June 28th 2007
Real estate might "kick" at year's end
"Steady. Not going overboard," but, "At the end of 2007 we might see a kick on the Island," is how one Island-based real estate agent, Ian Ivers, described the residential property market on Magnetic Island this week.
As this is the start of the property sales season, Magnetic Times decided to seek the opinions of a number of Island-based agents to gauge the market as it is now and for the future.
"People are selling who are at the right price. It (the market) is not dead by any means," says Ian Ivers of First National who is waiting to see what happens in the new financial year when he thinks the end of the government's generous superannuation contributions scheme may see more money flow back into real estate.
Ian Ivers sees residential sales as the steadiest. "We've sold one unit but seven or eight houses this year - which is three up on this time last year - and we may be five up shortly," he adds with a note of anticipation.
Murray Stevens, an agent based in Picnic Bay, generally agrees with Ian Ivers' claims. "It's certainly moving better than the last twelve months. Houses are moving in Picnic Bay." As is normal in real estate, the cheapest houses sell the quickest and, according to Murray, "They are basically in the $300,000 to $350,000 range. Anything over $350,000 is a bit harder to move.
Guy Tickle from Compass Real Estate was buoyed by what he called "An unusually strong Christmas market," but was more cautious about the new season. "It's a little early to work out where it's going to be," he says but observed that, "It (the market) is stronger now in prices than last year as you can see with what's for sale."
Ian Ivers thinks that there are no hard and fast rules as to features which may attract buyers and agrees that there are lots of ugly houses on Magnetic. "Semi-modern styles attract and new masonry homes are selling in the $400,000s." He is skeptical of the advantages of pre-fabricated homes in regard to their overall quality and mentions one company which built a range of homes on the Island in the 1970s in which, "All the bathrooms collapsed. There was no cement sheet on the floors."
"People like verandas and high ceilings and the warmth of timber, nice decks and open plan living."
"People are mainly looking for quarter acre blocks. I've sold a few over the last few months - the older style high-sets," says Murray.
However, Guy Tickle's Sandals development at Horseshoe Bay, where block sizes are considerably smaller, has, "One going up now and five more for July".
Ian Ivers is an agent for some Bright Point properties but says, "I don't know of any resales for benchmarks (to compare with prices) off the plan." He notes that, "There is a big volume at the (Nelly Bay) Harbour but I think it's stagnant.
"Normal units such as Magnetic North with strata title sell in the high $200,000s or low $300,000s." he adds.
"I'll be interested to see what happens when Blue on Blue opens," says Guy Tickle who admits , "We specialise in residential dwellings and get more responses for that."
Continually increasing building costs are another factor. According to Ian Ivers, "Construction costs were up 11% last year. They dipped to 6% this year and next year another 5% is expected. To get the value, land values have to creep up more".
Ian Ivers predicts however, "We'll have a bit of a bubble at the end of 2007. We'll see a bit of a kick on the Island. It's only four year (since the last rise) but I think we will start to see signs at the end of 2007. It's starting to happen in Sydney and I benchmark from there - but with a bit of a lag," he says.
Overall however, Ian Ivers assessment is that prices will not rise significantly until the Island has more retail infrastructure. "Unless we get better shops and retail outlets we won't get the people. It would be better to focus on the retail precinct in the harbour or at least at the same time (as the unit development was built).
Murray Stevens, who has recently sold a commercial site on the corner of Sooning and Kelly Street, where he understands five new shops are to be built, echoed this sentiment saying, "The Island is still lacking tremendously in retail outlets - particularly restaurants and shops where people on holidays can spend their money. There's potential, in my opinion for another ten to fifteen coffee shops and restaurants," but adds, "Whether they'll survive or not depends on the operators."
Ian is expecting that a change in the bad winter weather will be reflected in sales. "Once that's cracked we will get day trippers and regulars coming over. Without people being exposed to product, you can't sell."
So who are the people who are presently looking to buy on Magnetic?
Ian Ivers says that the majority are investors. "Some are empty-nesters or returnees who have lived here before. But it is pretty much investors with rental properties being sold. Some are (fly-in fly-out) miners who are renting but with only three or so days off they mostly want to chill out rather than look for property."
Murray Stevens' buyers are mostly local, Townsville-based. "People seem to be positioning themselves - renting now but to settle here in ten years time," he said.
Story & photo: George Hirst
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