The month in review: Regional NSW
By Herron Todd White
The Southern Highlands residential property markets finally started to improve in 2015 and the latter part of 2014.
This year it has been (as in most market moves) most apparent in the lower price bracket of under $1,000,000, with properties under $700,000 moving off the books pretty easily within short selling times. After a long hiatus period of subdued prices, the towns and villages of the Southern Highlands have also shown some increases. Steady as it goes is the deal rather than a flurry of demand, but local real estate agents also confirm that the enquiry rate is up and the market is increasing. For the year ahead, we anticipate this to continue. The rental market in the Highlands had increased and is now steady.
Continuing good demand for vacant land and new properties throughout the Highlands region has returned confidence to a previously flat market.
The newest construction is mainly in Renwick Mittagong and on the outskirts of Bowral and Moss Vale. New home builds really give impetus to a small economy and realistically we predict this will continue into 2016 and beyond given our analysis.
The prestige or upper end of the market of over $1.5 million to $3 million is steady and some caution is still evident from buyers, but transactions are starting to become more frequent, with cashed up buyers from Sydney generally being the main players, although there is still some trading up happening. Once again in this sector, agents are stating that if vendors’ expectations are excessive, longer selling periods apply, until the vendors eventually meet the market. We are expecting this sector to remain steady in 2016.
In Goulburn and surrounds, market prices have been stable throughout 2015 without much fanfare. A great deal of the new lots in north Goulburn have been sold and building is well underway, with a resulting knock-on effect for the local economy, which is well anchored by major employers Goulburn Jail and Police Academy.
We expect that the Goulburn market will continue to be steady in 2016. The Crookwell Village market is also steady.
The rural residential property market has also been stable. We predict that these markets should remain steady throughout 2016.
The rental market in Goulburn has actually declined slightly as some tenants have returned to the Canberra area.
NSW Mid North Coast
This month we are taking a look back on 2015 and our predictions from earlier in the year.
We have had a strong year throughout the mid north coast with most residential market segments performing well. There has been strong growth in capital values and rents as well as bullish yields for investment properties.
The only market segments that haven’t seen rapid rises in values have been the prestige residential and higher value rural residential property segments. These segments only make up a small percentage of the overall market on the mid north coast and they have continued with steady values and longer selling periods.
At the start of the year we predicted that the continuing low interest rates would fuel the residential market across the mid north coast for at least the first half of the year and we were pleased to see this prediction come to pass. Recently demand has slowed slightly, but it continues to remain strong over most market segments throughout the region.
We predicted that the investment market would be strong throughout 2015 and this has also been the case with investors generally dominating the low to mid residential market segments throughout the region.
At the start of the year, we were more optimistic for 2015 than for previous years and it has been great to see a buoyant market along the mid north coast throughout 2015.
We wish everyone a very merry Christmas and a prosperous new year.
NSW Central Coast
Being so close to the Sydney, it’s fair to say that the real estate market within the central coast region will follow what’s happening in the Sydney market. There has been no exception in 2015.
The region has seen a very active market this year and many suburbs are enjoying a level of activity not seen for some time with values rising accordingly. Other suburbs have continued on an upward trend in values and popularity, while others have coasted. However toward the end of the year, activity declined as lending criteria and policies came into effect.
At the southern end of the region, Erina is one of those suburbs that saw higher than average levels of activity and prices paid in some cases were surprising. In speaking with the marketing agents, it seems there has been pent up demand and once the activity started, it kept going. Only now, are we seeing a slowdown in this activity. A higher level of activity has also been seen the popular rural residential Matcham/Holgate Valley area and this looks like continuing into next year.
Up at the northern end of the region, the newer suburbs of Woongarrah, Hamlyn Terrace and Wadalba have had the lights switched on again. This is a good thing for this end of the region as it represents the main urban development area and to see the return of activity and confidence here is considered a boost for the region.
Values and turnover in Kariong rose during the year beyond a level we expected. This is an area with easy access to the M1 Motorway which has proven popular with those doing the daily commute to Sydney. A little further from the beaches but logic is the strength of residents here insomuch that they commute during the week and play on the weekend.
The Peninsula areas of Umina Beach, Ettalong Beach and Woy Woy continued to grow in values and demand, which is something we didn’t think would happen. We stated earlier that the rising values are becoming unsustainable, but they continued to rise in 2015 and the prices being paid here are now being compared to those in some Sydney suburbs.
On the sleepy side of the market, we are surprised that suburbs including Avoca Beach, Bateau Bay and Toukley didn’t see as much activity as they deserve. We are suspicious this will change next year.
As one could expect with such a busy year in the local market, there have been a number of ‘big’ sales seen in the region. These include;
• a lovely rural residential property at Mount White sold for $3.4 million;
• another rural residential property at Matcham sold at $4 million;
• a beachfront home in Wamberal at $3.75 million;
• two near beachfront properties at Killcare sold for $4.5 million and $5 million, and;
• a Blue Bay beachfront home at $3.5 million
There have been a number of events that have impacted the regions market this year, but perhaps the most obvious has been the return of residential unit construction. Developers have made their return and it’s good to see. So far Gosford City is leading the way with several developments completed and sold off during the year with several further large scale developments awaiting approvals to begin.
Gosford waterfront has been mentioned in the news a lot this year, with supporters and detractors making their views known. The development of this area has the potential to substantially change the local real estate market, but after so many years of planning, discussion and shelving, it’s a sad reflection that the locals aren’t holding their breath for something tangible to start. Perhaps the State Government led amalgamation of Gosford and Wyong Councils will provide an impetus for this.
Speaking of Wyong (Shire) Council, much has been spoken about major developments coming off the drawing board, but in reality, little has actually occurred. Unfortunately, like many major initiatives, there always seems to be impediments from various sources. This includes the expansion of Warnervale Airport which has the potential to boost the local market.
NSW North Coast
Lismore, Casino and Kyogle
As expected, the residential markets for 2015 in the Lismore, Casino and Kyogle localities were relatively steady with some slight variations, thanks largely to the surprise rate cut mid way through the year. The market towards the last quarter of the year has seen a slight lift in positivity, although plot divergences in the story over recent months have raised some concern for the near future.
The ongoing low level official interest rate environment contributed to a steadying impact on the overall residential market with first home buyers benefiting, whereas the change in policy on the treatment of property investor finance by lenders as being a different product to home owners….. not so.
The rural residential and rural lifestyle markets of Lismore, Richmond Valley and Kyogle Shires experienced continued reticence by investors and home owners despite record low interest rates throughout the year. The increase in costs to maintain such properties was a pertinent factor as well as distance. Even more so, the semi remote and remote vacant timbered blocks of 40 hectares or more received a significant hit in overall demand, appeal and ultimately, a fall in market value. Of all the various property types, this particular sector has experienced much change over the year with typical prices being achieved ranging between $50,000 and $70,000. This is a stark reality check compared to nearly five years ago when such property would have breached $100,000.
New residential building stock for first home buyers (together with stamp duty exemptions and other incentives) and upgraders relied on the availability of vacant land which throughout the course of 2015 became increasingly slim. The current supply of vacant residential lots within Lismore, Casino and Kyogle has fallen with only the suburb of Goonellabah (Lismore City) offering some vacant land stock in the form of further planned stages in large, existing residential estates and new, smaller estates developed in the latter part of the year.
As with the Lismore, Casino and Kyogle markets, if properties were competitively priced they continued to sell. Vendors still appear to be requiring some coaching and blunt advice regarding their expectations which are based on yester year.
In summary, the residential property market for Lismore, Richmond Valley and Kyogle Council areas for 2015 had a relatively long period of softening activity and confidence despite the low interest rates. Confidence and sales activity picked up slightly during the latter stages of the year and for a brief stint following the interest rate cut.
However, the recent decision by major lenders to marginally increase their borrowing rates not long after, citing as their reason the banking regulator APRA requiring the major banks to hold more capital in reserve by 1 July 2016 to protect against potential mortgage losses, went down like a lead balloon on a wintry arvo and has resulted in an increase of bank hopping by savvy property investors and home owners seeking better deals.
At this late point in the year, the property market for the local region is on an edge and like many times before, the role defining feature of the interest rates will be a pertinent factor in the following chapters of the 2016 residential property market story line.
Vacant land sales increased towards the back end of the year. This is mainly due to the land buyer’s subsidy scheme which is a Government rebate. The $25,000 incentive has helped mainly local people build a new home and enter to the ever increasing property market within the North Coast. Recent stages in these subdivisions have sold quickly with an increasing shortage of supply.
The rural residential market remained slow throughout the year along with the upper end standard residential price bracket of over $800,000. However, this has increased slightly towards the back end with some good prices being achieved.
Lennox Head, Byron Bay, Mullumbimby, Ocean Shores
Strongly performing localities over the 2015 calendar year have been Suffolk Park and Lennox Head, particularly for properties in the $700,000 to $1.2 million price bracket. Strong demand and lack of stock have seen both dwellings and houses alike performing well.
The continued low interest rates combined with limited stock supply throughout Byron Bay, Lennox Head and Suffolk Park have helped maintain a firming market throughout the year.
The surprise of the year within the coastal residential market has been the prestige sector within Byron Bay for properties priced from $1.8 million and above. This market sector has performed well over the past year, with properties being purchased by interstate buyers as well as local buyers looking to trade up. Both buyer profiles have continued to compete with one another to secure their piece of this prestige market and in doing so have set new pricing benchmarks for similar and well located properties.
The lure of cheap money and competitiveness of the banking industry have fuelled demand throughout all sectors of the market with the biggest performer being the sub $500,000 sector where demand is the strongest. This demand has naturally flowed through into the mid to high value range ($500,000 to $1 million) culminating in two beachfront sales in excess of $2 million which is the first in many years.
The rural residential market has also been strong especially for the well located properties close to Coffs Harbour such as Boambee East, Bonville, Korora, Karangi, Upper Orara, Sapphire and Moonee Beach, west of the highway, which has seen some notable sales within the $1 million to $2 million sector.
The ever increasing performer in the rural sector is the blueberry market driven by the recent purchase of the old Bunnings site south of Coffs Harbour with news it is to be re-developed as a local processing centre.
One sector of the market which was hit hardest by the GFC that has seen a strong recovery is new unit and housing constructions. Park Beach north of the Coffs Harbour CBD has experienced the greatest number of new unit developments with Sapphire Beach topping the list for housing. The increased demand for new housing coupled with the natural constraints of supply has seen vacant land prices increase sharply.
In short, market conditions in all sectors have been extremely buoyant over the past twelve months which has not entirely been driven by the record low interest rates but more importantly fundamentals such as continual population growth, resurgence in local tourism, upgrading of major road infrastructure, an increasing industrial base and the growing health and education sectors.
The Clarence Valley residential market has been busy over the past year with agents reporting increased sales and limited stock available for listing.
The Grafton hub has seen an increase in demand for lower mid range residential dwelling properties particularly between $300,000 and $400,000. This range accounted for just over 50% of all residential dwelling sales.
Several key infrastructure developments are driving this demand which include a proposed second Grafton Bridge crossing, Pacific Motorway bypass and second jail in South Grafton.
Recently, the old Grafton jail has been re-opened, creating more jobs. These projects are underway to various degrees which is in turn driving both investor and home occupier purchases. The projected infrastructure works planned for the region are expected to continually drive this situation. The flow on effect of this large proposed infrastructure spending in the region is also impacting on other towns such as Maclean and Yamba.