Holiday Home Market Hit

THE SUNDAY AGE

Sunday January 8, 1995

Adrian Rollins

RISING interest rates have dealt a blow to the holiday house market, which has been in the doldrums across much of Victoria during the '90s.

In summer holiday playgrounds such as Phillip Island, Eildon and Lakes Entrance, sellers have outnumbered buyers for the past four years, depressing prices and cutting turnover to a minimum.

This is despite the strength of the market on the Mornington Peninsula and along the west coast between Geelong and Apollo Bay, where demand has increased steadily in the past 12 months.

Agent Robert Wilkinson, of Sallman First National in Cowes, said prices in some areas of Phillip Island had dropped 25 per cent in the past year.

According to Mr Wilkinson holiday properties on the island are selling for between $45,000 and $250,000, depending on location, size and condition.

``If you want to buy and use a holiday house, you can get a two or three-bedroom one in the $40,000 to $70,000 range, where a year ago you might have been paying $80,000 to $90,000.

``But there seem to be increaes in pockets. At Smith's Beach and Rhyll the prices are as good as they were 12 months ago. But areas like Cape Woolamai, Sunset Strip and Sunderland Bay have been decimated. We are selling blocks for $10,000 where they were getting $18,000 or $19,000 last year," he said.

Agent Rex Nicholas, of Noble Knight Real Estate in Alexandra, said the market had slowed after being buoyant during the 1980s.

According to Mr Nicholas, prices in the Taylor Bay area started at $140,000 for a three-bedroom home in fair condition, but warned, ``A lot of people buy a waterfront house with a jetty and expect to be able to walk out the front door and waterski from their jetty. This year being a drought year, the water level has fallen a lot, so a lot of waterfront homes are actually 300 metres away from the water," he said.

The market in Lakes Entrance has experienced a decline in the past five months as rising interest rates have combined with the long-term economic downturn in the La Trobe Valley to put buyers off.

Agent Bill Daniel, of LJ Hooker Lakes Entrance, said the holiday home market had ``definitely slowed up".

``There are not too many buyers but there are a lot of sellers. We have about 20 properties for sale in the $85,000 to $110,000 range, but the market is very quiet.

``You would be able to get a weatherboard holiday home in town for about $93,000, and at the upper end of the market you would pay about $110,000 for one close to the water," he said.

Mr Daniel said that despite the poor state of the market, prices had remained about the same for the past five years. He did not expect any significant improvement for at least 18 months.

But in Rye, agent Michael Kelly, of Shorts Real Estate, said the market had been ``moving along well".

``One of the reasons is that prices have come down such a long, long way. They have dropped by 30 per cent over the past four or five years.

``But in terms of sales the last six months have been very good for us, the best since 1990. We are probably averaging between eight and ten sales a month," he said.

Mr Kelly said land sales on estates near the ocean beaches were booming, with some blocks attracting prices of $250,000, but ``the rest of Rye is losing value".

``There is a huge oversupply of property, and that's keeping the prices down. We've got 300 homes on our books plus another 200 blocks of vacant land. You can get yourself quite a nice place for $65,000 to $75,000," he said.

Mr Kelly said holiday homes gave a poor return on the investment, and rental prices were depressed.

In Lorne, sales for some agents have increased by 25 per cent in the past 18 months.

Mr Ian Stewart, of Lorne Real Estate, said demand had been ``excellent", with the majority of buyers looking to spend up to $250,000 for a house close to the township.

Mr Stewart said sales had increased by 25 per cent between June 1993 and June 1994, with the strongest demand for properties with ocean views and close to facilities. But he warned that buyers should not expect to recoup much in rent.

``Those that look to rent them out will not get a great percentage return on their capital outlay. Weekly rentals are anywhere from $350 to $1400 for a top-market ultra-modern four-bedroom house with ocean views," he said.

Mr Brad Papworth, of Hayden Real Estate in Torquay, said the holiday house market had accelerated since mid-1983, with prices now ranging from $90,000 for a two-bedroom cottage to $400,000 for a substantial beachfront home.

© 1995 THE SUNDAY AGE

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