The month in review: South Western WA
By Herron Todd White
April, 2010
The South West region of WA is renowned as a tourist
destination and there are many locations, particularly
along the coast, which have long been hot spots for
holiday homes. These range from multi million dollar
homes with sweeping ocean views to 40-hectare lifestyle
lots, special rural lots and basic residential lots.
A major factor in this sector is affordability of most
holiday homes with ocean views having values in excess
of $1 million This sector therefore tends to accentuate
the fluctuations in the market being over heated in the
good times and performing below average in the down
turns. Properties on Geographe Bay Road, Busselton, the
majority of which have uninterrupted ocean views, saw
values for a basic home drop to slightly below $1 million
as a result of the Global Financial Crisis. These properties
had values of between $1.4 million and $1.6 prior to
the Global Financial Crisis. Values in the area have now
recovered somewhat with sales of $1.25 million and $1.4
million.
achieved very high values with a 2000sqm lot in Eagle
Bay WA selling for $10.05 million in April 2007. However,
values appear to have come back somewhat. A case in
point being a 1740sqm basic 1990 house in Marybrook
WA, which sold for $4.5 millioin February 2008, recently
went under contract for $2.85 million.
Eagle Bay is a good representation of the top end of
the market. It is a prestigious location with high quality
homes, most of which have excellent ocean and bay
views. This locality was significantly affected by the Global
Financial Crisis, with values falling up to 40% as margin
calls instigated the offloading of excess assets and very
few buyers in the market. There were a total of three sales
for the 12-month period of March 2008 to March 2009,
to a total value of $4.575 million. For the 12 months prior
there were 11 sales with a total value of $30 million. The
market seems to have recovered in the past 12 months
with 13 sales totalling $32 million. One of the highest sale
for the period was worth $5.8 million.
Molloy Island is another case in point, being located in
the Blackwood River near Augusta at the southernmost
tip of WA and only accessed by car ferry. This island is
predominantly occupied by holiday homes and demand
has fallen significantly recently with only two sales in the
past 12 months and five in the previous 12 months. In the
12 months prior there were 16 sales. It is understood that
banks have now limited their loan to value ratio on the
island to 50%.
The Busselton and Augusta - Margaret River Shires also
have many short stay accommodation lots which allow
for a maximum stay of 3 months only. These have been
established to help provide tourist accommodation in
the region. Many of these are resort run with fixed rates
of return to the owner. These properties are generally well
utilised in the peak period but have low occupancies in
the off peak periods. Demand for this style of property
has been flat for some time and is likely to remain so
unless the occupation restrictions are relaxed. Values in
Bunker Bay Resort have fallen 25% since their release in
2005 however values now appear to have stabilised.
Land Tax is also a major issue with holiday homes as
many owners who have had their homes for an extended
period are hit each year with large tax bills making a big
hole in the family budget, therefore forcing the sale of
these properties.
The purchasers of the high value holiday homes in the
region are usually big business executives. Prior to the
Global Financial Crisis the excess money in the pockets of
mining executives saw a significant increase in the value
of holiday homes and lifestyle lots in the region.
As we are at the start of what appears to be another
mining boom the flow on may again be felt in terms of
increased values for holiday homes in the region.
|
