BYRON BAY has had its worst property year in more than a decade and it's not just the market that's to blame.
Coastal erosion, uncertainty about holiday rentals and unrealistic price expectations are also playing a part in the property slump.
Figures from Australian Property Monitors show Byron Bay's median house price has dropped 10.5 per cent in 12 months. Apartments have performed even worse, falling 31.3 per cent.
The common denominator is uncertainty. Just out of town, properties on the troubled Belongil strip are being heavily discounted amid fears of further coastal erosion.
A beachfront property originally listed for $5.75 million has recently sold via receivers for $1.25 million. The previous owners paid $3.6 million in 2006.
Another comparable property on The Esplanade sold for $1.3 million a year earlier. The beachfront property had been listed for $5.5 million in 2010.
The selling agent, Ed Silk of Ed Silk Byron Bay, said ''that's what is on people's minds, the erosion component''.
Then there's Byron Shire Council's bid to end holiday rentals in residential areas, prompted by ratepayer fury over rowdy and untidy tourists. Its case against a Ewingsdale man, who wants to lease his home to holidaymakers, goes before the Land and Environment Court next month.
The case could set a precedent allowing the council to target other holiday rentals.
The principal of Ray White Byron Bay, David Gordon, said the dispute has resulted in five or six sales falling through.
''Byron Shire Council has told [buyers] point blank that there is no consent to holiday let in that area and they've come back to us and said we're not interested,'' he said. ''There have even been situations where buyers have come back and reduced their offers by significant amounts of money once they've found out that you can't holiday rent it.''
Valerie Williams, from Byron Beach Realty, recently lost a sale to an international buyer who wanted to build a holiday rental property for disabled people.
''It's definitely something the Byron area needed but they were told that any development applications would not give consent specifically to holiday lets,'' she said.
Unrealistic price expectations are also slowing prestige sales across all of Byron Bay.
''In the high-end sector it's the ego level,'' Ms Williams said. ''Most vendors in Byron are in denial that the global financial crisis ever happened.''
Despite this she said there is still good value for buyers.
''In that sector, the $1.5 million-plus sector, you are probably looking at 30 per cent less than what the properties were in 2005-07,'' she said.
Mr Silk is also optimistic that people will continue to buy on the Belongil beachfront despite rising sea levels.