“How can house prices keep rising without incomes in the area rising as well?.. The only answer I can come up with is that prices can’t possibly go up so far ahead of rents sustainably.”
In my experience – which is an investment/development role in primarily waterfront/coastal locations, the answer comes down to “supply and demand” and the buyer’s ability to service the cost of the property without the need for residual income.
I am not familiar with the location highlighted in this discussion, however, if it is attracting a predominantly retired population, then it is possible their ability to acquire freehold, or service minimal mortgages, is playing a part in sustaining market valuations.
Otherwise demand for waterfront/coastal property will always exist, and often appreciate at a faster rate than other locations – without the typical influences such as rental and interest rates.
As westan correctly pointed out.. “the prices might seem high to you but there are some very wealthy people out there all after the same thing.”
— Michael
Have a read of the book ‘The Big Shift’ by Bernard Salt. That will give you some insight into the coastal phenomenon going on in Australia.
James
I remember working on the south coast of new south wales, and hearing about the manz people who bought down there as a cheaper alternative to living in sydney (this was before the RE boom). Problem was, there was not the infrastructure to support people. All the doctors didn´t bulk-bill (a monopoly agreement) and there was barely a corner store, let alone a community centre etc… I doubt this has much changed. There was also no public transport, and the rail line ended in nowra, leaving areas further south isolated.
The boom may have flooded coastal areas, but what are people buying into?
River views might be the next big thing. I reckon aussies have a love affair with the river too, particularly those of us from the country. Check this out:
http://www.thesundaymail.news.com.au/common/story_page/0,5936,8818031%255E2765,00.html
kay henry
Carlover,
The demand for property in country areas in mainly fueled by city people wanting to buy vacation homes. This in turn pushes the prices up in these areas. For example, look at Terrigal, the average price of a home rangers anything from 500k to 2 million, its a simple maxium, demand will always influence supply and for that matter, price!
RedStar,
Who can afford holiday houses anymore? Richmond has one, but he rents it out.
Where is Richmond anzway?? [
]kay henry
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