Escape to the beach

It’s no surprise that baby boomers across the country have been reluctant to sell the family home while the residential property market remained depressed. But why not buy a home to retire to in a few years’ time? Agents in Sydney’s northern beaches and on Melbourne’s Mornington Peninsula have reported an increase in the number of baby boomers snapping up lifestyle apartments and townhouses at discounted prices with a plan to rent them out for a few years before retiring.

The chief economist at Australian Property Monitors, Dr Andrew Wilson, says it could prove to be a good strategy.

”Given that the stockmarket has underperformed in terms of returns until recently and the housing market has been subdued, buying property at the bottom of a pricing cycle while rents in most capital cities have continued to grow makes sense,” Wilson says. ”You can accrue some capital gains while getting solid returns from rent.”

The co-author of Where to Retire in Australia, Jill Weeks, says it pays to get to know an area well before you buy.

”There are a number of things people really need to think about,” she says. ”Today’s paradise could very well be tomorrow’s high street, so spend some time in the area. Check out the medical facilities, speak to police about crime in the area and find out what the weather patterns will be like.” And top of the list for many retirees, Weeks says, is being able to leave the car at home and walk to amenities.

In Sydney: 14 Southbourne Way Mona Vale $880,000

Snapshot A three-bedroom, 193 sq m townhouse with only one common wall. At ground level is a double garage with internal entry and tiled, open-plan living areas that open to a private and leafy courtyard. The granite and gas kitchen has new Miele appliances and the bedrooms are upstairs. 

Maintenance levy $530 a quarter. 
Rent estimate $750 a week. Yield 4.4 per cent. 
Agent LJ Hooker Mona Vale, 0424 755 448.

Agent Karen Turner says she has fielded interest from a few older buyers who are looking at this 1999 townhouse with the view to renting it out for a couple of years until they are ready to move.

Reduced from $920,000 and tucked into a cul-de-sac about a 400-metre walk from the local shopping village, the property has a guest powder room on the lower level as well as a chairlift for elderly or disabled access to the second floor.

Turner says new paint and floor coverings, as well as an update to the bathroom and kitchen, could fetch a higher rent of up to $850 a week.

Dr Andrew Wilson, of APM, says Mona Vale is a good target for retirees.

”You still have the seaside environment but without the top-end prices you get at Whale and Palm beach,” he says.

Mona Vale’s median unit price is $585,000 and more than 23 per cent of local residents rent.

Best features: Room to add value, shops and cafes within walking distance, public transport nearby.

Worst feature: The south-to-back aspect.

And Melbourne: 8/14 Tanti Avenue Mornington $790,000+

Snapshot: A three-bedroom townhouse, measuring about 200 sq m, with double garage. The townhouse has a stone kitchen with integrated appliances and large living spaces on the ground floor. The adjoining living and dining rooms open to a landscaped courtyard with four steps up to the street. The bedrooms, two bathrooms and a study are upstairs. 

Strata levy $950 a quarter. 
Rent estimate $550 a week. 
Yield 3.6 per cent (at purchase price of $800,000). 
Agent Harcourts Mornington, 0419 503 327.

Agent Janet McNeill says this townhouse, which has been reduced from an initial asking price of $965,000, has been immaculately maintained by the current owners and would appeal to retirees and downsizers.

Within Sutton Grange, a 2007 development with 17 townhouses and an 1877 residence with a colourful history, the property is only 200 metres from Mornington’s bustling main street where you’ll find shops, cafes, cinemas, restaurants and parks.

McNeill says the area is a walker’s paradise and daily errands don’t require a car.

”This is what the majority of people moving into or around Mornington are wanting,” she says. ”They want to walk to everything, leave the car at home, and be able to ‘lock and leave’ when they travel, either interstate or overseas.”

APM’s Dr Andrew Wilson says many Melbourne suburbs with properties ranging from $1 million to $2 million ”took off” last year, which would help some baby boomers plan their retirement.

”There are solid baby boomer areas where we’ve seen gains, so these people may be able to borrow against the family home to buy a retirement place,” Wilson says. ”However, there is much less competition for rental properties in Victoria so we may see flattening or even a backwards movement in rents.” Mornington’s median unit price is $389,000 and about 25 per cent of the population rents.

Best features: Central location, large rooms, no work required on property.

Worst feature:  The bedrooms are all upstairs, which could present a problem for an ageing owner.