Regional NSW

The Smartline Report – July Edition

The month in review: Regional NSW

By Herron Todd White
July 2016

Southern Highlands
The market in the Southern Highlands for $500,000 is limited generally to new units in the townships of Bowral and Moss Vale and ten to 15 year old houses in the established subdivisions on the periphery of town.

Around the $500,000 mark will buy a new 2- or 3-bedroom unit in the township of Bowral or Moss Vale or a ten to 15 year old project home needing some work in East Bowral or Moss Vale. Rentals are in the $500 to $550 per week range providing a good return. In Mittagong, a smaller project style home can be purchased for $500,000 in newer subdivisions on the outskirts of the township.

Southern Tablelands
The Southern Tablelands still offers choice and affordability to potential investors with lower price entry levels than the Highlands. Depending on the dwelling, land size and quality of the home, between $475,000 and $500,000 will buy a new or modern home that will rent for between $470 and $500 per week. For capital growth, an investor could purchase an older style dwelling for between $350,000 and $400,000 and renovate.

We have noticed over the past 12 months that out of town investors attracted to the region are purchasing multiple residential units or townhouse villa properties for between $200,000 and $250,000. These rent for between $220 and $300 per week providing a premium return when compared to traditional capital city rental returns. This market continues to show good capital growth. Rental levels in Goulburn are steady.

Compared to 2015, the market has generally seen an uptick of around 15% in the Highlands and around 10% in the Tablelands. From our suggestions and focus in July 2015, we would consider reinvesting into these properties. Value and rental markets have improved in our region.

NSW Central Coast
The Central Coast region has plenty to offer both owner-occupiers and investors looking to buy at around the $500,000 mark.

The northern end of the region probably offers more value for money if a more modern style of home is needed. Think of Blue Haven, Hamlyn Terrace and even the odd property in Woongarrah. These are all close to the M1 Freeway and $500,000 will secure a single level, 3- or 4-bedroom brick and tile home with double garage on an average size land parcel. Similarly close to the freeway is Mardi, in some ways the unsung hero of the region where a similar buy-in will secure a good 3- or 4- bedroom home close to the rail station and a regional level shopping centre.

The days of cheap buys are almost behind us in the older areas of Budgewoi, Halekulani, Buff Point and San Remo, but $500,000 still buys a lot in these areas and the rental returns work well for the investor.

Toward the middle section of the region but closer to the water are the suburbs of Bateau Bay, The Entrance and Long Jetty. These locations all offer something different. Only the quick or those on a real estate agent’s database are likely to secure a $500,000 buy in Bateau Bay, but they do come up occasionally. It will probably entail an older dwelling with some work required, but Bateau is one for the astute to be aware of. When looking at The Entrance, a spend of $500,000 gets a 2- or 3-bedroom unit with at least lake views and often an ocean view. Just be diligent with checking the repairs register though as some of the unit complexes here are at the age where repairs are needed and requests for sinking fund top ups can be hefty at times. Ouch!

Killarney Vale and Berkeley Vale are good, solid suburbs with equally good facilities and a good vibe for younger people and families. $500,000 buys are becoming limited, but are still around and it is our recommendation to look here. Expect an older dwelling with 3-bedrooms and room to improve.

As we move down the coast toward the southern end, buys at around the $500,000 mark become harder. They are still available, but just harder to find and we are reminded of the importance of getting onto the buyer’s database of a few agents to receive information on these properties as early as possible.

If the famous Terrigal is on the radar, then there will be a little disappointment here if $500,000 is the limit but there are still buys at around this amount – usually an older unit or small unit. Even the price of vacant land is nearing $500,000 in Terrigal, if you can find a vacant parcel that is. So to for the fabulous Peninsula locations of Umina Beach, Ettalong Beach, Woy Woy and Booker Bay. In years gone by, almost everyone had old aunts, uncles or grandparents at Umina, but those days are nearly gone as the prices being achieved are getting beyond this and sadly, $500,000 buys are becoming rare.

Our records show the odd buy at this level, but these are mostly for older villas or houses which are not to be ignored in terms of value, but the point being made here is that the market is limited at around $500,000.

Best buys for around $500,000 on the southern end of the coast include Narara, Niagara Park and Wyoming. These are good locations which are close to services and schools. With the recent strong market, these areas have come into their own and we are seeing cashed up singles, young families, renovators etc moving in. Investors are also well advised to look carefully at these areas. We don’t see much future infrastructure improvements likely in the immediate area, but the Gosford City Centre is very close by and notwithstanding we are in full federal election mode with a new promise made every day, there is action aplenty here in the short term with or without the election.

Kariong has for some been the go to area for affordability. It is a gateway suburb which adjoins the freeway to Sydney. Prices in Kariong have jumped and it is becoming harder to secure a sub $500,000 purchase, but they are still around for those quick enough and again, we recommend getting onto the database of the local real estate agent. Expect to find a reasonably good 3-bedroom home or tidy villa for $500,000 which may suit the investor.

NSW Mid North Coast
In July 2015 we reported that $500,000 may be easier to obtain but it certainly didn’t go as far as it did the previous year and this year is the same. Port Macquarie particularly has limited stock available in this price range compared to last year and generally only includes properties such as villas or units, 3-bedroom dwellings and smaller older style 4-bedroom dwellings.

Combined with the limited stock and another drop in interest rates in early May the market has remained buoyant with more buyers than sellers.

There are now limited areas of Port Macquarie where these sub $500,000 properties can be found for purchase. Areas include Flynns Beach, Clifton and the outer western fringes of the township. Dwellings in this price bracket are becoming rare within other areas of Port Macquarie and are therefore being sold very quickly whenever they come on the market.

Rents have eased slightly, however current high demand is evident around the CBD, hospital and Charles Stuart University areas. We note that there are several student accommodation style developments currently under construction within these areas and once complete, will provide good supply and therefore rental growth may slow.

We consider the following areas as solid investment:

• Good quality older villas or lower end villa complexes, consisting of two villas sold as in one line, have been popular with investors producing an almost positively geared return.
• 3- or 4-bedroom older homes on the eastern side of Port Macquarie or near the CBD, around the $450,000 to $550,000 mark, are also producing good returns in most instances and have excellent potential for future capital growth.
• New house and land packages in the outer and western regions of Port Macquarie and nearby towns and villages can be purchased between $450,000 and $550,000. While theses dwellings are not located within the main stream capital growth area, tax depreciation is making up the shortfall for the prudent buyer.

Port Macquarie on the mid north coast still has the highest rates for capital growth and rental returns.

The smaller regional and coastal towns and villages have also showed signs of slowing with properties remaining on the market longer and purchase prices not being achieved. However rental returns for the above areas remain firm with limited vacancies.

NSW North Coast
Little has changed from 12 months ago in terms of what one can score with a lazy half a million. However, the mixture of product may have varied slightly, particularly in the more regional areas within the Richmond Valley and Kyogle Council areas.

In a lot of ways it resembles a typical poker hand. For example, consider the five of a kind:

• Five $100,000 (or less) vacant steep timber 40 hectare bush blocks in the rural localities of Drake or Tabulam; or
• Five $100,000 standard vacant residential blocks in Casino or Kyogle. Relatively flat but may ask slightly more than $100,000 individually, so a package deal of say five at the nice round figure of $100,000 each would be hard for a vendor to pass up in the current subdued market.

Alternatively, secure a nice 3- to 4-bedroom, 2-bathroom house with a garage for around $300,000 to $350,000 and throw in another vacant residential block at $100,000 to $120,000.

There are not too many residential properties within Casino or Kyogle that would use up the whole $500,000 in one transaction, however, those that do usually deliver the full quota of features from air-conditioning, good quality appointments, pool, established landscaping or full renovation of an older style character home.

For those inclined towards a more rural residential setting, there are opportunities to use a substantial part of the $500,000 to acquire established properties of modern 4-bedroom, 2-bathroom homes with double garages in close proximity to the town centres of Casino and Kyogle. Typically, such properties would comprise lots ranging in size from 4,000 square metres to five hectares.

Semi remote rural localities with properties on lots from 40 hectares to 100 hectares may still be purchased under $500,000 and provide semi modern homes with established ancillary improvements, however distance and maintenance of the land are factors that any potential purchaser must consider.

Within Lismore city, the lazy half million is somewhat more restricted in its purchasing power, however, opportunities are still available. Good quality level vacant residential lots are around the $200,000 mark in the new, developing residential estates, so buy two and possibly use the remaining $100,000 as a $50,000 deposit for a house to be built on each of the lots, or purchase one of the steeper vacant blocks for around $100,000 (just keep in mind that your building costs will rise significantly).

It should be relatively easy to find two residential house properties for around $250,000 each, however they are likely to be located in a flood prone area, need some cosmetic attention or front a busy road.

There are a number of 2-bedroom, 1-bathroom, brick and tile residential units with single carports available within reasonable proximity of shopping and educational facilities in Lismore city which have an expected price range of $130,000 to $170,000 and attract a rent of around $175 to $200 per week.

Failing that, and if you so wish, $500,000 would go a long way to fully or near fully acquire or brand new 4- or 5-bedroom, 2-bathroom, double garage residence in the modern residential estates of Goonellabah or Lismore Heights (where most of the new build action is) with pool and established landscaping. The rental assessments can vary widely depending on features, but expect something in the order of $450 plus per week.

At present, even with the record low interest rate levels, the future of any significant price improvement is not generally clear or warranted as there is still the overriding climate of that old age concern….”is my job secure?”.Therefore, don’t expect any significant rapid sales activity any time soon.

The Clarence Valley
Further to the south in Yamba, $500,000 does not get you as close to the beach as it did 12 months ago where the June 2015 entry point was for a circa 1980s canal home or an older circa 1950s dwelling close to the beach. Entry point now is in a modern 4-bedroom, 2-bathroom modern dwelling in Yamba’s residential estates located west of Yamba town centre. However, a 3-bedroom, 2-bathroom strata townhouse complex by the beachside is still within reach and includes resort facilities and holiday rental income. In Yamba the $500,000 and above market is driven by steady interest from the capital cities due to the town’s good proximity to proposed large infrastructure developments such as the Pacific Highway.

In the region surrounding Grafton, $500,000 is considered to be in the premium residential range and has stayed pretty steady in comparison to 12 months ago. Properties may include large residential grazing cattle farms of over 50 hectares to modern quality built residential dwellings on acreage parcels close to Grafton.

Byron Bay/Lennox Head/Ocean Shores
There is little that can be purchased in or around Byron Bay or Lennox Head for a lazy half million and your money will take you only as far as a basic 2- or 3-bedroom townhouse or villa located just west of Byron Bay township in the Sunrise Estate. Lennox Head has even less to offer and you would be lucky to see a duplex unit on the market for around $500,000. Buyers around Byron Bay and Lennox Head will almost need a lazy $700,000 to enter the market.

A lazy half million will be easier to spend in Ocean Shores where a semi-modern to modern 3-bedroom house can be purchased around the $500,000 mark. There has been relatively little change in the past 12 months in Ocean Shores.

The options of what $500,000 can get you are somewhat limited and more so than 12 months ago. Finding a house in West Ballina or Ballina Island is becoming more difficult and similar to 12 months ago, you will need to settle for a circa 1970 to 1990 2- or 3-bedroom unit if you wish to be close to the beach. There are still opportunities to purchase a house in Alstonville or Wollongbar around the $500,000 mark. The other alternative is to purchase land in an Alstonville or Wollongbar residential estate and build a project home. This can still be done in Ballina (Ferngrove and River Oaks Estate) and Cumbalum (Ballina Heights), however a basic project home is really all you will get for your lazy half million.

Coffs Harbour
Approaching the half way mark of the year with record low interest rates and consumer confidence back sees the market remaining strong with increases in values being experienced through several sectors of the market.

Buyers in the $500,000 bracket can expect to purchase good quality five to 20 year old 3- or 4-bedroom, 2- or 3- bathroom homes on varying size sites located within two to three kilometres of the Coffs Harbour CBD and local beaches. Standard new project style 4-bedroom, 2-bathroom homes range between $450,000 and $550,000 in the smaller central Coffs estates and southern suburbs of Bonville and Boambee East. The more modern upmarket estate known as The Lakes at North Boambee Valley (two kilometres from the CBD) starts at around $500,000 for new 4-bedroom, 2-bathroom homes.

If you are after more bang for your $500,000, the older established areas south of Coffs Harbour at Boambee East and Toormina will get you a five to 30 year old larger better quality 4- to 5-bedroom home with double garage and pool. Traditionally these areas are of a more modest standard with values in the $300,000 to $450,000 range. These areas are well located close to the Pacific Highway for access north and south and are also located within two to three kilometres of the popular Sawtell Beach and shopping precinct. The major shopping centre at Centro Tormina is underpinned with K-Mart, Woolworths and Coles. Schools include primary and public high schools plus nearby St Josephs College and Southern Cross University.

The older homes within the northern beaches suburbs of Korora, Sapphire Beach, Moonee Beach and Emerald Beach have always been solid investments in the $500,000 to $600,000 bracket which buys 20 to 30 year old properties of good size located close to beaches and not far from major facilities in Coffs Harbour.

One area to watch is the beach side township of Woolgoolga, 30 kilometres north of Coffs Harbour. A traditionally strong agricultural area with good infrastructure, the recent bypass upgrade of the Pacific Highway and opening of Woolworths shopping centre only adds to the appeal. Look to the southern side of Woolgoolga at Sandy Beach for the cheap beachside properties. Price points are generally under $450,000 for one to 30 year old homes of modest construction, with esplanade position properties going between $500,000 and $650,000. This area is still under developed with easy access to Woolgoolga and Coffs Harbour. The recent purchase of a large beachside development site will see substantial future residential development taking place which will lead to better infrastructure.

The Coffs Coast locality saw little capital growth over the GFC period, however the past 12 to 18 months has seen the market bottom and the start of the recovery. Traditionally we have not experienced the high levels of capital growth of the major cites due to the fairly low economic base within the region. Limited job opportunities does put a cap on the growth experienced in the mid to upper price brackets, while the majority of growth is centred under the $500,000 mark.

$500,000 still makes a large percentage of the residential market available to a buyer and continues to be a significant price point. The majority of new 4-bedroom homes continues to be sold for less than this amount, although the proportion between $450,000 and $500,000 is increasing. This may be a reflection of the limited growth in incomes in the region, as they are reported to be across the Australian economy. This affects borrowing capacity which in turn determines what money is available in the market. This has more weight in the local market given that the region is not as sought after by wealthy migrants or overseas investors, except in the field of agriculture. The upside of this is a relatively stable market that has seen some increases over the past 12 months. Investor activity has increased with investors chasing yields not available in Sydney, particularly as they may be able to purchase two properties for $500,000 instead of one.

If house prices are looked at in terms of years of average income, then $500,000 is a significant point above which mortgage stress is likely to be felt keenly by people on average incomes. If we consider that the median sale price for the region is between $300,000 and $400,000 then we can say that the region does not have an affordability problem. Having said that, it is unlikely to be enough for a few acres on the fringe of town. Such properties continue to enjoy strong popularity and are considered to be aspirational properties for a large percentage of the market. Such properties also benefit disproportionately from Sydney tree changers.

Land values for well located central properties have increased more than the average if recent sales of such properties for redevelopment are used as a guide.

Our advice would be to find the area that has the most builders’ signs, indicating a renovation or redevelopment, and see what is available for under $500,000 in that area. Investigating Council approvals may be a more targeted approach.

Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2016. Australian Credit Licence Number 385325

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.