs to sell at $2.9M
Beachside, Suffolk Park - quite a few sales at the Malibu end of Byron that could be looked at as bargain shopping.
Look forward to talking with you soon.
Michael Murray
0428 555 501