The month in review: Regional NSW
By Herron Todd White
July, 2010
MUDGEE
A lazy half million will buy you quite a lot in Mudgee.
This figure is nudging you up into the high cost market
in the district. Types of property you could buy include
a large modern four to five-bedroom dwelling in a new
subdivision, a renovated double brick residence in town,
or a rural residential allotment with a reasonable house
located 15km from town.
During 2008 and early 2009 when the GFC was at its peak,
these properties suffered slightly but towards the second
half of 2009 they were back on track. Currently all three of
these property types are travelling along well and should
remain stable to strong in the medium term.
BATHURST / ORANGE
In the Bathurst/Orange area a ‘Lazy Half Million’ will
get you either an executive style dwelling in a newer
subdivision or a relatively average condition heritage
style dwelling in an older part of town. Another possibility is rural residential, where $500,000 will get you a basic
1980–1990s era dwelling on around two hectares.
In the Orange area there is good scope for growth and
potential investment due to the expansion of Cadia gold
mine and the construction and expansion of services
being provided at the Orange base hospital.
So if you had $500,000 to play with you could get your
hands on a rental property in one of the new development
areas of Orange which are selling between $400,000
and $500,000 and returning $420 to $460 per week
unfurnished and as high as $725 per week furnished.
Alternatively a renovated circa 1920 dwelling sold close
to the CBD for $595,000 which had four bedrooms, two
bathroom and two living areas. It is on a lot just over
1000sqm and had very good standard ground works.
Similarly in Bathurst, a 1950s era dwelling on 1700sqm
sold for $510,000 which was also close to the CBD and
had been renovated and presented very well.
NSW CENTRAL COAST
Would you park a lazy $500,000 in a different part of the
Central Coast real estate market this year?
Let’s firstly review the key events that occurred over the
past 12 months. The most significant events were the
first homebuyer bonus scheme, only to be outdone by
the GFC. Each had a varying level of influence on the
market.
The first homebuyer bonus scheme certainly stimulated
the lower end of the Central Coast market. Areas like
Umina Beach, Narara, Hamlyn Terrace and Woongarrah
saw an increase in activity with modest rises in values
being seen. The upper end of the market, along the
beach and ocean strips saw a slight regression in activity
and values as the effects of the GFC become the centre
of attention.
Twelve months down the track, would we spend $500,000
in the same place. In all probability, yes we would. But it
seems that rental returns have stabilised in the past 12
months and therefore most areas of the Central Coast
have near similar yields. With this in mind, we should
look to the areas that have good rental demand, but are
showing signs of growth in values.
Buyers or investors with access to $500,000 and looking
to spend on the southern end of the coast will still find
the odd good buy at Avoca Beach, Terrigal, Erina and
Saratoga. These are areas which are already showing
signs of growth as buyer confidence returns and demand
seems to be picking up. In fact, Saratoga has been
showing steady growth and popularity. Rental returns
for these areas, for those properties hovering around the
$500,000 mark are around 4% to 5%.
Houses in Saratoga and Avoca Beach are generally older
style with modern dwellings being found in Terrigal and
Erina. All are close to shopping, beaches and Brisbane
Waters.
The northern end of the Central Coast is definitely worth
a close look. In general terms, values on this end of
the coast are slightly lower and we are still seeing the
odd waterfront property being purchased around the
$500,000 mark. These types of buys can only increase
in value. A very modern, four-bedroom, double garage
home on a 600sqm parcel can be found in places like
Hamlyn Terrace, Woongarrah and Blue Haven for less than
$500,000 and the returns are a solid 5% with low vacancy
rates at present.
Take a bit longer when looking at the northern end of the
Central Coast real estate market and do your research.
It will be found that this end of the coast has good
prospects for growth due to the opportunities for further
development in the area being available.
NSW MID NORTH COAST
The main regional centers along the Mid North Coast of NSW: Forster; Taree and Port Macquarie have significantly
lower median house prices in comparison with the major
cities of Australia, and investors with a lazy $500K have a
good choice of residential property available to them.
Following rapid population growth over the last two
decades, the seaside locations of Forster and Port
Macquarie have followed similar expanding construction
patterns. Purchasers of houses in this price range will
typically decide between a well located but dated 1970s
brick house (usually with good aspect and good proximity
to water) or a larger modern house in one of the newer
residential estates. The purchaser profile in this bracket
is predominantly a second time home buyer (families or
retirees).
It appears capital growth for these houses will likely be
mode t in the short term, and with rental returns typically
4.5% to-5% at best, location should be chosen over
comfort in this instance which would also give rise to the
benefits of a possible holiday house. Furthermore, astute
investors thinking long term should reflect on possible
future relocation to either of these popular retirement
destinations, with corresponding avoidance of capital
gains tax.
Forster and Port Macquarie have an over supply of
modern high-rise units in this price range, and according
investors (who are the typical purchaser profile) have a
wide selection available. However capital growth appears
even less likely in the short term, returns are typically 4%
to 4.5% at best, there is higher risk of an extended re-sale
period, and this type of accommodation largely lacks
appeal to retirees.
Residential property with a value of $500,000 forms the
prestige market of Taree and houses in this price range
are usually located near the Manning River in Taree
West, or on the rural-residential periphery. Demand
for such property is currently weak and extended sales
periods have become the norm. Bargain hunters however
should beware, with increases in value in the short term
unlikely.
In light of the above, we would suggest the best option
currently available for investors at present would be
to purchase two or more lower end properties, where
vacancies are tight, higher yields achievable and greater
potential exists for capital growth.
In Port Macquarie and Forster, a number of older style
two-bedroom units having good proximity to beaches
can be purchased for under $250,000 and modern
villas suitable for retirement and close to shops can
be purchased for under $350,000. In Taree, an investor seeking high returns could significantly expand their
investment portfolio with an acquisition of four houses
(former Department Housing) at $125,000 each returning
yields of approximately 7% to 8%.
NSW SOUTHERN HIGHLANDS/TABLELANDS
The investor who has a lazy half mill has some good
prospects in these markets.
The market in the Southern Highlands has been relatively
subdued in recent years, but is recently showing signs of
starting to increase. The predominant choice of property
type to maximise capital growth, would be to purchase
an older style dwelling and renovate.
In Bowral, an investor would need to spend $500,000 to
$600,000 to secure such a property. Sub $500,000 it is
mainly townhouses and semi-modern homes situated
on the perimeter of the town that would fit the price
tag. These properties perform well in the rental market,
yielding around 5% to- 5.5% gross and would move inline
with general market movements.
In sections of the Moss Vale and Mittagong markets, an
investor could purchase the older style dwelling for under
$500,000 and renovate to go for capital growth. Or even
purchase the modern/semi-modern home for between
$350,000 to $500,000 and rent it out.
The Southern Tablelands offers more choices and
affordability to potential investors with lower price entry
levels than the Highlands. Goulburn, with a population
of around 24,000 has a steady workforce and is a popular
country holiday destination. Due to the high real estate
prices in Canberra and Sydney, we are seeing renewed
interest, especially from Canberra investors, purchasing
their investment properties in Goulburn.
For between $300,000 and $400,000 one could purchase
a new/modern home and rent it out for a good rental
return. For capital growth, an investor could purchase an
older style dwelling for between $250,000 and $320,000
and renovate.
The real option here for the savvy investor would be to
purchase multiple residential units or townhouse/villa
properties for between $120,000 and $170,000 each and
rent them out for between $150 and $180 per week. An
investor could purchase three of these properties for
under the half mill. This market has shown good capital
and rental growth this year.
WAGGA
This year’s suggestions on where our office would be
spending $500,000 would be in Turvey Park. Last year’s
nomination of Central Wagga Wagga has now become
relatively too expensive and out of reach for many people.
Turvey Park, being the neighbouring suburb of Central
Wagga Wagga, still has good access to the centre of town
less than two kilometres away, has become the cheaper
alternative. This has been reflected in the first half of the
year with strong sales prices.
This area is definitely a growth area, however with the
University, Army Base and RAAF Base close by, strong rents
can be achieved, reducing holding costs for investors.
Our choice is based on a shortage of land in and around
the centre of town. Both the north and eastern sides of
town are locked with the Murrumbidgee River. Prices in
Central Wagga Wagga have increased greatly during the
past five years. Turvey Park looks like the next suburb to
experience high demand. |
