Let it snow, agents pray

Real-estate agents selling properties in Australia’s ski fields are all dreaming of a white Christmas in July as they face a lacklustre selling season.

Depending on who you speak to, the predictions for property sales this winter range from low-key optimism to downright pessimism.

Reasons for the gloom range from Australia’s growing savings culture to little new stock coming on board to banks’ unwillingness to provide financing.

However, all believe that plenty of powder on the ground will go a long way to attracting buyers.

“If it’s a good snow season, it will help our cause,” says Steve Forbes, director at Snowy Mountains real-estate group Forbes Stynes. “We need snow consistently on the ground.”

He is blunt about the current prospects for sellers: “The market is dead. I’m expecting price drops of around 20%.”

Sales volumes at Forbes Stynes are down 50% since 2010. In 2005-06 the agency sold about 50 properties in Thredbo. Last year it sold 18.

Forbes says property sales were hurt by the impact of the GFC and the subsequent savings culture that emerged, with fewer people spending money on luxuries such as ski lodges and chalets.

“The situation will only change when people stop saving and start spending again. Two years ago the national savings ratio was in negative territory, now it’s positive. When we see that change, then I will become more bullish again,” he says.

When Property Observer spoke to Forbes he was preparing to sell the 25-suite Marritz Alpine Chalet at Perisher on behalf of receivers. The property sold the following weekend for $3.1 million, with Forbes telling the AFR it was half of what it would cost to build such a building today.

Although not nearly as gloomy as Forbes, Toni Wheelhouse from Raine & Horne Thredbo is also hoping for good snow falls this season.

“If there’s a lot of snow, people who come for a holiday get excited. They think, ‘This is great, let’s buy a property’.”

Ski season is traditionally a time when people make inquiries about properties, but Wheelhouse says sales are strongest around Christmas time.

She says the Victorian it has taken a small dip relative to the New South Wales market, but the change is not major.

“The outlook is fairly even. It boomed in 2008 and then dropped off, but it’s been quite steady since,” she says.

No investor interest

Unlike buyers of residential and commercial, purchasers of snow properties buy them because they love to ski, not as an investment.

Forbes says in his 10 years of selling snow properties, he has never sold to an investor. “There is no interest from overseas investors. Why should they buy here? There are way better places to buy.”

Forbes says although most people who buy a property near the snow are happy with the income or possible tax benefits, most are just looking for holiday home. “They are rarely a straight and pure investor such as people who buy residential property in the CBD,” he says.

A survey carried out last year of 2000 home owners and investors by PRDnationwide found that people who wanted a second home were nearly four times as likely to buy a beachfront property as a ski lodge. CBD apartments were also more popular locations for second homes.

Doug Edwards, owner of Mountain High Real Estate, which sells properties in the Thredbo and Jindabyne regions, agrees that most purchases are for lifestyle rather as a “pure investment scenario”.

Although he prefers not to call the market – “it’s pretty hard to judge” – he says there has been a positive start to the season with “lots of inspections and inquiries”.

Usually Edwards sells 30 to 40 properties a year. This year he doesn’t think he’ll sell more than 25.

How much money do you need?

Prices can range from a few hundred thousand dollars for a small two-bedroom apartment to more than $1 million for a modern, architecturally designed pad with a view.

Edwards says “top-of-the-line” new 130-square-metre apartments in Thredbo and Jindabyne can sell for between $1.1 million and $1.25 million, up from about $850,000 five years ago.

“The newer apartments are much larger and have more facilities, such as onsite parking and under-floor heating,” he says. Having just recently listed a three-bedroom apartment for $1.3 million, he says the premium end of town is very tightly held.

The older style, smaller (75 to 80 square metres) two-bedroom units fetch about $500,000, he says.

Edwards has fewer concerns than Forbes about banks’ willingness to lend – he says many buyers use their personal wealth or their super to make purchases.

Wheelhouse is more bearish about the top end of town. She says $1 million plus units are taking longer to sell and owners have had to drop prices to get sales through.

“Depending on condition, you’re probably looking at about $500,000 for a two-bed place or a one-bed with loft,” she says. Add a great location and an amazing view and the price tag pushes up towards the $1 million mark.

Future growth

As for future property developments, among the biggest planned is the village earmarked for James Packer’s Perisher Blue ski field.

In May 2009 Packer’s Consolidated Press Holdings signed an agreement with the NSW government to relinquish control of the Perish Blue car park to make way for a new recreation, retail and commercial village with 800 beds of accommodation. In return CPH got new 40-year leases with options for another 20 years.

However, the village is still some way away, with work anticipated to begin in the summer of 2012-13.

Wheelhouse says there are also plans to rebuild the 65-bed Thredbo Alpine Hotel, part of the Rydges group.