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Caravan Park Market Review - September 2008

Wednesday, 17 December 2008 00:00

We had however already started to see in the year prior to March 08 an easing in the Caravan Park Market on the back of the RBA’s previous rate increases (most notably 7 in 3 years). Buyer enquiry was diminishing or otherwise taking a more conservative approach.”

As predicted the Caravan Park Market has continued to quieten over the past 6 months. This is not to be unexpected given there has been an overall tightening on the Australian economy with financial and property markets continuing to decline to levels not seen in Australia for many years.

There has been a perception that Caravan Park yields/returns should have moved dramatically from where they were 2 years ago as a result of this quietening. This has simply not been the case. Yes, yields have moved but nowhere near the extent expected by buyers presently in the market. The reason being the lack of Caravan Park sales in the last 12 months when compared to a large number of ‘forced sales’ in other financial and property markets. Sales data generally acts as evidence to suggest a shift in a particular market and the Caravan Park Market hasn’t had this supporting sales evidence.

Thus, a quietening in a particular market does not necessarily mean a quietening in that particular industry. The Caravan Park Market and Industry is a good example of this at present. The Industry has by all reports experienced another good season with many operators again reporting increases on their previous year. Outback areas in particular have had an excellent season with fuel prices generally having little effect.

As discussed above, things look relatively good with regards to the Industry but where to from here with regards to the market? As you’d be aware the RBA reduced official rates by .25% at the start of the month after noting the economy had slowed considerably quicker than they’d originally expected. As such, analysts predict that this will be the start of many more cuts by the RBA over the next 12-18 months. It would seem also that the Banks have undertaken to mirror official rates on a one in all in basis.

We’d expect that after an initial wait and see approach by buyers, which would be considered a normal approach given many will still be hesitant after 7 years of increases, buyers will gradually start to filter back into the market.

Our advice – if you’ve considered selling in the last 12 months or envisage selling in the next 12 months then the time to act is NOW! There’s limited quality product in the market at present and yet more buyers will continue to flow back as interest rates decrease and buyer confidence returns. Therefore those Parks for sale now will have a greater chance of selling as opposed to those competing with an increase in product in the next 12 months – a case of supply and demand.

For any owners wishing to discuss the market at present or for an obligation free appraisal on the value of your Park please do not hesitate to call one of our experienced brokers.

For any owners considering wanting to sell either now or in the near future, there are several things they should consider doing now so as to maximise their Sales Price at the time their park is marketed. Forward planning is imperative and a confidential, informative and obligation free call to us is welcomed.

Market Updates will now be issued on a quarterly basis in order to keep clients better informed of the trends in this continually changing market.