Grant King, the Origin Energy boss, secures Palm Beach, Sydney, cottage cheapie

Bay Cottage, the simple 1940s beachfront cottage with an ambience reflecting the good old days of Palm Beach, has been sold for a good old day's sale price.

It's been snapped up by Origin Energy managing director Grant King and his wife Jennifer, according to company documentation created to hold the investment property for the Neutral Bay couple.

Bay Cottage (pictured below) stands on a level 620-square-metre block of land at the corner of Iluka and Nabilla roads, adjacent to a park fronting Snapperman Beach.

Set in lush tropical gardens with a avocado tree, the main two-bedroom house has a sandstone facade. Its upstairs wide bi-fold windows allow sea breezes to float through, while providing views across the water to Coasters Retreat.

It comes with the one-bedder boatshed, credited as one of the most charming boatsheds on the Pittwater foreshores.

It last traded for $5.25 million in October 2006 with minor refurbishments undertaken in 2007. 

It was initially listed in April 2009 with $6.29 million hopes.

Title Tattle notes its been sold at $4.05 million, reflecting a 22% price fall. Its price represents $6,500 a square metre. While it would be pushing it to suggest that Palm Beach become a peninsula of paupers, there's no doubting beachfront property prices had come off by 20% or so by late 2009 due to the global financial crisis, and in many instances hovers still at those levels.

Bay Cottage sold through Noel Nicholson at LJ Hooker.

The price drop almost mirrors the official NSW Valuer-General land valuation which has dropped 32% from $5.88 million as at July 2010, to $5.1 million in July 2011 and to $4 million in July last year.

Based on the three-year averaging, its $4.99 million average will incur an $83,400 land tax bill. 

Since 2007 the taxable value of each parcel of land is determined by adding the land value for the current tax year and the land values that applied for the two preceding tax years then calculating the average.

Last year's top Palm Beach sale price was Kalua, the Joye family’s plantation-style Palm Beach trophy home, officially registered at $22 million.

It consisted of two amounts, the $19 million 4,615-square-metre front block on Ocean Road plus the rear Florida Road $3 million 888-square-metre block.

Another $1.42 million was paid in stamp duty for the property, which is a five-bedroom, six-bathroom house with three-bedroom guesthouse along with studio cabana, pool and tennis court on a 5,500-square-metre dress circle block overlooking Cabbage Tree Boat Harbour.

Breaking it up into two separate prices allowed a $60,000 stamp duty saving as stamp duty on a $22 million sale would have been $1.48 million.

Sutton and his wife will be the 1920s beach bungalow’s third owner. It was last sold by the Hordern retailing family to the more entrepreneurial Joye family, the current vendors, for $330,000 in 1978.

Palm Beach sales previously peaked with the $15 million sale in 2007 of Anakela, the beachfront retreat of the late grocery tycoon Jim Fleming and his widow, Angela.

It was bought by the Uncle Toby's founder Doug Shears.

The Flemings had paid $3.65 million in 1995 for the 1,947-square-metre Iluka Road property, which had sold in 1973 for $140,000.

The Flemings constructed an expansively lavish house that came with a second-floor see-through glass bathtub, which was suspended above the ground-floor living area.

It was 1981 when the late Kerry Packer broke through the suburb's million-dollar threshold with his $1 million purchase from the MacCormick family. But the pianola is the raciest accoutrement around at the Packer family bungalow.

Kalua was sold by Ken Jacobs and Darren Curtis at Christies International in conjunction with LJ Hooker Palm Beach agents David Edwards and Peter Robinson. It represents a record price for the suburb, and a bullish price, but it didn't overflow into the bulk of the prestige market with any great impact following its April 2012 sale.

Neither did the April 2011 purchase by Steve Bellotti, ANZ’s managing director of global markets, of $8.4 million on a beachfront property in the pricey part of Sydney’s northern beaches peninsula.

The vendor, dentist Graham O’Neil, had wanted $9.95 million for the 558-square-metre holding with an architect-designed two-storey, five-bedroom beach house complete with boat and watercraft storage area with hydraulic floor lift.

It ranks among the few Iluka Road properties with title to the high-water mark, whereas the other properties are mostly reserve frontage.

It was a more-than-respectable final selling price of $15,000 per square metre which gave rise to suggestions the tide was rising.

There was a nearby $6 million sale nearby in 2010 with a tiny cottage that reflected $10,900 per square metre of land value. And another house slightly less comparable to the Bellotti purchase sold mid-2010 at $7.2 million, which reflected $13,400 per square metre.

The pre-global financial crisis beachfront record was $12,980 per square metre, also on Iluka Road, in 2007.

At one stage during the downturn there was a $4 million oceanfront reserve sale on Ocean Road – directly opposite the northern end of beach – reflecting $3,550 per square metre in 2009. Prices, however, eventually found their floor in the wash-up of the much-credited Lehman's effect.

The 558-square-metre Bellotti Palm Beach block comes with a current $4.6 million valuation, down on its $5 million valuation a year earlier and its $5.61 million unimproved land valuation in 2010. The 2008 land valuation was $5.28 million and $5.5 million in 2009. The current annual land tax bill will be $85,000, if the home is not the principle place of residence.

Its value in 1984 was $350,000, according to RP Data.

The current priciest listing was listed last month by businessman Paul Nankervis and his wife, Rosie, on sought-after Sunrise Hill.

It was designed by architect Susan Rothwell on a 1,891-square-metre block with the uninterrupted full northerly panorama of the sand spit, golf course, ocean, Pittwater and Barrenjoey headland and its lighthouse.

After the Nankervises bought the property (pictured above and below) 11 years ago for $2.4 million, they built the three-level residence featuring six bedrooms, six bathrooms, and kitchen and expansive living areas flowing to entertainment terraces.

The property is for sale with $14 million plus hopes through LJ Hooker agents David Edwards and Peter Robinson. 

The ongoing twin challenges for Palm Beach are the strength of the Australian dollar – and the virtual absence of expatriate buyers – and perhaps the greater underlying inhibitor to any sustained recovery, the detrimental impact of land tax.

Looking at the rubbish trolleys still out on the narrow streets well after garbage night, it is possible to conclude about 80% of Palm Beach properties are holiday houses. So their holiday home purchase requires not only the initial outlay – with its inevitable NSW government premium property stamp duty – but also the annual land tax.

The best thing to do is make Palm Beach one’s principle place of residence and have a land tax-free apartment in town.