Hello,
Just looking for opinions here…
I've got a beachfront property, bought in 2003, when "buy beachfront" was the catchphrase in real estate.
To be brutally honest, I think I bought with my heart as it is the ideal owner occupier beachfront residence – but a good rental it aint. Seven years on, and the rental yeild is still dire, and it's only made 30% capital gain over 7 years (regional NSW).
Things have changed in 7 years, and apart from global warming (which I don't think will be a problem for even dune front props like mine for several decades), my heart is in my mouth every time there's a tsunami alert (would insurance cover? – too afraid to ask!)
I'm itching to sell. The only reason why I haven't is, given the appalling returns, I'm thinking I could be selling just when the area may be due for a rise in prices, and then there's the transactions costs. Even though I'm of the "never sell" school, this property's performance is just so bad, I think I should learn the lesson, take the transaction cost on the chin, and move on…
Thoughts, anyone?
Swampy30
The end of 2003 was close to the end of the property upturn. Do not be discouraged about the 30%. That is typical contrary to what you read. Talk to us in 20 years, but you do not want to be telling us you once owned a property on the water that is now "X" dollars (three times the price of today). Seven years is not what I would call the long term. One of the keys to investing is delayed gratification…….
Pffft, who'd want beachfront with all its associated problems? Rising tides, tsunami, global warming, endless coastline in Aust, salt corrosion, sea spray etc
Yes, you are so right. Pass all these beachfronts to me. I will do the awful job of living by the sea. I am willing to sacrifice for the entire forum.
At first glance I was tempted to say that the biggest problem with the property is the word 'regional'. If it's a substantial distance from the city and still a ghost town, then you won't see big capital gains till neighbouring suburbs start to pick up, or if there's suddenly new development in the area that creates an influx of people. I'd be thinking that if you bought true beachfront property within the metropolitan boundary, you'd be cruising. Having said that, my bet is that if you're prepared to hold out for 10-15 years, population growth will be a big aid and could push the urban envelope. That will cause your area to pick up. Not to forget also the sea-change phenomenon…people and water attract each other. Same with people and trees…to a certain extent anyway.
If I were you, it wouldn't be a worry about tsunamis and the like. In the event of a major natural disaster, I've always thought about it this way: if it's time for you to go, it's time. No point fearing it. Having said that, I wouldn't tempt fate and buy seafront property in low lying areas or reclaimed swampland, even if I don't really believe in the concept of global warming.
Really, there's a limit to the amount of coast that's available. Virtually all seaside property that has access to lovely beaches with low pollution, beautiful and peaceful outlooks, piers for fishing, beach houses, and also cafes and shops etc, basically anywhere that appears particularly picturesque, would be expected to pick up in due time. But of course the further you are from a 'desirable' area, the lesser the chances of a boom in the next decade.
Just something else to consider ( or not
)Cheap airfares are changing the holidaymaker demographics, thus influencing local infrastructure which in turn affect prices. I live in the coastal region of Bundaberg Qld and the fact that Hervey Bay airport has upgraded to jet status means that Southerners can fly cheaper to there or Maroochydore than the traditional road trip to Merimbula etc. Get there quicker and enjoy more temperate weather.
Bundaberg has upgraded their airport but the commercial airlines aren't prepared yet to offer the service whilst Hervey Bay is only 75 mins away. Guess where the tourists go, guess where the infrastructure that goes with that happened. Of course there is also a glut of properties there as everybody tried to cash in.
I live 300m from the water, and have seen prices virtually triple in the last few years without any real reason, other than hype. There is a waterfront cottage near me for $560k that can't rent at $250. My point is, if the area (based on infrastructure and future appeal)warrants the price, sit tight, if it was based on hype and inflated expectations then think some more.
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