Many people dream of buying a beach house, but properties always seem to cost a bit more than they should. However, now may be the time to take another look at fulfilling that dream.
I thought I would look at the Lorne property market, as it is indicative of many coastal holiday towns, particularly those with higher value properties.
During COVID, Lorne house prices increased by 70% between 2019 and 2022 according to Core Logic. In 2022 there were 102 sales in Lorne, and at one stage there was only one house for sale.
The market has flipped – sales have fallen and listings have risen.
This financial year, only 24 properties were sold in Lorne, well down from the usual 50 to 60 annual sales. Domain shows 128 properties currently listed for sale. Unofficially, there are another dozen or so for sale according to Tyrone Provan from Great Ocean Road Real Estate in Lorne.
“With this number of properties on the market, buyers have plenty of choice and it’s becoming a buyers’ market” says Tyrone. “Vendors are lowering their asking prices and buyers are holding off making offers”.
So, what has caused this influx of properties for sale?
Tyrone believes the single biggest factor forcing people to sell is Land Tax.
He gave an example of a client whose Land Tax rose from $5,000 three years ago to $23,500 this year. After adding rates, insurance and utilities, it will cost $33,000 just to keep the family holiday house this year.
Lorne property values have fallen from the peak in 2022. Last year the median house price fell 11% according to Core Logic.
A holiday house has always been a discretionary purchase, but the cost of maintaining one has significantly increased. This increased cost has impacted on potential buyers, who are more price sensitive and wary when purchasing. Unless Land Tax is reduced (unlikely), buyers can expect lower prices and plenty of choice in towns such as Lorne.
“Buyers are becoming savvy and selective, given the choice of properties” says Tyrone.
Sellers need to be realistic when pricing their property. Often we see optimistic vendors having to lower their asking price chasing a declining market. Sellers need to be well informed on current conditions and price their property to meet the market, and not follow it down.
Of course, if you are thinking of relocating to the beach, perhaps now is a good time to start looking at properties for sale, and maybe that dream can be achieved.
For anyone selling a property, it may be worthwhile to get an impartial opinion on current conditions – and that is where we can help. If you are thinking of selling, talk to us about developing a winning sales strategy.
Regards,
Robert Allanadale
Director
m: 0418 517 643
TOWER PROPERTY ADVISORY
Tower Property Advisory is an independent consultancy that specialises in managing the end-to-end process of property sales on behalf of Vendors