Coastal properties on the cheap

It's true that coastal properties often come at a premium - so Jonathan Rivera, state director, residential research with PRD nationwide, shows you can still grab a waterfront property without breaking the bank.

In the wake of the stock market tumble, many buyers are wondering if it's still safe to put their money on coastal properties. While there are some indications that sales volumes have come down, prices in the coastal areas are still holding up on their own.

Coastal hotspots such as Tweed Heads West in northern NSW have jumped by 20.41% in the past months and a solid 6.22% in the three months to March 2008. Another NSW suburb Bonnells Bay, located at the Central Coast racked up a 15.8% growth year-on-year and a healthy 5% in the three months to February.

My take is that the current downturn hasn't continued on long enough to cause people to drop their prices. While there's a lot of speculation that coastal property owners might come under pressure due to their exposure to the share markets and will have to sell up at a lower price, I think there are enough people migrating to the coastal areas to underwrite the values.

In his Population Growth Report last year, Bernard Salt found that the fastest growing places in Australia in terms of percentage growth rates comprise of small communities on the beach or in parts of the city undergoing significant social and urban change. Salt identified the City of Gold Coast as by far the fastest growing local government area on the Australian continent.

High return, low risk investment
Investing in property along the coastline is like buying into the blue chip share market. The price of entry is normally higher than inland properties, but the rate of return is often better and the risk of a loss is minimised due the scarce and unique nature of these properties.

Coastal property has performed exceptionally well when the markets have been driven by the following fundamentals.

• Population growth
• Strong tourism market
• Private and government investment towards infrastructure and jobs creations through employment opportunities
• Solid confidence from developers in future residential developments
• Airport and major infrastructure networks (hospitals, education, public transport and arterial roads etc)

Regional opportunities
The cost of buying into a coastal community which satisfies all the above-mentioned market fundamentals is high. Therefore emerging coastal communities which might not yet have all of these facilities are worth a look. The more "regional" beach side towns represent some of the best capital growth potential and in many cases provide a comparatively affordable entry point into this popular coastal market.

Ultimately the key factors buyers should look for when selecting property in emerging regional coastal "hot spots" are as many of these market fundamental as possible, plus any features which make the region unique such as an economy based on military, tourism or agricultural and mining services. Diversified areas such as these provide a low risk investing environment, as the local economy is well balanced and should be capable of withstanding any economic fluctuation such as changes in commodity prices or fewer tourism numbers.

If you're looking to buy at the coast you should shop hard and make sure you do your research. If you can find something that has all the attributes - right price, water views, an older style that can be renovated, something that's close to all the new retail centres then it's a sound financial investment. It also must have the ability to be used as a holiday let, a permanent let and one where the owner/buyer is happy to live in it then you can take advantage of all three markets.

Jonathan Rivera is the state director, residential research with PRD nationwide. Visit www.prdnationwide.com.au

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