There is little doubt that real estate on Magnetic Island is undergoing a boom - probably the biggest in its history. In the last 18 months house prices have, according to one real estate agent, risen by $100,000 - and, if another Island agent is correct, may see 20 to 30% added in the next year or so.

Ian Ivers of First National told MT, "Business is very brisk. Most activity is residential. There's not much commercial property to sell".

"I think there is still another 20 to 30% increase if you base it on seven to ten year period and look at trends over time" says Ian Ivers, adding "Anybody who bought in 1993-94 will have doubled their dollars".

Serene Place, the controversial development in Nelly Bay in which neighbours became agitated over tree clearing and the long term effects the development might have on drainage, has all but sold out with, at last count, the final four blocks under contract. And, at the Bayside development in Horseshoe Bay only four blocks were apparently left.

According to Ian Ivers, the cheapest house on his books is $235,000. "It's a substantial property with four bedrooms. The run-down places have all sold," he said.

Agents attributed much of the demand as being buoyed by the apparent success of the yet to be opened, Nelly Bay Harbour (Magnetic Harbour). They point to the large amount of promotion the Island has received interstate through the project's marketing and its contribution to the Island's tertiary sewerage infrastructure which has, nonetheless, been a mandatory requirement of the State Environmental Protection Agency on Council.

According to agent Bill John, "There's nothing under $225,000. The majority of places are between $275,000 and $325,000. From July 2002 to December 2002 real estate on the Island rose by about $50,000 across the board, from January to April 2003 nothing changed and then from April this year prices have risen another $50,000."

Bill John believes that, on the whole, people are not buying for speculative reasons but to retire here. Another agent, Robyn Hamblyn told Magnetic Times, "People are buying because they've "found" the place and realise how beautiful it is and want to buy before they can't."

Sue Cole from About Town Real Estate said, "It's definitely booming. I think it is just catching up with the prices in the south. A contributing factor is that people feel more secure in a smaller community."

The boom was being fuelled, it seemed, by the onset of retiring baby-boomers. As the agents agreed that the majority of clients were expecting to reside on the Island and with far lower interest rates than during the last major rise in 1989 it was a more "realistic spike". Ian Ivers said, "Any seaside area will definitely be good for market increases," citing the combination of tropical warmth, seaside location and the migration of greying baby boomers north to Noosa and now beyond, not to mention the fact that Island prices are still comparatively cheap compared to southern city properties. Generally the agents felt that, with the above factors contributing, the unique attributes of Magnetic Island and the strong growth in Townsville's economy, it was likely that instead of a downturn when the Australian property boom runs out, Magnetic prices were more likely to "plateau".

This optimistic outlook in the real estate market is however tempered by a number of factors which have yet to play out. These include the general impact of increases in development costs. Ian Ivers notes that individual blocks now cost about $16,000 each to develop and that the average unit is about $10,000 with water and sewerage before connection. Already, Townsville City Council has imposed an $942 levy on toilet pedestals connected to the new tertiary treatment plant. The likelihood is that, with the Picnic Bay rubbish dump rapidly filling, rubbish will need to be removed from the Island and this is expected to add significantly to Island living costs. Furthermore, it is no secret that with an increase in distance, terminal maintenance charges, the cost of extra ferries and crews to maintain schedules to Nelly Bay Harbour, ferry fares will have to rise. By how much and whether the increase will be shared equally by residents and visitors is still unknown.

Into the future it seems almost inevitable that through increases in real estate prices and with the expected increases to the cost of Island living, Magnetic is likely to become more and more a haven for those who can afford it.