July Market Outlook
CoreLogic National housing Update July 2017
7 Factors That Influence a Home Buyer’s Decision by CoreLogic
Stamp duty and first home owner grant changes in effect across Australia
The difference between owner-occupier and investment interest rates
Adelaide July 2017
Brisbane July 2017
Cairns July 2017
Canberra July 2017
Darwin July 2017
Gold Coast July 2017
Melbourne July 2017
Newcastle July 2017
Perth July 2017
Regional NSW July 2017
Regional NT July 2017
Regional QLD July 2017
Regional VIC July 2017
South West WA July 2017
Sydney July 2017
Tasmania July 2017
Wollongong July 2017
CoreLogic QLD housing Update July 2017
CoreLogic SA housing Update July 2017
CoreLogic VIC housing Update July 2017
CoreLogic WA housing Update July 2017
Should you rent out your home on Airbnb?
How to calculate the cost of buying a home in Australia
Mortgage myth buster: things you need to know about mortgages
Regional NSW July 2017
The month in review: Regional NSW
By Herron Todd White
The continuing ripple effect of the Sydney market has pushed the main townships of Bowral, Moss Vale and Mittagong beyond the $500,000 range for the aspiring property owner. Where we have seen a real surge are the outlying hamlets such as Hill Top and Colo Vale, where $500,000 will buy a neat 3- or 4-bedroom 1980s style house on 700 square metres of land. These locations are proving attractive to entry point purchasers, enjoying close proximity to the freeway. We note that the market has moved strongly over the past 12 months when in July 2016 we observed that the strata market and older houses on the fringe of the main townships were within the price range. This would now be the exception with only the possibility of picking up a late 1960s early 1970s built dwelling in Mittagong or Moss Vale, located in the previously social housing precincts.
NSW Central Coast
Finding a property with a lazy $500,000 is becoming increasingly difficult in the central coast region as a result of market value increases over the past two years. There are still some areas where the owneroccupiers and investors are looking to buy at this level and can be accommodated, however the pool of stock is shrinking.
We think most buys in the housing market will be found in the older suburbs at the northern end of the region. Some parts of Blue Haven, San Remo, Gorokan, Toukley, Budgewoi and Charmhaven are still offering properties at or below the $500,000 mark. These properties are mostly single level, 2- or 3-bedroom fibro or brick and tile homes, mostly with garaging on average size blocks of land. If villas or townhouses are being considered, then reasonably priced stock is available within Mardi and Watanobbi.
The middle of the region includes suburbs like Bateau Bay, Killarney Vale, The Entrance and Long Jetty. While still available, properties with a $500,000 price tag are becoming rare and will mostly be limited to villas, townhouses and units. There are a few dwellings seen at this level, however these properties will be older style and most likely in need of renovations or repairs.
Killarney Vale and Berkeley Vale are good, solid suburbs with equally good facilities. There is a good vibe in these locations for younger buyers and families. Buys at the $500,000 mark are becoming limited, yet they are still around and it’s 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, buying around the $500,000 mark becomes harder. Properties are still available, although buyers should expect to concentrate on the unit market where buying a property at this price point is still achievable.
This is also the case for the Peninsula locations of Umina Beach, Ettalong Beach, Woy Woy and Booker Bay as $500,000 buys are becoming rare.
Narara, Niagara Park and Wyoming have been benefiting from the strong market and their growth in popularity has pushed the $500,000 buy in price upwards and we are seeing limited purchases at this level now.
When looking back at the comments made in 2016, we note the underlying tone was that buying with a lazy $500,000 was achievable, although the stock was shrinking in some areas, and this has proven to be the case. We think that next year, we may be talking a lazy $600,000.
NSW North Coast Lismore / Casino / Kyogle
There has been some positive movement in some areas of the property market from 12 months ago in terms of what one can score with a lazy half a million. In other words, in some places that $500,000 would get you less whereas in other places you could get more for your money. However, the mix of product may have varied slightly, particularly in the more regional areas within the Richmond Valley and Kyogle council areas.
Still, in the more remote areas, we have noted a distinct fall in some markets. For example:
• 6 x $75,000 (or less) per steep timber vacant 40 hectare bush blocks in the rural localities of Drake and Tabulam; or
• 4 x $110,000 to $120,000 standard vacant residential blocks in Casino and 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 market.
Alternatively, secure a nice 3- to 4-bedroom, 2-bathroom house with garage for around $300,000 to $350,000 and throw in another vacant residential block at $110,000 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 the ones 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 gift to acquire an established property with 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 even 100 hectares purchased under $500,000 have become slightly more attainable in the past 12 months and still 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 still abound. Good quality level vacant residential lots are around the $200,000 plus 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 use the other $100,000 to 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 may be even more opportunity following the recent flood in the Lismore basin and North and South Lismore areas, particularly for houses where flood waters entered the habitable floor areas, however tread carefully, as anecdotally it has been reported that some areas in Lismore had flood waters higher than that recorded in 1954 and 1974!
There are still 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 $150,000 to $200,000 and attract a rent of around $200 to $250 per week.
One particular sector of the market which has seen a lot of activity in the past 12 months is the wellpresented, 4- or 5-bedroom, 2-bathroom, double garage residence in the modern residential estates of Goonellabah and Lismore Heights (where most of the new build action is) within the $450,000 to $550,000 range, that is if you feel inclined to use up the $500,000 in one go plus a little bit more from a friend. The rental assessments can vary widely depending on features, but expect something in the order of $450 per week plus.
At present, even with the record low interest rate levels, the possibility of any significant price improvement is not generally clear as there is still the overriding climate of people expressing that age old concern of ”is my job secure?”
There is little that can be purchased in or around Byron Bay or the Lennox Head area for a lazy half million in 2017. In Byron Bay, $500,000 would only allow you to purchase a basic 2- or 3-bedroom townhouse or villa located west of the city centre.
The suburb of Lennox Head has limited options for a lazy half million as well, offering maybe an older duplex purchasing option. In truth potential purchasers looking for a buy into the Byron Bay or Lennox Head market will almost need a lazy $700,000 at a minimum for a solid investment opportunity.
Ocean Shores however would present an easier opportunity to spend a lazy half million as a semi-modern to modern 3-bedroom house can be purchased at around the $500,000 mark. As the market has continued to firm over the past 12 months these opportunities even within the locality of Ocean Shores have become harder to find.
The prediction from last year’s lazy half million edition remains true, as the market in the Byron shire is almost void of the $500,000 price bracket. It should be considered however, that the unit market in Ocean Shores would be all on offer for a lazy half a million dollars. This suburb provides a great locality to major service centres such as the Gold Coast airport and provides a mid price point of around $450,000.
In Ballina or Alstonville, $500,000 would get you a basic 3-bedroom semi-modern dwelling or a reasonable 3-bedroom townhouse or villa. Another option would be to purchase vacant land in Wollongbar Estates or Ballina Heights and build. This would get you an entry level modern project home within a new estate and would have strong re-sale value.
Within less desirable locations such as Wardell, Broadwater and Woodburn, $500,000 would still get you an above average quality home or even a basic acreage lifestyle property.
Within Evans Head, $500,000 would buy a modern good quality 3-bedroom townhouse or a basic older style dwelling situated on land with possible redevelopment potential.
The Clarence Valley
Within Yamba and Maclean, the sub $500,000 market remains strong with 66 and 82% of combined dwelling, unit and land sales reported in this price bracket so far this year respectively (as sourced from RP Data). The Maclean market remains the more affordable option with the beachfront appeal of Yamba contributing to firming values. At the $500,000 price point, a range of options are available. Some of these include established dwellings (renovated or original condition), units, land and new builds and even large lot rural residential in areas such as Gulmarrad. With the market in its current state, it is wise for purchasers to be wary of longer term returns. In a hot or peaking market it is important to keep in mind the possibility of a downward or even stabilizing trend in the future. Accordingly, it is important for purchasers, particularly renovators or investors, not to overcapitalize. In terms of rental returns, there continues to be demand for housing from the Pacific Highway upgrade, as well as standard holiday rentals. With limited permanent rentals available it is a competitive market with better than historical rental returns being recorded.
Approaching the half way mark of the year with record low interest rates and consumer confidence seemingly unstoppable we have recorded strong increases in values over the past 12 months within several sectors of the market.
Buyers in the $500,000 bracket cannot expect to buy as much as in previous years with significant pressure on the sub $500,000 market sector. $500,000 will buy you a 10 to 30 year old 3- or 4-bedroom home on varying size sites west of the Pacific Highway and within two to three kilometres of the Coffs Harbour CBD. East of the highway you will get a 20 to 60 year old home close to town and beaches although will generally be modest in size and require significant upgrade work. The newer project style homes in suburban locations such as Bonville and Coffs Harbour now range between $500,000 and $650,000 whilst in the more upmarket beachside suburbs of Korora, Sapphire Beach and Moonee Beach, you will find very little for sale under the $600,000 mark with the lazy half million buying an older style home which will require some work. Homes in the more modern upmarket estate known as The Lakes at North Boambee Valley (two kilometres from the CBD) start at around $600,000 for modern 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 larger 4- or 5-bedroom home of five to 30 years of age. Traditionally homes in these areas are of a more modest standard with values in the $375,000 to $550,000 range. These areas are well located close to the Pacific Highway for access north and south and within two to three kilometres of the popular Sawtell Beach and shopping precinct. The major shopping centre at Centro Toormina is underpinned with K-Mart, Woolworths and Coles. Schools include primary and public high schools plus nearby St Josephs College and Southern Cross University.
One area that has seen significant price rises is the beach side township of Woolgoolga, 30 kilometres north of Coffs Harbour. Traditionally a strong agricultural area with good infrastructure, the recent bypass upgrade of the Pacific Highway and opening of the Woolworths shopping centre only adds to the appeal. $500,000 in Woolgoolga will only buy you a modest 20 to 60 year old home on various size sites, any within the central township locality becoming increasingly harder to find.
Look to the southern side of Woolgoolga at Sandy Beach for the cheap beachside properties. Price points are generally under $550,000 for 10 to 30 year old homes of modest construction with esplanade position properties at between $600,000 and $750,000. This area is still under developed with easy access to Woolgoolga and Coffs Harbour. There is a large beachside development site planned for this area which will see substantial future residential development which will lead to better infrastructure.
The Coffs Coast locality saw little capital growth over the GFC period, however the past 12 months has seen the market boom with 20% to 30% increases in some property sectors. Traditionally we have not experienced the high levels of capital growth of the major cites, having a fairly low economic base, however recent demand has outstripped supply which has led to significant capital growth. Traditionally the limited job opportunities put a cap on the amount of growth however we are experiencing a lot of activity from the capital cities where the Coffs Coast prices still seem relatively cheap compared to metropolitan prices coupled with the lifestyle factors afforded within the area.
The best way to spend around the $500,000 mark in the Dubbo market would be an entry level dual occupancy or duplex property. Yields are still higher than the capital cities however given our ageing population and the need for retirees to downsize, there is still strong rental demand for solid brick veneer duplex units.
We have found that $500,000 is probably a little low to enter the market and most modern duplex pairs are above $600,000. The typical modern brick duplex pairs are showing around the 5.5% gross yield mark.
There is currently strong building growth in Dubbo for duplex units but that will probably hit saturation point if city growth and job growth don’t follow.
For $500,000 you could buy a 4-bedroom, 2-bathroom modern dwelling in south or west Mudgee on a 1,000 square metre block or a renovated federation style home in central Mudgee on a smaller lot.
On a return basis you could potentially do better by buying two units which would be possible on a $500,000 budget (although don’t forget about the additional fees such as strata fees etc).
You can expect a rental return of between $400 and $450 per week on the modern 4-bedroom home in south or west Mudgee, $450 to $485 on the renovated central Mudgee home or $500 to $550 on the two units.
With new state government changes to first home buyer grants and an improved coal price this property bracket could exceed that lazy half million figure by the end of 2017. Fingers crossed!
The lazy half million gives buyers the opportunity to buy a quality home in the Tamworth region without having to sacrifice any of the creature comforts. $500,000 will get you a near new, large brick veneer home of a quality fit-out in the expanding suburbs of Calala, North Tamworth or Moore Creek, or if new is not your style it will buy a renovated brick federation home in East Tamworth or North Tamworth. This price range also gives buyers the opportunity to move out of town onto small acreage (one to five hectares) with an older dwelling (1970 up) in original but good condition.
With the Tamworth median house price sitting around $360,000, half a million dollar houses are certainly not what first home owners or investors are looking for. At this price range we are seeing upgraders and families as the main target market. The best performer at this price range would be the small acreage properties or the older homes in East Tamworth, both of which are experiencing good growth in land values and capital gains. For investors this price opens up the potential for a modern duplex or older unit block or triplex. While these options offer little in the way of capital growth a gross return on investment of 6% to 8% is easily achieved. The other option would be to purchase two separate properties, with plenty of reasonable properties available at the $250,000 mark that provide potential for capital growth as well as strong rental returns
We believe this market will continue to be a strong contender within the Tamworth market. With the introduction of the new stamp duty rules for first home buyers and continuing low interest rates, we expect there will be more activity in the $250,000 to $400,000 market which will open up more opportunities for those looking to upgrade and move into the next price bracket.
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.