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Regional NSW July 2018
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CoreLogic NSW housing Update July 2018
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Regional NSW July 2018
The month in review: Regional NSW
By Herron Todd White
A lot has changed in 12 months 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 some 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:
- 7 x $50,000 to $75,000 per steep timber vacant 40 hectare bush blocks in the rural localities of Drake and Tabulam; or
- 4 x $120,000 to $125,000 standard vacant residential blocks in Casino and Kyogle. Relatively flat but may ask slightly more than $125,000 individually, so a package deal of say four at the nice round figure of $120,000 each would be hard for a vendor to pass up in the current market.
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 a 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 an established property with a modern 4-bedroom, 2-bathroom home with double garage in close proximity to the town centres of Casino or 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 under $500,000 have still been available over the past 12 months 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 has been more restricted in its purchasing power due to the coveted $600,000 price bracket being surpassed quite frequently. However, opportunities still abound. Good quality level vacant residential lots are around the $225,000 plus mark in the new, developing residential estates, so buy two and possibly use the remaining $50,000 as a deposit for a house to be built on each of the lots.
It should be still possible to find two residential house properties for around $250,000 each, however they are likely to be located in a flood prone area, need cosmetic attention or front a busy road.
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 level range of $175,000 to $250,000 and attract a rent of around $235 to $275 per week.
At present, even with the record low interest rate levels, the future 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?”
Ballina and Byron
$500,000 in Lennox Head would buy you a basic 2-bedroom unit within reasonably close proximity of the Lennox Head shopping precinct and beaches.
Within Ballina, $500,000 would buy you a reasonably neat and tidy 3-bedroom villa or townhouse or a very basic residential dwelling. Further from the coast, $500,000 would still get you a reasonable 1990s 3- or 4-bedroom residence within the townships of Alstonville or Wollongbar. Rental demand remains strong across the Ballina Shire with increases in rental prices experienced over the past 18 to 24 months, however increases in value levels across the shire have generally out performed increases in rental prices resulting in lower yields.
There is little that can be purchased in or around Byron Bay or the Lennox Head area for a lazy half million in 2018. 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 villa or townhouse purchasing option. In truth, potential purchasers looking to buy into the Byron Bay or Lennox Head market will almost need a lazy $750,000 at a minimum for a solid investment opportunity.
Ocean Shores however would present an easier opportunity to spend a lazy half million as a dated to semi-modern, 3-bedroom house can be purchased at around the $500,000 to $600,000 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 and has spread to localities in recent times considered secondary. 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 major shopping facilities.
The Clarence Valley
Across the Clarence Valley there are ample investment opportunities available for under $500,000. With many localities such as Grafton showing median prices of under $400,000 and rental returns remaining strong due to the Pacific Highway upgrade and new Grafton Jail, investors as well as owner-occupiers are active in the market. However since the initial interest, the rate of turnover as well as stock available on the market have shown signs of slowing, albeit without any hindrance to sale prices.
Maclean has also continued to perform as a significant player in the sub $500,000 market. Yamba continues its momentum as fewer opportunities, particularly detached dwellings, are available at this price, however across the Clarence Valley, there remains numerous detached dwellings, units and even some acreage and rural residential properties for sale at affordable prices.
Over the past 12 months, this market has performed relatively in line with our predictions and is likely to continue at this level until the infrastructure upgrade workforce shifts. It is prime to capitalise on rental returns whilst keeping in mind the opportunity for capital gains in the long term.
Twelve months on and the $500,000 is seemingly becoming more like the entry level rather than midmarket as it was several years ago.
Demand has remained strong from the home buyer and investor sectors whilst supply remains relatively limited resulting in upward pressure on values, typically within the most affordable sector of the market of $350,000 to $550,000.
We are now seeing sales within the suburban areas of Coffs Harbour and traditionally lower value areas south at Boambee East and Toormina producing sales of older style (20 to 40 years) 3-bedroom, 1-bathroom properties on 700 to 1,000 square metre sites within the $500,000 to $550,000 range which were typically $400,000 to $450,000 12 months ago.
East of the Pacific Highway from Coffs Harbour heading north to Woolgoolga you will find it very difficult to pick up a free standing home for $500,000. Your best chance is within Sandy Beach (south of Woolgoolga) or Corindi Beach (north of Woolgoolga) where a 3- or 4-bedroom home is still in the $450,000 to $550,000 range.
The new home market has just about seen its days for property under $500,000 within the greater Coffs Harbour area. The entry level is around the $475,000 mark for which you will get a project style home of 120 to 140 square metre plus garage and patio on a 450 to 550 square metre site. Typically the new home market west of the Pacific Highway is within the $550,000 to $650,000 range whilst east of the highway, beach front suburbs start at $650,000.
Whilst interest rates remain low and supply and demand factors remain unbalanced, we can only expect a continuing shrinking of the lazy half a million dollar market. The Coffs Coast offers a diverse range of property and lifestyle benefits which attract an ever increasing population from the capital cities who come with full pockets and consider $500,000 to be bargain buying.
Mid North Coast
This month, we consider where we would park $500,000 in the mid north coast property market to achieve a solid investment result and we have selected the major regional centre of Port Macquarie for our discussions.
Particularly within the Port Macquarie region, $500,000 now will only purchase limited stock, as prices for an average 4-bedroom, 2-bathroom and 2-car garage now exceed the $500,000 mark. There are still some older 3-bedroom, 1-bathroom, single garage dwellings scattered throughout the township close to town and major amenities that can be obtained for around the $500,000 and with the market stabilising we expect these types of dwellings to out perform some of the dwellings in less central locations. Also large good quality villas in smaller complexes close to amenities have been popular, seeing good growth and now fetching close to the $500,000. Again we expect this stock to remain solid over the next six months as they appeal to the ageing down sizing market.
With the winter season upon us, unique or properties that are of limited supply are still gaining close to full asking price, however the more standard properties seem to be sitting on the market for longer and are seeing some reductions in asking price.
For investors chasing a mix of yield and capital growth, we consider the following areas as solid investment:
- Good quality older 3-bedroom dwellings with the possibility of a granny flat have been popular with investors producing an almost neutral return, with investors cashing in on university student accommodation.
- New house and land packages in the outer and western regions of Port Macquarie and nearby towns and villages can be purchased at between $500,000 and $600,000. Whilst theses dwellings are not located within the main stream capital growth area, solid rents and tax depreciation benefits are making up the shortfall for the prudent buyer.
Rental prices around the CBD, the hospital and Charles Stuart University areas have remained steady due to student accommodation style developments being completed and a shortfall in student intake. We have also noted that houses are remaining longer on the market for rent and in some instances rent has had to be reduced to gain a tenant.
With dwellings being built in the outer suburbs for a cheaper price than purchasing an existing older dwelling within the township or Port Macquarie, many new purchasers are opting to build. We are therefore still seeing demand for vacant land in the outer suburbs. With two elections next year (federal and state) we expect that the housing market will stabilise further and that major growth may not been seen again until after these events.
It doesn’t seem that long ago that a lazy $500,000 could buy two properties within many parts of the New South Wales central region. How times change – with this amount, one might now find an old dwelling on the outskirts or an older unit close to town.
Purchases at this level are becoming rare on the coast – a little more looking and agility is now required. No better evidence of this is seen than when taking a look at the statistics available to us all via RP Data. The March 2014 median value for Narara was $392,500. It now stands at $628,000 and similar levels of increase are seen in most suburbs making up the region.
It isn’t surprising given the strengthening market seen over the previous three years.
Here are some specific examples of what $500,000 (or less) may buy you:
- A circa 1977, 2-bedroom, 1-bathroom unit fronting a busy road on the Gosford CBD fringe – $420,000
- A near new, 1-bedroom, 1-bathroom unit close to Woy Woy about 1.5 kilometres from the shops and station – $480,000
- A circa 1960, basic 3-bedroom, 2-bathroom dwelling with single garage in need of renovation – $495,000
These are brief details that relate to the southern end of the region and fortunately, there are still a number of locations towards the northern end of our region where property prices remain under the $500,000 mark. These include Budgewoi, Buff Point, Gorokan, Gwandalan, Mannering Park and Chain Valley Bay. All good, solid areas that surprisingly, haven’t been discovered yet by those coming into the region.
Typical examples of values include:
- A circa 1980, 2-bedroom, 1-bathroom partly renovated dwelling in Mannering Park with single detached garage – $445,000
- A well presented, circa 1998, 3-bedroom, 1-bathroom brick and tile dwelling with attached carport – $495,000
- A 1993, 4-bedroom, 2-bathroom brick and tile dwelling with single garage in Buff Point – $515,000
- Numerous examples of 3-bedroom, 1-bathroom dwellings in the $400,000 to $450,000 range in Chain Valley Bay.
- A 1980, brick and tile dwelling with 3-bedrooms and 1-bathroom on a 715 square metre parcel with value adding potential.
These coincidently are areas identified when this subject was visited last year.
When we speak of where the best buys are, it’s hard to go past the northern end of the region. There are many choices for good value properties under $500,000. At present, for numerous reasons we would single out Gorokan as the pick location for good value. From both an owner-occupier and investor perspective, the area is well serviced with schools, shopping and proximity to the lake and beach. This is an area that has the feel of gentrification occurring.
The northern end of the region doesn’t hold all the benefits. If keen enough to move quickly on attached housing at the southern end of the region, there are some good investments there too. A 2-bedroom unit purchased for $440,000 in East Gosford could achieve a potential rental of $330 per week.
So who are the buyers and where are they coming from? No surprises here – most buyers in this segment of the market include young first home buyers, mum and dad investors and most often, those with good deposits but priced out of the Sydney market.
It is the latter who many say are responsible for the large increases in values seen in some of the region’s suburbs. This is no more evident than the peninsula suburbs of Woy Woy, Umina Beach and Ettalong. With few exceptions, the days of securing real estate at less than $500,000 in these areas are now a distant memory.
When thinking of the sub $500,000 market segment, we often associate it with the investor market. In this market, return and gain are the key motivators and whilst readers would be very familiar with the rises in values in just about every centre, returns seen in our region sit at around a respectable 5% to 6% in general speak.
It’s difficult to say how this sector will perform over the coming period. It is now generally accepted that the market has or is about to slow. At present, while it appears that the number of transactions in the market has reduced, sale prices remain stable for the time being.
We noted this time last year the ramp up of the northern villages of the Southern Highlands, such as Hill Top and Colo Vale. As we round out the 2018 financial year, the median price for Hill Top is just north of $600,000 and Colo Vale stronger still, with proximity to freeway and pricepoint driving this growth. At the $500,000 mark, there are isolated opportunities available, more realistically entry point is $560,000, comprising late 1960’s to early 1970’s built dwellings on smaller blocks of land in Mittagong and Moss Vale, located in the previous social housing precincts. The market sub $750,000 is still strong across the Highlands and we do not expect this market appetite to diminish over the current period.
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.