Over the past 12 months Australia's lifestyle-driven coastal markets have fared worse than other markets, but now could be the ideal time to take a good look at these as we begin to see conditions slowly improve.
This heralds good news for prospective buyers who may have aspired to owning a coastal lifestyle property, however due to a lack of funds, they avoided these markets and threw away any hope of ‘getting in'. Because housing values across some of Australia's most popular coastal regions have recently shown significant falls, and competition in the market remains relatively subdued, now is a good time to look.
Based on findings from RP Data, the indications are clear that this market is now turning and many of these lifestyle markets have seen the worst of times.
There are various reasons why our coastal markets now offer up a great buying advantage. These include:
- The number of home sales has increased by 37% since bottoming 12 months ago.
- The time it takes to sell a home is becoming shorter across the key coastal markets and vendors are discounting their properties less.
- The total amount of stock available for sale is gradually reducing indicating that supply is being absorbed by the heightened level of buyer activity.
This turnaround in market conditions is coming from a low base and most coastal lifestyle markets still represent opportunistic buying. Generally, prices are still lower than what they were last year and the level of negotiation to be had by the buyer is still typically higher than what they would experience in the metro areas. Despite the strong jump in market activity generally, monthly sales volumes remain well below the 10-year average, suggesting competition in the market is far from fierce.
While the conditions appear to be improving, the road to recovery is likely to be a slow one for many of these regions. Due to a drop in regular tourists to our coastal markets, the past 12 months has been dire. A distinct lack of tourist visiting coastal areas has largely contributed to poor market performance.
As an example, the tourism industry has been hit hard by the Global Financial Crisis. The ABS has reported that takings from tourist accommodation were down 5.8% over the year to June 2009, and room occupancy rates have plunged to just 59%.
To add to this, Tourism Australia is forecasting that visitor arrivals will fall by about 5.5% over the second half of 2009.
Arguably Australia's most iconic lifestyle market, the Gold Coast, provides a good case study. The median house price is still 7.7% lower than last year and the median unit price is 8.4% lower than last year. The annual number of properties available for sale has fallen by 6% from 20,500 in September last year to 19,300 over the last 12 months. Houses and units are taking 68 days to sell compared with 100 and 92 days last year for houses and units respectively.
These popular coastal markets are still much more affordable than they once were and market conditions are still in favour of the buyer. For these reasons now may be a good time to be positioning in the market for future growth.
Buyers are already returning, as evidenced by recent results, and as the global economy continues to improve, visitor numbers will once again pick up, reinvigorating these popular lifestyle markets.
Tim Lawless is the Director of Property Research at RP Data.
