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Hervey Bay is it Finally Picking up?

Discussion in 'General Property Chat' started by spot, 1st Sep, 2016.

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  1. spot

    spot New Member

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    1st Sep, 2016
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    Hi All,

    New to the forum but would appreciate any feedback on how they see Hervey Bay tracking.

    Reason for asking, is that we bought an IP 2B townhouse in 2007 for $290K (unfortunately near the peak of the market) and it has been trending down ever since. Currently rented out for $260/wk until early November. It is an older complex of 6 2B townhouses, on the Esplanade. So right across from the beach and facing a park. The problem with Hervey Bay as I see it, was an oversupply of units/townhouses, GFC, loss of mining jobs and dependence on tourism.

    Bank valuation just came in at $240K, as we were looking at using it for security to purchase a PPOR in Perth. So this unfortunately means negative equity as we still owe $220K. It has always been negatively geared with probably costing us about $5K a year. Our aim with the purchase was more for CG and we bought it while we were working overseas and had a case of FOMO.

    So tossing up whether to just cut our losses or wait a little longer as we would really like to buy a place for ourselves and wanting to take advantage of the downturn in prices in Perth. We are currently renting and feel we are wasting rent money while properties are only getting more expensive. The selling agent I have been talking to says that the market is picking up in Hervey Bay and it would be a good time to list it with spring and everything. Also, saw that the HTW clock has Hervey Bay as picking up. There has been recent extension of a major shopping centre and new hospital which sounds promising for the economy.

    One negative with selling is that there is another one for sale in the complex at $240K and we were hoping to achieve $260K. So until that is sold, it will just keep the price down.

    So, in summary, with the other unit on the market are we just wasting time and money trying to achieve a higher price? And if the market really is picking up, we could wait another year?

    Thanks in advance.
     
  2. New Town

    New Town Well-Known Member

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    If you've held on for this long I wouldn't sell just yet. While values of units plummeted the area now appears the only bright spot on the coast until Cairns

    An agent saying "it’s a good time to sell" is a waste of typing
     
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  3. Indifference

    Indifference Well-Known Member

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    Of course the Agent said it's a good time to sell.... that is is their job! They get paid to "sell" properties....

    Realising a loss hardly seems complimentary to buying a PPOR. Also owing 220k on a property valued at 240k is not negative equity. It has a LVR of ~92%, so you have some equity, which would largely disappear if you sold due to costs.

    I think the real issue you're trying to convey is about serviceability for a PPOR?

    Also, if the other property in the complex listed at 240k sells, it might not achieve 240k... so thinking that this will improve your chances of gaining a higher price does not make sense to me. Ie. if it sells for 230k & you list yours the next day, do you really expect someone to pay 260k for a comparable or identical property next door?
     
  4. Miss_D

    Miss_D Member

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    Hi spot, i live in maryborough, 30 mins to the bay.
    Prices are holding, but barely. We are loosing employment every day. The wide bay has the second highest unemployment rate in australia for youth and overall its pretty bad economy here. I know where i work is a major employer and we just lost 23 people, and with more vr's to come it is not good... And this sentiment is not just where i work but other places too. I think a lot of people here are nervous about the economy. Tourism has picked up in the last twelve months, but with huge downturns else where no surprise tourism is one of the first things to drop. There are a lot of empy shops everywhere. In order for this area to take off we need some major players to set up industry here and i just dont see that happening unless we get state or federal help. I dare say any growth is going to be a long term thing. 06-07 was the peak and most stuff today is selling for 20% less or more from then. I dont see major growth for the next 5 years unless we get some big players in town for employment. Also u can buy a brand new house and land deal for less then 320k. That will be putting unit prices down too.
     
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  5. Phase2

    Phase2 Well-Known Member

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    Market seems to be pretty flat to me. If you only owe $220k on it then your interest payments should be less than $11k/yr vs rent of $13k, with rates, insurance etc sounds like it should be neutral, not negatively geared. Stop paying P&I and switch to interest only.

    The other way to look at Perth, is that rents are going down and competition between landlords is pretty high, so why not take advantage of that? ie get a nicer place, OR, get a lower rent and save save save for your deposit?
     
  6. wobbycarly

    wobbycarly Well-Known Member

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    We (company I work for) opened a store in HB about 2 years ago. 12 months in and it's making about half it's budget. Given we sell a "lifestyle" product, I'd be saying that the local economy is still somewhat depressed. I'll let you know when retail sales pick up again. :rolleyes:
     
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  7. dabbler

    dabbler Well-Known Member

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    Yep, tell you anything especially to get a listing. It is always a good time for buyer and vendor to act for them :)

    I do not know the area, but if another is listed at 240, unless the market is warm, it is likely to go for less and in turn be same for yours unless sig. different :(
     
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  8. spot

    spot New Member

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    Thanks all for taking the time to reply.

    Hi @Indifference , yes the intention was to sell to help with PPOR purchase. We had resigned ourselves to some loss, if it means that we can move on. In regards to the other property for sale, that is what is holding us back from selling. We were also thinking of heading overseas in a couple of years so wanted to have as much $$ with us as possible.

    @Miss_D and wobbycarly that doesn't sound very encouraging for HB. We were only thinking of holding on for a bit longer if the market was looking to improve.

    @Phase2 yes the other option was just to get something bigger to rent in Perth, especially if the Perth market is still falling. We are currently in a townhouse with hardly any outdoor space and a 2 year old.

    The agent is a friend of the family, so hoping that it is not all bs talk :rolleyes:
     
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  9. thatbum

    thatbum Well-Known Member

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    Renting is amazing value for money at the moment in Perth. If things are tight financially, this seems like an obvious choice imo.
     
  10. Toon

    Toon Well-Known Member

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    There's some interesting information in this article:

    Fraser Coast property market (Hervey Bay, Pialba & Maryborough) - Australian Property Investor magazine

    Of particular interest, given the high regional unemployment rate, '...data from the Australian Bureau of Statistics points towards a credible economic recovery already under way, with a 10.3 per cent increase in total jobs in the region for the 18 months ending June 2016 (national average 4.5 per cent increase).'

    If they can keep this rate up, that will be very positive for the region and things may start to pick up again.
     
  11. Angel

    Angel Well-Known Member

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    I was talking to a salesman for Coral Homes last week and asking about coastal Wide Bay region. He said their company is currently looking around for a suitable place to set up another display village in Hervey Bay for 2017. Don't know if I'd believe him tho.
     
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  12. Toon

    Toon Well-Known Member

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