Ballina and property price developments
April 2007 - Interest rates, Ballina, Casino, non-property option, property prices
May 2007 - New loan option, NSW country and Brisbane prices
June 2007 - Loans, Navra, Property Residex
July 2007 - Hot properties, Sub prime mortgaging, Housing affordability
August 2007 - Property vs Shares, Local market, Citibank offer
September 2007 - Overview, Loans, rates and the whole d... thing!, Properties
October 2007 - Overview, Byron Bay, Ocean Shores, October Property Hot List
November 2007 - Gazumping, The Rate Dance, MO & CT, Navra, Property
December 2007 - Property valuations, Replacement value, Equity finance mortgage
Last newsletter 2007 - Byron Bay market graph, beach front & other properties
January 2008 - Mood of Moment, post crash summary, Gossip
March 2008 - March Musings, New Developments
April1 2008 - War Stories, Property Punting, Interest Rates
May 2008 - Only in Byron, Lo Docs and Tax
June 2008 - Debt Consolodation, signs of weakness
July 2008 - Property Punting, Byron Bay Holiday Rental, Housing Affordability
August 2008 - The Wash Up, Signs of Weakness, Growth area, Debt consolidation
September 2008 - Take stock and share the pain, Property, Elections and Finance
Welcome to BPS Newsletter # 16 – the last newsletter for 2007
GRAPHS AND CHARTS
Here is a couple of charts for those who like such things.
This first one I ripped off from PRD Nationwide. I included it because it does paint the picture of the Byron market quite accurately. The highest vertical green line in the middle of the graph was a recent high point in house sales (140) in March 2002, the height of the surge, and then followed by much lower turnover, average of 80 house sales. The vertical green lines represent 6 months of activity and is for the town of Byron only. The latest green line is March 2007 and is now showing what I believe to be the beginning of an upswing. The blue horizontal line is the median house price now reaching $600,000. We have had single digit price increase for four or five years with a downturn in 2005. The first green bar is for March 1997 and the median price was around $150,000 - can that be true? Byron prices have quadrupled in 10 years?
BEACH FRONT
This one is interesting for a couple of reasons. Thanks to First National. It shows the median average price increase over the five years from 2002 to now on a few of Australia's beach front suburbs. And the winner is, yes little old Suffolk Park with an average 20% increase over the last 5 years which means the median has doubled in a relatively flat period.
The other interesting point is look at the median price of Mermaid Beach on the Gold Coast. Yes, most of us would expect the highest average house price to be Sydney Harbour, Wategoes or somewhere in Perth where the mining magnates hang out. But, no, the most expensive real estate enclave in Australia is a beachside suburb just over the border at Mermaid Beach - not called the "Gold Coast" for nothing!
| Suburb | Median 02 | Median 07 | Avg Annual change |
| Suffolk Park | $234,256.05 | $595,000.00 | 20.5% |
| Lennox Head | $228,422.75 | $540,000.00 | 18.8% |
| Kingscliff | $283,727.47 | $576,000.00 | 15.2% |
| Mermaid Beach | $580,411.77 | $1,145,000.00 | 14.6% |
| Byron Bay | $346,981.48 | $672,500.00 | 14.2% |
| Palm Cove | $309,585.56 | $488,750.00 | 9.6% |
| Port Douglas | $365,405.52 | $552,500.00 | 8.6% |
| Noosa Heads | $426,923.44 | $624,500.00 | 7.9% |
A BIT OF BALANCE
In times of market exuberance it is great to increase an asset but also a bit of balance is called for. Over the years I have overhead conversations as in: "I bought this property only three years ago for $500,000 and just sold it for $750,000". A casual listener may just do the sums and guess that this loud mouth has made $250,000 for sitting around but that is not looking at all the facts. Purchase costs of stamp duty and legal fees for a $500,000 property is going to be around $25,000 not including time spent and expenses actually doing the search. Then there will be holding costs above and beyond living costs or negative gearing. If it is an investment property with a debt of $400,000 the mortgage will be around $30,000 PA - offset by a rental of around $400 a week which is a shortfall of around $10,000 a year plus rates and maintenance. Lets say $70,000 for getting in and holding over three years and then to sell with an agent paying, say $30,000, to a selling agent. So roughly $100,000 or half that amount could be shaved off that boast if they took the time to go into details.
All of these scenarios are different and some can do better or worse. My point is that it is lazy thinking in just subtracting the purchase price from the sell price in estimating the profit on a property transaction. Many people do it and it is misleading and inaccurate. I could even go further and include the interest on the deposit money, Capital Gains Tax or lost opportunity costs of being in the deal as well. Of course in my business as a buyers agent I am an advocate of property as an investment and as an interesting past time, I just felt the need to take off some of the easy, gung-ho chatter that can infect this industry.
AND THERE'S MORE ....
and while I am having a bit of a rant ........ there are two things going down in Byron right now that is of interest enough to me to comment on:
1. HOLIDAY LETTING
I know there are some complicated issues in the background but how complicated can it be for council to get this one together. People have a right to holiday let their property but neighbours have a right to shut them down if they create a disturbance. This is a popular holiday town, visitors want to come here, some people operate a business letting holiday houses and some people subsidise their holiday by sub letting their homes. How complicated or anti social is that? Why can't council sell permits to people wanting to holiday let, this can create some badly needed revenue and if they let to noisy, disruptive people their permit is revoked. How complicated is that?
2. LOW COST HOUSING
In my business of being a buyers agent most of my clients are relatively well off people wanting to make a home here. I must say that the majority by far are great people - sensitive, aware and ready to embrace this towns value's, community and lifestyle. The only thing that worries me is the number of them and I do worry for the diversity in our community. This problem is a lot harder to fix than holiday letting outlined above but it needs to be tackled. There is only a little bit of developable land left in the shire and Council needs to find a way to accommodate and house low income residents so we can maintain the cultural mix we currently enjoy.
In Holland and other European countries they encourage a mix of properties in the same development so that top end apartments are built alongside smaller compact units. Sometimes a whole mini suburb is built, complete with environmentally sound practices of grey water recycling, solar power, on site waste disposal and internet interactivity. The developer contributions are relaxed for the smaller units and sometimes subsidised so they can be built cheaply. This encourages a mix of residents instead of the current trend towards homogenisation and conformity. The number of places which have made this mistake are legion, Florida, Gold Coast, etc that soon become a "Blandland" of uniform development. The other negative in becoming an isolated wealthy enclave like Lake Como in Italy or Silicon Valley in California. Services suffer as people like teachers and service workers have to commute long distances to work there.
That’s my rant for now! See you next year.
Michael M Murray
Buyers Agent/Mortgage Broker