[+] Margaret River: Uncomfortable Comparisons in Time of Growth

The word on Perth’s windy streets back in the early 70s was the state’s emerging south-west wine industry was invented by a handful of medical doctors who couldn’t play enough golf to lower their tax bills. That’s only partly true. Certainly the first serious vineyards in the Margaret River region, 270km south of Perth, were planted by an unusual number of medical practitioners. Dr Tom Cullity was a respected cardiologist when he planted Margaret River’s first commercial vineyard on just over three hectares in Cowaramup, and Vasse Felix was born. Busselton doctor Kevin Cullen and his wife Diana acquired land in neighbouring Wilyabrup and started Cullens. Dr Bill Pannell was doing a residency at Royal Perth Hospital and King Edward Maternity Hospital, when he found a site on Metricup Road for Moss Wood. Dr John Lagan, an Irishman who arrived in Margaret River in 1968, started Xanadu. From there, according to veteran West Australian journalist Ray Jordan, the fairy tales begin. “Yes, there was this reputation they were doctors with more money than sense making wine, but they honestly worked bloody hard,” says Jordan who has been writing about wine and the region for more than 40 years. “I mean Tom Cullity at Vasse Felix was a cardiologist from Perth. He drove down after work on Friday, he worked like a navvy for two days and drove back either at midnight on Sunday or first thing on Monday morning, then went back to work. “Bill Pannell was the same. He lived on a shoestring. ▲ Vines in the Margaret River region. “And remember they were establishing vineyards when there was no infrastructure,” Jordan says. “If you wanted to get anything down there, you had to go up to Bunbury to get it, offload it from a train and then drive it down on roads that were not sealed.” The doctors, and other early winemakers that joined them, put the Augusta Margaret River Shire on the map, turning the once sleepy agricultural region known for its tall trees and world-class surf breaks into a major destination for tourists and a new home for sea and tree-changers. Last year 1.6 million tourists visited the Margaret River region, the big majority of them domestic. But it’s the resident population that’s growing fast, as West Australians look to get out of the city and head south for any one of a number of reasons. In the 2021 census, 17,298 people lived in the municipality, about 10,000 of them in the town itself. But while the state’s population rose less than one per cent in the 12 months prior, Augusta Margaret River grew by 2.85 per cent. Demand for easy access to good beaches, natural forests and national parks, picturesque vineyards, a wide variety of locally-grown food, and a generally more relaxed lifestyle has seen property prices in the area continue to rise. In a report released last week, and despite national property prices declining, Domain chief of research and economics Dr Nicola Powell said regional areas across the country had seen a big increase in demand. “Many regional house prices are still outperforming their city counterparts even though the pandemic-induced boom is over.” Powell said. Augusta Margaret River is no exception. ▲ The natural beauty of the region is of course a large part of its appeal. The Domain data showed the median house price in the past 12 months rose 17.2 per cent to $700,000. Only Toodyay—a wheatbelt town on the Avon River 85km north-east of Perth—had a bigger percentage increase. But its median house price is $200,000 less. And all that has led to some uncomfortable comparisons. Some in the region and in the media have begun asking: Is Margaret River the next Byron Bay? “No, not for me,” says August Margaret River Shire councillor Ian Earl. Earl was the only member of Augusta Margaret River’s elected body, or administration, who would speak with The Urban Developer . After initially agreeing to interviews, council officers then said the shire would have to “politely decline participation in this instance…” A councillor since 2009 and twice shire president, Earl was born in Margaret River, early enough to remember the last train leaving the town in 1956. His family has been in the region for about 90 years. ▲ Like many coastal hotspots, surfers arriving in the 1960s changed the region. “Byron Bay is on the ocean,” he says. “The fact that Margaret River is not gives us some advantages when it comes to planning, I think.” Margaret River town planner Marc Halsall puts that down to careful planning by both state and municipal governments, dating back to the late 1990s. “They said look, what we're going to do is to consolidate the existing town sites on Bussell Highway which is, say, ten kilometres from the coast, and Margaret River will be a major centre and Augusta will be another significant centre,” he says. “And then the other minor towns on either side, like Cowaramup, Witchcliffe and to a lesser extent Karridale, they can all accept some population. “So that has dispersed the population a little bit into smaller centres, giving people choice of where to live, while keeping development away from the coast.” Halsall should know. He was with Augusta Margaret River shire from 1994, leaving nearly ten years later as principal planner. “I think growth down here was probably inevitable because of the location of the place, its proximity to Perth and the improved connectivity of it,” he says. “Probably even more so now that we've got the airport at Busselton.” Regional House Price Growth in WA Halsall is referring to the Busselton Margaret River Airport, just 20km north, which has been marketed as the gateway into Margaret River’s wine region with Jetstar flying three direct flights a week from Melbourne since April last year. The facility is expected to see nearly 100,000 passengers this year. Fly in, fly out (FIFO) workers have helped swell those numbers. “FIFO became a lot stronger throughout Covid,” says Halsall. “FIFO positions suddenly became almost solely dedicated to West Australian workers. And I think a lot of those people made the choice to live where they wanted to during COVID, and Margaret River became a part of that.” BHP, Fortescue Minerals and Rio Tinto all have direct flights from Busselton to their north-west mining operations. Rio Tinto estimates more than 1300 of their workers live in the Busselton-Margaret River region. And then there are the baby boomers. Halsall studied urban and regional planning at Perth’s Curtin University in the early 90s, where he first heard warnings of the future movement of baby boomers. “It just it always stuck in my mind when we were doing the planning degree,” he says, “they said, 30 per cent of baby boomers were expected to move into the southwest, probably in their retirement.” At the moment, the median age of a Margaret River resident is 42 years. Unemployment is at just 2.8 per cent. But with rising house and land prices, how long can that trend continue? Total Value of Building Approvals, August Margaret River “I guess it comes down to housing and making sure there's enough homes available, and some areas are better placed to be able to do that,” says Ray White’s chief economist Nerida Conisbee. About 18 months ago, as Byron Bay land prices continued to surge, Conisbee used data to work out where the next hotspots might be. Naturally, the location needed to be by the beach. And had to be achieving price growth already—at least 20 per cent—but still priced under $1 million. Rental growth had to be strong—at least five per cent annually—and long term growth had to be solid. And, critically, it couldn’t be within easy commuting distance of a capital city. Conisbee singled out Yamba in northern New South Wales, Cape Woolamai on the south-eastern tip of Victoria’s Phillip Island, the Cairns suburb of Palm Cove in Queensland, South Australia’s Robe. And Dunsborough, a coastal town about 40km north of Margaret River. “It has lots of nice beaches, shops and restaurants,” she said in her report. “And as an added bonus, it’s close to Margaret River wineries.” Byron’s recent history is not that dissimilar to that of Margaret River. Longboard surfers arrived in the late 60s for the surf breaks and by the 70sits reputation as a hippy, happy alternative town was well established. But with a median house price that more than doubled during the pandemic to $3.09 million, Byron has become something of a cautionary tale. Only the very rich can afford to live there. ▲ A street in the Margaret River township. “Really, the only way that they can solve affordability is by making sure enough homes are built but I guess the community opposition of people that are already living there is against it, because they don’t want a lot of development in the region,” Conisbee says. When asked about affordability, Cr Earl points out Margaret River is “still cheaper than Melbourne and Sydney.” Council statistics show the total value of all building approvals for the 2022-23 financial year will be about $77 million. The bulk of that—$58.8 million—is residential. But that’s actually $43 million less than the previous year and the lowest for the previous three years when Covid drove construction numbers up. “We know as a council that we need to continue to supply 250 Plus blocks of land a year otherwise, we will run out of them quickly,” Earle says. “It was always going to happen because there were people with some money and people with a bit of vision who started turning up and making some changes, and that just put us in a better place,” he says. Since July 2011, certain development applications—generally over $10 million— are no longer determined by local government. Instead, applications go before a Joint Development Assessment Panel, JDAP. ▲ The region’s forest are world-famous and include the tallest trees in Australia. Developers with small projects of more than $2 million can elect a voluntary JDAP determination. That’s aimed at speeding the process, and both Halsall and Earle believe it has worked well. “That comprises a board of five people, and two of them are local councillors,” says Halsall. “And the council writes the reports to that meeting, so it still has strong input into the state decision-making.” The town planner does not see growth in the region as out of control. “It is self-regulating in a way, there’s only so many people that the area can sustain physically and also economically,” he says. “You can only really grow if you can sustain a population, and you can only sustain a population if there's employment, obviously. “Yes, in a sense it is becoming another Byron Bay. “But I don't think what I came here for is gone. “You know, the natural environment, the rural experiences that we've got, the wineries, the river and the north, west and south coasts, that are all around us. “And forests. They're all pretty much intact as they were when I came here.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Margaret River: Uncomfortable Comparisons in Time of Growth

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