Latest NewsTrophy seaside home prices surgeFriday, 04 December 2020

Seaside property prices have risen by up to 10 times the national average during the past 12 months as demand for holiday and primary homes soars in response to the fallout from the COVID-19 crisis and rising confidence.

The biggest gains have been in beach suburbs within a two-hour commute of the central business districts, typically Sydney and Brisbane, which also have the infrastructure to support remote working.

Real estate and buyers' agents say demand is much higher than the seasonal uptick for seaside real estate around Christmas, new year and the January holiday season.

One local agent has just completed her biggest quarter for sales in 33 years from buyers seeking a holiday home, or permanent residence from where they can work.

“People can’t travel overseas and they are not sure when they will be able to,” the agent says. “Buyers tell me they’d normally jump into a plane for an overseas holiday, now they jump into a car to their holiday home.”

The numbers are based on an analysis of 12-month changes in property values for seaside postcodes by CoreLogic, which monitors property prices.

High prices are also being paid for showcase seaside properties by a new generation of buyers wanting to combine resort-style luxury living with a remote office where they can work, says Paul Arthur, chief executive of Sotheby’s International Realty.

“This time of year they’d normally be heading off skiing in Aspen,” Arthur says. “Instead they are here in Australia and spending big in Australia on large discretionary items including property, boats and campervans.”

According to Finder, which monitors rates and financial services, Australians spent about $1.1 billion a week on travel last year before the pandemic stopped trips overseas.

Arthur says luxury properties in popular locations along Australia’s north-east coast have increased in price by between 10 and 15 per cent, compared with a national average of about 2.4 per cent.

Recent sales include $6 million for a luxury 2228sq m house on Hamilton Island, which is about 890 kilometres north of Brisbane.

“COVID-19 has not adversely affected the market. There have been some significant sales from huge volumes,” Arthur says.

Prices for houses close to Noosa, around 160 kilometres north of Brisbane, have increased by more than 24 per cent. For apartments, the rise has been about 14 per cent.

Permanent shift?
Agents in Palm Beach, 44 kilometres north of Sydney’s central business district, say before COVID-19 around nine in 10 buyers were looking for a holiday home.

But “many now have greater flexibility to work remotely and are looking for a primary residence".

“This has begun to translate into demand for areas that are highly desired but have been often seen as too far away for a five-day commute” .

A record price of more than $20 million was recently set for a five-bedroom, four-bathroom two-storey Palm Beach house on 2074sq m block.

There is also strong demand for beach properties closer to Sydney.

Brooke Flint, a Sydney-based buyers agent, says demand is “huge” in the northern beachside suburbs north of MANLY from Dee Why through to Avalon, which is about 37 kilometres from Sydney’s CBD.

“Demand has been huge and supply of new properties low,” Flint says.

About one in four buyers in the northern beaches are now from out of the area, drawn by its affordability, agents say.

Prices in the past 12 months for houses in Mona Vale, 28 kilometres north of Sydney, have risen by about 14 per cent, and by about 6 per cent for apartments.

In nearby North Narrabeen, they are up by 16 per cent over the same period.

Prices at popular coastal postcodes in other states are also rising strongly.

According to investment bank Morgan Stanley, the general outlook for the housing sector remains positive, despite trade tensions with China and economic setbacks caused by the pandemic.

“While some signs of housing stress may emerge as broad stimulus measures are tapered, we expect the stronger underlying economic recovery will support positive price growth and are likely to see the previous peak in national prices surpassed,” the bank wrote in its analysis.