'when Times Get Tough, The First Thing To Go Is The Ferrari Then It's The Beach House'

Sun Herald

Sunday November 9, 2008

By ALEX BROOKS and ELLEN LUTTON

TROPHIES of the rich such as beach houses are being sold as the economic crisis bites hard, generating "wonderful opportunities" for cashed-up buyers.

"Individuals and businesses can reap a lot of great gains right now. It may be the misfortune of others but the buyers should well and truly be smiling," Commsec chief equities economist Craig James said.

A stunning beachfront apartment in the prestigious Reflections tower at Coolangatta on the Gold Coast, which the owner bought for $1.55 million in May is now on the market for $1,349,000.

PRDnationwide agent Jason Abbott said the owner was desperate to sell due to the financial crisis and risked losing the apartment to the bank.

"There are certainly some great buys out there and we've noticed some buyers are coming out from the woodwork for that exact reason," he said.

"Buyers know that these are investments that vendors are doing their best to offload in these tough economic times."

Mr Abbott said that Reflections, which settled only in November, already had more than 30 apartments back up for sale.

"Many of them are barely getting their money back and in some cases, they're losing after paying stamp duty and selling costs."

In NSW, a chic beachfront house in Central Coast hotspot Pearl Beach that was selling for $3.25 million in January is now available "for definite sale in the early $2 millions", PRDnationwide Ettalong agent Stuart Gan said.

A beachfront house in the South Coast village of Hyams Beach that was $3.2 million earlier this year now has a $2.65 million price tag.

"When times get tough, the first thing people sell is the Ferrari and next is the beach house," McGrath real estate founder John McGrath said.

"If you peek behind the curtain you will find a lot of these sellers are in the finance world and are caught with margin loan calls or not getting the same bonus or remuneration they've been used to," he said.

The news that the NSW Government would increase land tax on investment properties worth more than $2.25 million adds pressure to the prestige beach house market. The annual land tax will increase from 1.6 per cent to 2 per cent.

"More people who had planned to hang on until the market improved will sell once they get another big land tax bill," Ray White Killcare director Kerrie Ryan said.

Property Central director Jamie Granger said the land tax slug "will frighten more people out of property" and it would make more sense to lower land tax to attract more investors to reap stamp duty revenues.

In Palm Beach, where some eastern suburbs home owners have a weekender that can fetch a holiday rentals of up to $25,000 a week, a raft of luxury homes has come on the market.

One waterfront property was valued at $12 million last year but is now for sale with a price guide of $8 million-plus.

"I suspect this is a short-term reaction to the economic conditions and in places like Palm Beach you will find that some people are just testing the market and won't actually have to sell," Mr McGrath said. "It's those homes priced between $1 million and $3 million that will be most affected."

Ray White Terrigal principal Jeff Mahoney said a Forresters Beach house he has for sale at $2.89 million was listed last year for $3.95 million with another agent.

"If you over-price a property, you have no chance of selling in this market," he said.

Mr James said the people forced to sell the beach house or sports car "are only a small niche in the market".

"For most people prepared to invest for the long term, this market is presenting wonderful opportunities for businesses and individuals to reap rewards at lower prices.".

© 2008 Sun Herald

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