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 # 11 - July 2007
IN GENERAL
What's happening in Byron Bay real estate is that there is lots of interest in property and that seems to be reflected in many other areas as well. Although not throughout the country.
Unlike in the past when fluctuations in property values were nationwide, lately we are having wide divergence in regions. Perth and Darwin have just come off a huge boom and are in line for a correction. Sydney is still flatter compared to Brisbane and Melbourne which is currently in the early stages of recovery. Also Sydney itself is not a uniform market. Top end in the Eastern Suburbs and North Shore are now strong while Howard's mortgage belt/struggle street is really struggling. The west and south western suburbs of Sydney are experiencing nearly double the number of mortgagee in possession auctions (1400 for year ending March 07 compared to 2005 according to SMH).
In May there was an 8.9% surge in investment property loans. This would signify that the investors are returning to property as a solid form of investment. The share market is in its 4th year of around 20% returns and many people are feeling it needs a rest. Although there is also the view that with the mountain of money from superannuation schemes finding its way into the share market, stock prices are set to remain high for some time.
HOT PROPERTIES:
In my travels around the shire lately I have come across a few things of interest:
- Coolomon Scenic
I have got to know the ridge line of Coolomon Scenic Drive a bit more closely. There are a four or five for sale on the ridge at present and I am convinced this is the last time we will see this dress circle area at this price between $1 and 1.5M. This area is only 10 minutes from Byron town and has a perfect north aspect and protected from the winter southerlies while getting summer breezes. Prices here will be have a "3" in front of it in only a couple of years. I know of one property in particular with pool and view which is going for the bottom end of the above range. Contact me if you are in the market for something like this.
- Ocean Shores
I have said it before and here I go again. Houses in Ocean Shores that are either on the canal or on the golf course are grossly undervalued. I admit that this kind of development was not ever something to Byron taste and a bit of an import from over the border. However, they do provide a point of difference for buyers and the baby boomer, sea change migration increases they will be more sought after. I know of a few on the golf course under $500K and a few on canals that are under $600K. I predict they will increase in value above other properties.
- Fern Beach
It is interesting driving through the Fern Beach area Ocean Shores and looking at the gradual gentrification taking place. A sure sign of values on the rise. One old run down fibro joint sits beside a modern two story beach house. I can't tell which looks more out of place. On the ocean side of the canal prices are generally the high side of 400s while the non ocean side is on the low 4s and some high 300s. For anyone who is prepared to be quick, I know of a vendor needing an urgent sale after a purchaser pulled out at the last minute and they are committed elsewhere. 2 bed house on 700 M2 block on the ocean side of canal fro around $400K.
- Mullumbimby
By far the hottest post code at the moment is Mullumbimby. Anything that comes on the market here at fair value does not last a week. I think this is due to the realisation that Mullum is just a great place to shop and hang out. Many long term locals have retreated from Byron as being their local of choice and Mullum is now more attractive. It is unpretensious and different, with a strong feeling of community. Long live Mullum and lets hope its own popularity does not kill its spirit.
- Upper Wilsons Creek
My other hot prospect as I have already been promoting. The 3 Ways Cafe, has a house (shack) and 10 acres with a great potential building site. Me thinks it good buying at $680K. This will be the only commercial zoning in Upper Wilsons for a long time to come and great position for someone wanting to do a spa or retreat.
SUB PRIME MORTGAGING
Some of you may have been listening to the news from the USA about the sub prime lending and housing market creating a dint in the economy over there. I thought it timely to comment on what is going on and reflect on how it could affect us here. The sub prime lending market is new finance options that became popular over recent years - specifically for lenders who have notched up a bad credit rating. They often have to pay a higher rate. The combination of inflated house prices in the states and the combination of very aggressive marketing of these loans, as only the Americans know how, have created a situation where there could be a domino of housing defaults coupled with falling house prices.
Our housing bubble occurred around 2004 so we are well passed this situation that the Americans find themselves in now. Here in Australia we also offer sub prime loans to credit impaired borrowers - I have helped a few people in this situation myself. But they have not been marketed to inappropriate borrowers as they have there also brokers here a lot more regulated than in the USA. However the situation that is much more of a problem here is house prices. Prices for property in Australia is probably one of the highest in the world as a ratio to annual income. The ratio in the states is probably half that of here. Which brings me to my next point .......
HOUSING AFFORDABILITY
This looks like it could hot up to become a major election issue. And what an interesting political hot potato it is. What are the options to improve housing affordability so more people can live the Aussie dream of their own back yard to BBQ in?:
1) State governments could release more land for development,
2) and reduce the amount of taxes and council contributions those developers have to pay
3) Eliminate negative gearing tax concessions to cool investor speculation.
But what a choice - to drop house values to allow the next generations more access to the market at the same time as alienating half the population as they watch their main asset reduce in value? It will be interesting to watch.
What to do? Maintain an investment in places like Byron Shire where demand will remain high and supply will always be limited.
Thats all for now. I will try to get something away again before I leave for the USA early August - I will be away for 3 weeks. I will be accessing my email while away and Jay and I will be contact around existing and any new mortgage loan enquiries.
Talk to you soon.
Michael M Murray
Buyers Agent/Mortgage Broker