Regional NSW June 2018

The month in review: Regional NSW

By Herron Todd White
June 2018

Lismore / Casino / Kyogle

A broad overview of how the Lismore/Casino/Kyogle market is doing at the moment can be summarised as remaining stable. This market segment is being driven primarily by the local market and doesn’t include many non-local investors. Rural townships such as the Casino and Kyogle CBDs continue to remain steady with no drop in sales volume.

The established housing sector remains steady and is the primary product purchased in the Lismore/ Casino/Kyogle shire. In general, there are not many new homes being sold in Casino or Kyogle, however, a high number of construction loans are happening with new builds in Goonellabah and Lismore and the occasional sale of a new duplex unit.

The rural residential property market located west of the Casino and Kyogle CBDs hasn’t seen much market movement lately and sales continue to remain relatively steady. Sales in these secondary locations tend to not be as quick to market as those of the smaller residential sales that have a superior location. Housing statistics in the Lismore region, specifically auction clearance rates, are generally good depending on the type of property in the market. Auctions of smaller residential properties seem to see the best results and have a steady presence in today’s market.

The general outlook remains steady for houses in the Lismore/Casino/Kyogle shire as we move into the second half of the year. Values seem to be increasing and sale volumes remain strong.

As for units located in this area, there is not a lot of product. Sales for this particular sector are thinning.

The main drivers for the Lismore/Casino/Kyogle market include retirees and people who wish to move closer to the CBD within these townships. It is these sales that contribute to the continuation of steady market sales within this region.

Mid North Coast

This month, as we near the halfway point in 2018, we look at how the Mid North Coast residential market is tracking. Whilst regional values of residential property have generally been easing across the country, the major regional centre of Port Macquarie is still generally trending upwards during the first half of 2018, however at a much steadier rate than in late 2017. However, there are some areas that have recently seen a stabilising of values and these include the outer fringe subdivisions of Port Macquarie and the western towns.

Most recently, we have seen some recent re-listings of dwellings that sold during mid to late 2017. These are coming back onto the market at similar values to previous sale prices and in several instances, below previous sale prices. Most of these can be attributed to properties purchased at above market value when demand was high and listings low.

Recently, selling periods have increased and are back to more reasonable periods (one to three months) which was the norm before the second half of 2017.

The southern towns of the mid north coast, including Taree and Forster Tuncurry have seen slowly increasing values and good demand over the past six months. These towns tend to lag the major regional centres and often still have ample stock available at a reasonable price.

Tamworth

Well, we have made it half way and so far the Tamworth market is continuing to trade strongly across all sectors. Residential properties are trading well with both owner-occupiers and investors being active. There has been a noticeable increase in the number of prestige properties being sold across several suburbs, with strong prices and limited time on market achieved. As we reach the middle of the year, the slight dip in construction we noticed at the start of the year appears to have stabilised and increased slightly, however it still appears to be down on what was occurring this time last year. This is still being attributed to the change in the first home owner grant as it is the lower end of construction ($350,000 to $450,000) which has slowed down.

The newer sections of Calala, North Tamworth and Moore Creek have seen an increase in sale prices as newer homes come onto the market as owners upgrade. The increase also seems to be attributed to the subdivisions now being more established with less construction happening around the homes, and streets on the whole having a better appeal. It is not only the newer suburbs performing well – East Tamworth has seen an increase in values particularly among the older style brick dwellings. According to Pricefinder the average increase in median price for north, east, south and west Tamworth is 11% as at today’s date. Now, this is skewed data as it is only for the past five months and not completely up to date, however gives a good indication of the strength of the Tamworth market. Given the relative affordability of housing in Tamworth, the unit market trades fairly steadily with no real highs or lows. However with the town continuing to grow and with more professionals moving in, the executive townhouse style unit is certainly increasing in demand. A 3-bedroom, 2-bathroom townhouse sold earlier this year for $550,000 in East Tamworth. With many new dwellings available in this price range, it shows the strong attraction for this style of townhouse.

Overall, the Tamworth market has been trading well and we expect this to continue for the remainder of 2018. There is some concern given the current drought conditions and there may be a slight drop noticed within the rural residential sector, however local agents continue to report strong demand for these properties. Tamworth is not a town reliant on any one industry and although the drought may affect the rural and rural lifestyle sector, it is expected that the general residential market will continue to trade strongly.

Southern Highlands

As we come to the end of 2018FY, across the Southern Highlands the residential market for dwellings has experienced a hiatus, with number of sales contracting from the highs of Q4 2017 and the average price tracking lower between 4-8% across the region with the exception of Bowral which has flattened from the highs of August 2017. The most active price point continues to be in the $650k-$1m band. As has been the case historically there is emerging market volatility in the Rural Lifestyle/ acreage properties in the $2.5m+ sector, where purchasers tend to be more discriminating in their purchasing decisions.

With respect to some of the more recent land release areas across the Southern Highlands, we are noticing increasing stock levels as new blocks in the 450sqm -2000sqm land size finally come to market. Because of the delay in registering titles, some speculative investors may find their dated lender approvals no longer current, which may prove challenging with tightening current credit criteria. For the remainder of the calendar year, we anticipate some further easing in the market as the increasing number of vendors particularly in the vacant residential land market compete with a limited pool of purchasers

The above being said, existing housing stock located close into the main townships of Moss Vale, Bowral and Mittagong, with the benefit of being located close to retail, medical, school and transport infrastructure will remain attractive to the Sydney buyer market, particularly families in the up to $1.5m pricepoint who continue to “discover” the Southern Highlands region as an affordable lifestyle alternative to an increasingly congested urban existence.

Gosford

While it can be said we are seeing a decline in supply in the Central Coast residential market post the 2017 rush, sales are still achieving high numbers (albeit at a slower rate). The Central Coast real estate market mirror the Sydney market and we are seeing properties staying on the market a little longer than seen during 2017. We are also seeing the return of the scales of dipping in favour of buyers and cases of asking prices not being achieved. Bear in mind though, asking prices are becoming a thing of the past it seems, with real estate agents opting to centre the marketing around wording such as “new to market”, or “contact agent” rather than signalling an asking price with negotiations held between competing parties post the open house inspections – a quasi-auction in anyone else’s language.

As seen in previous cycles, it will take some time for vendors to accept that the market has and will be moving away from the bullish market conditions with a real potential that the record highs that have been achieved may not be available. As the remainder of the year closes out, a better indication of just where we are heading will become apparent. Whether this will be media or ending rate/policy driven or both also remains to be seen. Regardless of all this, the market is still performing well overall. New dwellings continue to be built within the recently completed subdivisions at the northern end of the region in suburbs such as Hamlyn Terrace, Woongarrah, and Wadlaba. These are the region’s version of the “mortgage belt” and we will be monitoring things here as a barometer of the markets sentiment, stress points, and strengths. These new dwellings appear to be attractive with first home buyers out of the Sydney market due to their level of affordability, but we also note the investor market seems to be holding representation.

While new dwellings are popular in these areas, so too are the older, established dwellings due to their relative affordability. It’s an interesting note to make that many of the dwellings are not old enough for a complete renovation, but when looking at the marketing material, there seems to have been a lot of property styling ahead of placement on the market for sale purposes being and if the sale number is anything to go – it has been working well. Higher values areas such as Terrigal, Avoca Beach, and Killcare don’t appear to be experiencing any change in sales performance, as we continue to see record sales in these areas.

Moving into the second half of the year, we would like to say this trend will continue, but we can’t say this confidence. The rise in queries by the lenders and insurers, greater levels of urgency by mortgage brokers along with a slight slowing of sale volumes leads us to think that the market may be about to slow – if it hasn’t already. The ‘gentrified’ northern suburbs of Long Jetty, Killarney Vale, and Bateau Bay are continuing to increase in popularity – we are particularly interested in the Long Jetty market which seems to lead the field in being trendy.

The Peninsula at the southern end of the region continues to experience some good sales figures, but after a stellar run spanning a few years, the volumes seem to be slowing a bit. The Central Coast remains a popular and more importantly, an affordable choice for Sydney buyers and as such we are hopeful that values across the region will be stable as we head into the next phase of the real estate cycle. We may see a gradual shift from a seller’s market to a buyer’s market. While we have previously seen bidding wars amongst purchasers, it now might become a waiting game for the seller.

The buoyancy of the market over the past several years has provided us with an increase in residential unit numbers. There have been a number of recently completed projects, with more under constructions. In speaking to the marketing agents, it seems a majority of buyers are again, coming from the Sydney market. Along with the general state of the current market, local projects to further stimulate the market includes the significant upgrade Gosford Hospital and completion of the ATO building. These in themselves have created an air of activity and positivity in the Gosford CBD. Just outside the Gosford CBD, the unit market in East Gosford and Point Frederick are pushing on as construction continues and more in the pipeline. These developments have been well received by buyers, but we remain neutral on whether the high values paid in some of the developments will be sustained into the future.

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