Welcome to the BPS Newsletter Feb 09. I hope you enjoy the same newsy info on property and finance for Byron Bay and beyond.
Property Price Drops????
Depending which report you have been reading property prices have dropped by an average 8%. It varies so much because people use different statistics from different areas, houses and units, median prices and averages. But of most interest to us in this region are these figures from Australian Property Monitors. As you can see, the figures in the Byron region are not indicative of the rest of the country. However it is my experience out there on the streets that price fallout is just starting to be felt here and I would be very surprised if we do not see more negative figures for '09.
Area Median '08 change 1 yr forecast
Bangalow 600,000 -7.2% -5%
Goonalabah 297,000 10.4% +1%
Byron Bay 720,000 12.1% +3%
Mullumbimby 452,500 2.8% -1%
Ocean Shores 475,000 8% -1%
At this rate ......
Another major interest rate drop was announced last week. The full 1% is being passed on the consumers from the banks. This brings the retail interest rate that we can do to a few points above or below 5%. This means that to service a $500K loan will cost $25,000 per annum which becomes interesting as in some $500K properties now rent for around $500 a week or $25,000 PA. We are nearly back in the realm of cash flow neutral or cash flow positive properties which we haven't seen since the 90's. Anyone who is close to re entering the market should talk to us and get everything in order.
Share market stuff
At the moment the share market is trading in what the day traders or chartists call a support/resistance channel where the support for the ASX is found at 3350 and the resistance at 3800. It is likely to bounce around in this channel for a while before breaking out - either up or down. Therefore it would suggest we are not out of he woods yet with financial volatility and that the "bottom" is not yet assured. Those still waiting on the sidelines for indications on where we are heading would be advised to keep waiting. Remember the high of late 2007 was 6600 - so we are still having a half price clearance sale. The interesting question is going to be whether it is property or shares that becomes the darling for the big fund managers and investors once the all clear signal is given.
First Home Owners
As mentioned in the last newsletter - the strongest sector by far at present is the low end of the market as many First Home Owners are entering. One agent I know foresaw this development and moved from a Byron Bay agency to an Ocean Shores - smart move. For those who need more info the basics are this: If you have never had your name on a property title before you can apply to the government for a First Home Owner Grant which is up to $14,000 for established homes and $24,000 for a new home. For more info or call us at anytime and we can help you with the details or crunch some numbers for you and see if it is a viable move for you.
Units, Duplex and Apartments
It has been predicted that we are about to see a comparative rise in value for units, duplexes and apartments. For a long time these dwellings have been less favoured over houses because of the land to building ratio. The accepted wisdom being that land appreciates and buildings depreciate therefore you are better off being in house which has a higher proportion of land to building. ie house cost is $300K, land cost is $300K so the land building ratio is 50/50. A unit in a block of 4 can cost $400K, being $300K in building cost and $100K in land cost - land building ratio of 75/25. With the rise in the bottom end of the market, more demand because of the First Home Owner Grants and the better rental yield - we could expect to see an increase in value of units as compared to the value of houses.
Thanks a lot for staying with the new format of email. It will keep changing - and getting better. The new website will be up and running soon.
Back to Basix
I have just been through the process of complying with the strict new water, fire and environmental requirements while designing a new house. It is called "Basix" and is easy to learn about on the Byron Shire website Byron Shire Website . These requirements add a bit to the cost and time to any new build and I was a bit annoyed about this until the recent catastrophes of floods in Queensland and fires in Victoria. We are obviously entering into a phase of man made global warming and am amazed by people who still refute this obvious fact. I now think that Basix have not gone far enough.
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Byron Property Search | PO Box 927 | Byron Bay | NSW | 2481 | Australia