The month in review: Regional NSW
By Herron Todd White
The Southern Highlands
The Southern Highlands, also locally referred to as “the Highlands”, is a geographical region and district in New South Wales and is 110 kilometres south-west of Sydney.
This region is an important catchment area for water supply to Sydney, Wollongong and the Northern Shoalhaven.
The Highlands geographically sits between 500 metres and 900 metres above sea level on the Great Dividing Range. Like other regions along this plateau such as the Blue Mountains to the north and the Australian Alps to the south, the Southern Highlands is known for its cool temperate climate. The main towns are Bowral, Moss Vale, Mittagong and Bundanoon. As well, there are smaller villages including Hill Top, Yerrinbool, Colo Vale, Robertson, Berrima, New Berrima, Exeter, Burrawang, Penrose, Willow Vale, Alpine, Balaclava, Renwick, Wingello, Sutton Forest, Avoca, Fitzroy Falls and Balmoral Village.
The pattern of development is one of small towns and villages separated by a semi rural landscape.
Historical drivers of the local economy include mining, tourism and more recently, establishing an identity as a serious red wine region and also a wedding destination.
Being 90 minutes drive from Sydney and improving rail services, together with Sydney buyers seeking affordability and lifestyle balance has seen an influx of families and investors to the Southern Highlands region. The most obvious beneficiaries of this attention are the new subdivision precincts on the outskirts of the townships of Mittagong, Bowral and more recently Moss Vale, with the hamlets of Colo Vale and Hill Top picking up the pace as far as sales activity, again driven by affordability and access to the highway north to Sydney.
With federal and state government commitment to major infrastructure such as Badgerys Creek Airport in south western Sydney, land release precincts will further attract interest in the region.
There are similar trends evident in the Tablelands, with good land sales and new home construction activity in the new/modern residential estates on the fringe of Goulburn, including the Belmore Estate, Merino Country Estate and the Mistful Park estate. Goulburn can be viewed as a fringe suburb of Canberra, being more affordable for some Goulburn residents to commute to Canberra.
NSW Central Coast
Like many regions along the eastern seaboard, the Central Coast has seen a sustained period of growth and demand for real estate. Visitors, residents, investors, existing and future businesses on the coast are acutely aware of the main drivers of real estate in the Central Coast region of New South Wales. It has nought to do with the recent amalgamation of the former Gosford City and Wyong Shire Councils into one big Local Government Area – the ingeniously named Central Coast Council, but everything to do with price and proximity.
When broken down a little further, the diversity of property seen on the coast covers all wants, tastes and needs at pricing levels which are more than favourable to those seen in the Sydney metropolitan area and it’s just a short drive up the M1 Motorway to Sydney.
First home buyers make up a big part of the economic base on the coast. Spoilt for choice, there are a number of localities suitable for the first home buyer. At present, Narara, Niagara Park and Wyoming are probably the pick for these buyers toward the southern end of the LGA. Newer and bigger homes within reach for the first home buyer toward the northern end of the LGA can be found at Woongarrah, Hamlyn Terrace and Wadalba.
Second, third and subsequent buyers are equally well catered for. It just depends on whether they want to be close to the beaches or lakes, or in a suburbs or rural lifestyle area. All budgets and tastes are satisfied.
Property prices can start from a low base in the early $300,000s and rise through the different segments of the market.
While careful to avoid labelling an average or median value on the coast, we would say it lies in the mid to high $400,000s for first home buyers. Lately there have been a few sales breaching the $5 million mark along the beach or in the better rural lifestyle areas. While these are not occurring daily, the frequency of these sales is increasing.
Interestingly, in years gone by, the region was viewed as a holiday destination with the tourism market being seen as a major economic driver. Sadly or progressively (depending on who’s leading the conversation), the region’s economic base is far less reliant on tourism with a noticeable switch to a higher resident base – currently exceeding 350,000 – which has seen tourism recede as a major economic base. This has been brought about by the opening of the region to new residents via better access to the Sydney market and discovery of affordable real estate. The income generated, spent, recycled and transferred into and out of the region has elevated it from a few sleepy beachside towns where everyone had a grandparent or retired aunt or uncle living here to a vibrant, young, evolving and growing economy.
Business wise, the evolution of the region has been viewed as a little more subtle until a closer look is taken. There is still some distance to cover before classifying the region’s business economy as strong, but amongst other industries, medical is growing faster than many would realise and continues to grow in response to demand. The education and technology sectors have established roots here as well and are going okay. Overall though, secondary industries such as service and small manufacturing are probably the largest business base in the region. Export is not something we would associate with the region – it is present, but low key.
While there will always be a need to commute down the M1 Motorway to Sydney for some (upwards of 10,000 people do this daily), as more local industry arrives and establishes itself, economic modelling would suggest a drop in the number of these daily commuters along with a broadening of the skills base here for industry to capture and keep.
With plenty of fresh air and good weather, a good lifestyle is hard to miss. Sports play a big part in the local scene here and it’s not just limited to fishing, surfing and swimming. Football is bigger on the coast than some might realise – ever heard of the Central Coast Mariners? It’s difficult to say whether this affects the real estate market to a quantifiable degree, but it can’t hurt to think it is a factor.
NSW Mid North Coast
This month we are looking at the big picture and what is driving the Mid North Coast market at present.
The Mid North Coast is a popular tourist and holiday destination comprising several large town and the major centre of Port Macquarie.
We notice that primary drivers in our local market over the past year have been:
These include both local and out of town investors. Local investors are often looking for properties in the rapidly developing areas within towns and include the western localities of Port Macquarie close to the new Charles Sturt University, Base Hospital and schools.
Out of town investors are often from Sydney or other major cities. These investors find our regional area provides properties at significantly lower prices than that available within the cities, but these properties have similar overall investment return rates. This has been one of the primary drivers for increasing property values within our area. We have found that centrally located units and villas up to about $400,000 have been especially popular in this segment.
The Mid North Coast has a more relaxed lifestyle than its city counterparts and this has also added to growth and development within the region. We have noted that buyers are often young families moving from the city. They are selecting our area partly because of its lifestyle, partly because of its location (midway between Sydney and Brisbane) and partly because of increasing job opportunities in the rapidly expanding larger regional centres. They see our area as a place they can raise their families in a more relaxed environment and a country lifestyle.
These families are often cashed up after selling their high value Sydney home and are often able to purchase a good quality modern dwelling in the region for between $400,000 and $600,000 with little or no mortgage.
The Mid North Coast is also popular with retirees relocating from the cities and we have one of the higher population percentages of over 60s along the eastern seaboard.
Recent anecdotal evidence is indicating that over 50% of people investing in our property market or migrating to our area are moving up from Sydney.
Upgraders and the Expanding Local Population
This section of the market includes the rapidly developing towns such as Wauchope, Harrington, Old Bar, Forster and Tuncurry, as well as the residential areas to the west of Port Macquarie, namely Thrumster and Lake Innes. Here we are seeing locals and first home buyers able to purchase a new average quality 3- to 4-bedroom dwelling for between $400,000 and $500,000.
Other more favoured spots, especially for local buyers, are the established beachside suburbs in all the coastal towns, however properties in these areas are generally older and often require renovating.
The residential market has been firm throughout 2016. There has been an increase in the development of residential land and building activity is sound with most trades active. Rents increased throughout 2015 and 2016 to date due to a shortage of supply built up over the previous two to three years of slow growth.
The local market has been sustained by the low level of bank interest rates, however the lack of job security and comparatively high local unemployment are impacting on the strength of the local market.
The emergence of the blueberry industry is having a positive influence on the local economy and the development of services and completion of Pacific Highway works to the northern beaches have promoted growth in residential value levels along the northern beaches and Woolgoolga. The top end residential market remains slow, however sales are being effected, albeit with longer marketing periods and when vendors become realistic.
The Coffs Coast region will benefit further on the completion of Pacific Highway works to the far north coast and south towards Port Macquarie, which will improve access times from major cities. The failure to construct a Pacific Highway bypass around the Coffs Harbour city is proving a negative aspect for the local market with affected properties and locations restricted by the uncertainty and unknown influence of the proposed works.
Being the regional centre for the Northern Rivers, Lismore is regarded as the commercial hub for the area with the Lismore Base Hospital and Southern Cross University being significant contributors to industry within the city.
Recent upgrades and planned future extensions to the Base Hospital provide the impetus for medical professionals to come into the area and set up shop. We are aware of a number of high profile sales of residential properties in the upper end bracket reportedly purchased by medical professionals.
There is still some input from the surrounding agricultural and horticultural development in the rural areas of Lismore Shire with emphasis on the macadamia industry. The grazing industry has finally received some reprieve from the years of low yields with cattle prices improving. Whether this stablises or not remains to be seen.
In summary, there are no real stand out performances in the different market sectors.
Tourism is still maturing with localities such as Nimbin receiving more attention.
The Casino and Kyogle regions are primarily agriculture based with the large abattoir in Casino being a key employer. Any disruption or improvement in this business tends to have a negative or positive flow on effect respectively into the local community. Promising key projects include the proposed intermodal transport facility north-west of Casino which could be a future driver for the local region.
The CSG project, which promised so much when first introduced some ten years ago has now emphatically collapsed in a heap after much opposition in the Northern Rivers region.
Kyogle is a useful gateway point for tourism into the diverse rural landscapes and national parks northwest of the village and particularly through the popular Lions Road leading into Queensland.
In summary, while these are considered the main drivers of the economic base within Lismore, Casino and Kyogle, there is really no definitive section of the market which is primarily influenced by a buyer type as it includes a well rounded mixture of families, individuals, retirees and urban/rural professionals.
The Byron/Ballina region has long been known for its tourism industry. Byron Bay especially is a popular destination for domestic and international travellers. Tourism is the main driver within this region and with its climate and beaches, it is also a popular choice for sea changers too.
The region is currently experiencing a strong market and this is due to a combination of interest rates being at record lows and house prices in some major capital cities rising to exceptional levels over the past few years. Sea changers are able to cash in and get a lot more bang (or house) for their buck in the Byron/ Ballina region.
Within the Ballina Shire, along with the traditional tourism driver, the recent demand and increased sale rates for vacant land within residential estates has also resulted in the building and construction industry re-entering the market as an industry driver. The recent strong land sales achieved within the Riveroaks and Ferngrove estates in Ballina, the Ballina Heights estate at Cumbalum, the various residential estates situated within the Wollongbar Urban Expansion Area and the recent success achieved by the Epiq estate at Lennox Head (stages 1 and 2 comprising a total of 133 residential lots sold off the plan in one day each) will result in continuing and increased demand in the building and construction industry.
The Clarence Valley does not have a major industry, however the major driver in the region at the moment is the infrastructure in the area including the second Grafton Bridge, Grafton Gaol and the Pacific Highway upgrade. This in turn is creating more jobs in the region and more confidence in the local economy.
Housing within the Clarence Valley is situated at the lower end in relation to the greater north coast region and with interest rates being at record lows and good employment opportunities, housing is seen as affordable, particularly in Grafton.
Generally, there really isn’t much driving the market other than housing being more affordable, but the Clarence Valley is going through good times, particularly Yamba and Maclean.
The main driver in the area continues to be owneroccupiers either remaining in the area or relocating from elsewhere. Of the second type, retirees from capital cities are selling up in these good times and buying cheaper property of all types in the Central West, with the difference going towards retirement income and a caravan to head north for the winter. Investor activity has also increased.
Investors are being driven by slowing capital gains in the major cities making yield more important. Some recent analysis suggests that yields may already be under pressure from rising property prices locally. Investors should understand the drivers of the local market, particularly for properties in multiple occupancy complexes as these are the type of property traditionally most targeted by investors. They often don’t require as much capital backing, are often seen as renters and have been successful investments in capital cities.
In Sydney there has been an apartment boom around the CBD and up to Chatswood. In part this is due to the drivers of lifestyle choice. A lot of people want to be close to the city and all it offers such as work, entertainment and other people. The boom has also been fuelled by people from overseas as owners, tenants or investors where apartment living is the norm and is a desirable form of accommodation. These lifestyle drivers, aren’t as strong in the Central West.
A 30 minute drive is all it takes to get from the shops to the rural paddocks. There is no traffic to fight to get to work. There is a feeling of space, and this is an important lifestyle driver for the area. Why live on top of each other when there is so much room?
This helps to explain the position of multiple occupancy living in the Central West and probably regional Australia. Such accommodation, while consistently in good demand relative to supply, is more an economic or physical reality than a lifestyle choice. For example, retirees may need to be close to amenities in a smaller dwelling with a supportive community. Such a living arrangement as a lifestyle choice is popular with students and singles, but not as much with families. For investors, the wash up is that the market drivers point to the likelihood of a steady return for such properties, but unlikely to reach the giddy heights of the capital city apartment boom in the near future. But there are plenty of other options