Smoke on the water: Beachfront property market heats up

AFTER years in the doldrums, the waterfront market is heating up - not only in Sydney, but in sleepy beachfront outposts.

15 Balmoral Avenue, Mosman, which could fetch $13m.

COASTAL property is selling again - not only on Sydney Harbour, but in Queensland's Whitsundays and in sleepy beachfront outposts such as the little-known Port MacDonnell on the Great Australian Bight.

In Sydney, agents reckon cashed-up Chinese buyers will flood the eastern suburbs next year, buying waterfront mansions or houses with sweeping views of Sydney Harbour and the Opera House.

Property agent Monika Tu, of Black Diamondz, says waterfront housing is simply not available in mainland China - hence its popularity here.

She predicts 2014 will be "a very big year". "I have 15 buyers wanting to spend $10 million each. The most desirable properties are waterfronts. It's good fung shui -- water is wealth," she says.

As more Chinese satisfy the federal government's requirements for significant investor visas -- such as agreeing to plough $5m into approved investment schemes -- more will relocate to Sydney, handing over $40m for a waterfront mansion in the process, Tu reckons. She is marketing 15 Balmoral Avenue, Mosman, on behalf of a Chinese client with price expectations of $13m.

Bigger-ticket waterfront mansions such as Altona on Sydney Harbour sold for $53m earlier this year, followed by Sir William Tyree's Darling Point harbourfront property, which fetched close to $30m.

GALLERY: Properties of the weekend

At the other end of the scale are beachfront holiday houses. The South Australian local government area of Grant has the strongest median house price growth for coastal property this year - according to RP Data. Grant boasts sleepy coastal outposts such as Port MacDonnell, Racecourse Bay and Pelican Point - where beachfront holiday house prices shot up 15.8 per cent in median value in the 12 months to September.

RP Data's Cameron Kusher analysed 161 local government areas with coastal boundaries for Weekend A Plus. Median values increased in 114 of the LGAs for the 12 months to September. "You would expect that because a lot of these areas have seen significant falls in value," Kusher says. "People are . . . getting the confidence to move back to these seachange areas which they have not had since 2007."

Kusher reckons the biggest price increases will be recorded in the coastal areas closest to Sydney and Melbourne, but there will be a recovery in Queensland's Sunshine Coast and Gold Coast regions given home values fell 35 per cent since their 2007 peak.

"We have low interest rates and there are bargain hunters already in those areas. I would not be surprised to see those areas close to Sydney and Melbourne, like Lake Macquarie, Newcastle, Illawarra, Gosford and Wyong, really move as people are priced out of Sydney's housing market."

Queensland's Whitsundays gets top billing in the Sunshine State, with median values shooting up 5.2 per cent in the 12 months to September. In the Victorian township of Warrnambool median values rose 8.3 per cent, while at the prestige end on the Mornington Peninsula house prices shot up 4.6 per cent. In NSW, the LGA of Bellingen, well north of Sydney, recorded a 10.9 per cent median house price rise; in Western Australia the LGA of Capel jumped 14.8 per cent. Tasmania's West Coast was the best performer in the state with prices jumping 2.5 per cent to record a median value of $103,802.

Kay & Burton chairman Gerald Delany, who operates three offices on the Mornington Peninsula, says there has been a lot more sales activity of late. "It's a flow on from the Melbourne market. The buying activity in the past three months has been greater than the previous 12 months. It's predominantly holiday house sales and lifestyle property sales. There is also a small sector of retirees but it's predominantly lifestyle buying of secondary homes."

South Australian agent Rick Harcourt, of Goolwa's River Port Property, is surprised by Grant's strong performance given South Australians usually flock to Robe, Middleton, Goolwa, Port Elliot, Victor Harbor and the Fleurieu Peninsula to buy coastal property. "These areas such as Robe and Middleton are going moderately OK. They would be getting a 4 per cent increase over the past year, which is typical of the rest of South Australia," Harcourt says. The state's holiday house market suffers from the lack of high-net-worth executives - given Adelaide's dearth of listed corporations -- so coastal holiday house buyers are usually small business owners or medical or legal professionals. "Because South Australia has been doing it tough for the past five years there has not been a lot of growth," Harcourt says. "Discretionary housing is the first thing people get rid of."

But Toop & Toop agent Roger Smith of Victor Harbor says since the federal election there's been a rapid turnaround in inquiries as well as marginal increases in prices. Some coastal areas such as Yankalilla - which RP Data says sustained a 7.9 per cent increase in median house prices for the 12 months to September - have been struggling for years, but had experienced a pick-up of late.

Ottoson Partners sales consultant Tim Mort says the market has been tough but beachfront three-bedders at Kingston ranging from $180,000 to $250,000 have been selling.

"We had a house on the market for $450,000 and the vendors took $395,000 on a walk-in basis. People have said, post-election, they have a little bit more confidence."

The Gold Coast is one of Queensland's top performing coastal locations, with 5649 houses sold in the year to

September, while house prices are up 4.9 per cent on the previous year to a median of $489,735 according to RP Data.

But it's not only the long-suffering Gold Coast that is showing improvements. Further north, the Whitsundays was the Sunshine State's top

performer, with prices rising 5.2 per cent to $378,600 followed by the Cassowary Coast with a 5.1 per cent price rise.

PRD Whitsundays agent Christie Leet says the increase in sales is due to steady population growth.

"It's also due to the fact that so much vacant land has performed well and southern investors are seeing the market has passed through the bottom of the cycle and seen tremendous value and have the confidence to invest," Leet says.

Queensland's Sunshine Coast did not feature on RP Data's list of the top coastal performers. Nevertheless, Tom Offermann of Tom Offermann Real Estate says there's been a huge improvement since the election.

"October and November have been our best months for five years," says the Noosa-based Offermann.

"The conditions were ripe for increasing (sales) activity, with low interest rates, and people feeling there was value in the market, it seems a catalyst for improving confidence was the election. There's been quite a marked change of attitude and activity. We have had a lot of cases of multiple offers and unhappy people who have missed out on properties."

Sunshine Coast prices have picked up between five and 10 per cent in the past six months, he says. Offermann has just auctioned 43 Pelican Street, Peregian Beach, attracting three bidders. The renovated older-style house with ocean views sold for a record $2.22m.

A three-bedroom waterfront penthouse in the Noosa Pacific complex that failed to sell in 2010 and 2011 sold under the hammer for $1.8m recently.

"There's definitely a big pick-up in the market. A lot of people have had their life plans on hold for the past five years, because of the difficulty of selling their properties, but there's a lot of happy people out there."

But Offermann is quick to stress there are still bargains in Noosa.

"The market is still off about 30 per cent since pre-GFC, but is expected to make up a lot of that ground in 2014."

The LGA of Bellingen, north of Sydney, wins the prize for the highest median price growth in NSW - up 10.9 per cent. Bellingen agent Guy Saddleton, principle of Guy Saddleton Real Estate, says prices are holding firm.

"There's been extraordinarily high sales, which have contributed to the median price (rise). I don't believe we have seen a 10 per cent increase, but we will see an increase if the current sale levels in the Sydney market continue to the point where demand exceeds supply.

"People relocating from Sydney are the major drivers of our market, with average prices between $350,000 to $400,000 for a three-bedroom house on the coast."

Closer to Sydney, agents are divided over the on-going strength of the waterfront housing market - some expect more sales by the end of year, but others reckon the market has run out of steam.

"I can say you could kiss any coastal sales for this year goodbye," says Bill Bridges of Ballard Property.

"That's unless you have a buyer with $40m or $50m."

Nevertheless, there are at least 10 waterfronts on the market in Darling Point and Point Piper -- some are being marketed under the radar, with vendors unwilling to signal their decision to sell, while higher-priced properties such as business identity Ron Medich's 112 Wolseley Road, Point Piper habourfront have been publicly marketed for some time.

"Medich's has been on the market for 18 months. You can't get a better waterfront. They want $40m and I think it's worth $40m but there's no takers," says Bridges.

Ken Jacobs of Christie's International Real Estate believes there could be some more waterfront sales this year.

"The waterfront market has certainly improved dramatically in the past few years, but that is from a low base . . . There is certainly more attention on the top end: more inspections are taking place and there's more offshore interest from China, UK and some parts of Europe that have been hard hit economically. There are still high-net-worth people who live there and are looking at more stable economies to invest (in)."

Perhaps Australian Property Monitors Andrew Wilson sums it up best. He reckons the beachfront housing market has certainly improved.

"Holiday home and retiree destinations tend to be the last rung on the ladder in terms of a housing market recovery," Wilson says.

"The exception is Queensland, Cairns is getting a pick-up. The Sunshine Coast and the Gold Coast are on the rise from a low base of course.

"The NSW central coast is showing some increased activity, which is more to do with the Sydney housing buzz.

"The central coast is also picking up energy from the Sydney market because it's an affordable lifestyle market. There's some increased activity around Wollongong. If it is on the coast it is picking up."