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The month in review: Newcastle
By Herron Todd White
July, 2009
12 months ago we looked at where investors with a cash
sum of $500,000 could best look to purchase residential
property in the Newcastle Region. Such a sum of money
would give the investor a large amount of equity in the
property purchase and help create a positive cash flow
which is welcome news in today’s market where the
uncertainty of the fallout from the Global Financial Crisis
has put increased pressure on those with investment
property which is highly geared.
Lets review those 5 areas we looked at 12 months ago:
• A small modern unit, older style terrace or
cottage located in inner city suburbs such as The Hill,
Cooks Hill, The Junction or Merewether – within walking
distance of a number of inner city restaurants, shops & surf beaches. Despite the slow down in the market
and reduced sale volumes, these localities are generally
seeing values holding up and increased returns as rents
continue to firm. Certainly units have felt the pinch more
as the market has slowed with a general weakening in
median sale prices.
• An older style, renovated house located
in fringe inner city suburbs such as Hamilton South,
Adamstown or New Lambton – well positioned being
only 10 to 15 minutes drive from two major shopping
centres (Westfield Kotara & Charlestown Square), the CBD
and surf beaches. With the slow down in the market and
reduced sale volumes these localities are seeing values
soften with properties showing increased returns as rents
continue to firm.
• Two small cottages in a suburb such as
Carrington – an affordable inner city suburb with some
mixed industrial uses located along the Harbour foreshore.
The First Home Owners Grant has created increased
demand in this lower end of the property market and
values have firmed accordingly (will be interesting to see
what happens when the grant is discontinued at the start
of 2010) and rents have continued to firm.
• A house located in a coast-side suburb such as
Stockton, which is a unique suburb bounded by a harbour
on its western side and surf beaches on its eastern side. It
is a 20 minute drive from the city centre but does have a
pedestrian ferry crossing the Harbour into the CBD. The
market has slowed and houses that were priced around
$500,000 have generally seen their values softened over
the last 12 months, however this has led to increased
returns as rents continue to firm.
• A modern house located in a well located suburb
such as Charlestown – situated either side of the Pacific
Highway and serviced by Charlestown Square (48,700
sqm of retail shops). The market has slowed and houses
that were priced around $500,000 have generally seen
their values softened over the last 12 months, however
this has led to increased returns as rents continue to
firm.
This time last year we were worried about the possibility
of increased inflation and whether that may have led
to further interest rate rises, this did not come to be as
the Global Financial Crisis emerged from overseas and
interest rates were reduced to help stimulate demand.
Now the biggest threat to the residential property market
is whether unemployment is going to put the brakes on
demand and possibly cause more homes to come on the
market (the next 12 months will be interesting).
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