The month in review: Regional NSW
By Herron Todd White
Southern Highlands and Tablelands
The Southern Highlands residential property market has been increasing in both volume and price activity since late 2014. Over the course of 2015 we saw a noticeable increase in activity by investors. The Highlands property market is heavily influenced by the Sydney property market, with many buyers relocating from Sydney to the region. Now that Sydney has slowed and softened, the Highlands is also anticipated to slow.
Over the first quarter of 2016, we predict the market to remain steady with sales activity to remain at current levels.
However later in the year, we expect the market to slow and potentially market activity to soften slightly, especially if interest rates were to rise. This trend should be apparent in the first instance for properties over $1.5 million.
The main metamorphosis in the region is in the new residential and establishing residential subdivision precincts such as Renwick Estate (Mittagong), Bingara Gorge (Wilton) and more recently smaller more affordable lots at Nattai Ponds (Mittagong) and Darraby Estate (Moss Vale). There has been strong land sales and new building activity in these fringe locations. This uptick has also seen the emergence of residential infill developments in the townships of Bowral and Mittagong, with established larger land lots being subdivided into smaller allotments which are keenly sought after. There has also been renovation and extension activity in the well located, older style or character homes within the townships of Bowral and Mittagong.
Moss Vale in particular seems to be changing, with a new McDonalds restaurant complete and open for business as at February 2016. There has been relocation and renovation of the region’s car yards to the Moss Vale main street. There is also the new Throsby Gardens Estate, which features 2,000 square metre allotments that have sold in the high $300,000s.
The Southern Tablelands region is steady. The Sydney investor activity evident over the past 18 months is reducing. We anticipate Goulburn to plateau or even soften slightly this year. There are similar trends evident in the Tablelands, with good land sales and new home construction activity in the new and modern residential estates on the fringe of Goulburn, including the Belmore Estate, Merino Country Estate and the Mistful Park Estate.
NSW Central Coast
Located immediately north of the Sydney metropolitan area, it’s no secret that the New South Wales central coast region is blessed with some of the state’s nicest locations in which to live. Long viewed as an ideal place to visit, holiday or retire, the region has been transforming into an even greater place for the average family to live. This in part is attributable to easier access to the area and Sydney market prices becoming out of reach for many.
We seem to have arrived at the end of another hot property market or boom market to some and if previous cycles repeat themselves, we can expect to experience a slowing market with values dropping in some places. A consequence of this has been the emerging popularity of some localities often previously overlooked for the more desirable locations. This is no doubt due to the affordability of these areas catching the attention of new market entrants with a desire to make a mark.
The indicators of this include the purchase of tired old houses in less sought after locations becoming a trend and evolving into an acceptable location no longer viewed as lesser. When the keys are handed over, new owners set about renovating, modifying and extending. Before long, more eyes look at this area and buyer demand is created with a rise in values the prize.
In Central Coast terms, such areas include the peninsula suburbs of Umina Beach, Woy Woy and Ettalong Beach which have all seen this occur and a point has been reached where prices are virtually in direct competition with the Sydney market. Over the past 12 months values have increased by as much as 34.8% in some of the peninsula areas according to CoreLogic RPData.
Other areas include Narara and Niagara Park (both have shown an increase of 20% over the past 12 months) which have been attracting attention of late and for good reason. These areas have missed the positive reports enjoyed by other suburbs for some time, but the busy market has created opportunities for these two areas. They have now been discovered (or rediscovered) and those who recently purchased here may have got in at a good time for as the market settles, it is these types of areas that will endure.
When we are thinking further north in the region, the suburb of San Remo has hit the radar with a tidy increase in values of 13% over the past 12 months. Long overlooked as a desirable location, efforts by buyers new to the area are likely to make San Remo more popular. There is no new infrastructure of any note, shopping centres or schools in San Remo and the question must be asked why it is becoming popular. The most logical reason comes back to affordability and the recognition of this by real estate agents in their approach to marketing.
Time will tell whether the Nararas, Niagara Parks and San Remos of the region will enjoy sustained growth or not, but in the meantime, new owners will have invested their money and lives in them to make these areas grow in popularity.
When we think of locations having the potential to turn the corner to become locations of choice, our attention is drawn to the Gosford city centre. A history of indecision, blocking moves and anti development has seen the Gosford city centre suffer and decline. Efforts by newer decision makers to revitalise it have been exemplary and if not for the opposition they have faced at every turn, the Gosford city centre would have already undergone a transformation to be talked about here. It has been a hard slog for these people and those with a desire to invest heavily in its redevelopment, with some admitting defeat along the way. Fortunately, some of the developers have remained strong and we have seen a few new residential developments completed and others under construction. There is still some ground to cover, but if this continues, when we next speak of localities becoming or regaining popularity, the Gosford city centre will be at the top of the list.
NSW Mid North Coast
This month we are looking at localities within the mid north coast that have become more popular and have undergone gentrification of an older style or poorly perceived locality into a more highly sought and desirable location.
Along the mid north coast this metamorphosis has generally occurred in coastside suburbs where astute investors and owner-occupiers have been buying older style dwelling and either renovating or demolishing and rebuilding completely.
The attraction of close proximity to the beach appears to be the driving factor and suburbs undergoing this transformation include Blueys Beach and Boomerang Beach (beachside villages south of Forster), One Mile Beach in Forster, Bonny Hills, Lake Cathie and the coastal strip along the Port Macquarie beaches to the north (including Lighthouse Beach, Shelly Beach, Nobby Beach and Flynns Beach localities). Dwellings in these areas are often being extensively refurbished.
The central areas within Port Macquarie CBD are also undergoing some gentrification with older dwelling and units being upgraded and renovated. The close proximity to the CBD and services appears to be the driving factor here.
The older areas within the Port Macquarie, Forster and Tuncurry canal estates are also being redeveloped. With no more canal estates being developed and the limited supply of vacant canal front land left, potential owners who wish to live on the canals or river are now generally forced to buy an older style 1970s or 1980s dwelling and renovate it if they want a modern dwelling.
It is fair to say that most of the central west is undergoing a metamorphosis into the levels of cool, particularly for families. While not previously associated with cultural sophistication this is changing with the increase in entertainment venues with recent visits by Anh Do and Kitty Flanagan, increased numbers of immigrants finding it possible to settle in the central west outside of Sydney, university graduates remaining in the area, improved shopping and improved bars and restaurants, many of high quality. Whereas Bathurst was previously associated with young male race fans letting off steam, visitors these days are as likely to sit down to an a la carte dinner with the family as they would a meat pie.
Orange has invested considerable effort into the Taste Orange campaign and Orange is now seen as a centre for fine food and wine.
This makes sense given the red volcanic soils and cool climate which are perfect for fruits and other crops. Both cities have benefited from the social trend to moving back to natural ingredients with restaurants and grocery stores stocking local produce.
As the trend towards lifestyle choices continues, the area is increasingly able to tick a lot of boxes for more people creating a positive cycle of more local investment, with development mindful of what is drawing people to the region in the first place.
The Albury/Wodonga area, like many others, has suburbs and townships once viewed as unpopular now starting to show signs of increased popularity, a move from daggy to cool, so to speak. Areas where this has been most obvious include South Albury, North Albury, Central Wodonga and Chiltern.
North and South Albury have long been viewed as Albury and East Albury’s poor cousins. Recently however, we have seen a realisation in the market place that parts of these suburbs are in fact very close to central Albury and provide the opportunity to purchase an older character home for a fraction of the price.
Types of houses proving popular in both these areas are older homes in need of renovation, close to central Albury, in the $300,000 to $350,000 range.
The area of Central Wodonga is another that has seen increased interest and popularity. This has been driven largely by the multimillion dollar redevelopment of the Wodonga CBD since the railway line diversion. Old houses located close to the CBD that were previously unpopular and considered old and daggy are now being purchased and renovated or redeveloped because of their locations. Again, older character homes are proving to be the most popular as they have the most potential.
The above locations all show the common theme of older properties (often character dwellings) being purchased and fully renovated because of their location and close proximity to shopping, dining and business facilities.
NSW North Coast
Lismore / Casino / Kyogle
The council areas of Lismore City, Richmond Valley and Kyogle generally do not have specific areas which are undergoing gentrification or a metamorphosis from an ugly duckling to a knockout swan.
One possible market segment that benefits from improved appeal are those areas which over an extended period of time have transferred from public or government ownership to private ownership, such as Department of Housing properties. Generally, once such properties have come under private ownership they are renovated and subsequently rented as an investment product. As an example, most of the houses in the former Department of Housing estate on the northern ridge of Lismore Heights are now under private ownership. Another form of gentrification, albeit currently at a minor scale, is the identification of residential properties on traditionally quarter acre sites (1,012 square metres) close to the CBD being further improved by subdividing the land (minimum 400 square metres) or improving the property as a dual occupancy by building an additional dwelling or granny flat. In these regional areas, any form of gentrification is only beneficial if the expected costs are more than accounted for or outweighed by the improvement in market value as an investment product. Therefore, thorough investigation and identification of the key cost factors would be crucial to success.
Ballina / Lennox Head / Byron Bay / Mullumbimby / Ocean Shores
The most noted area of gentrification within the coastal localities is the ongoing development of the Ferngrove and River Oaks estates in Ballina. The previous local stigma associated with these subdivisions due to a combination of the landfill requirements and difficulties in the land market have finally subsided. Land values are increasing in each new stage release and demand remains strong. The once swampland is now turning into a well established modern looking estate. The young (first home owners) and older (retirees) are building on the manageable, some would say, small parcels of land. Residents of these estates cannot complain about potholes or having nowhere to take the kids. New smooth bitumen roads and ample amounts of safe pathways and parks with children’s play equipment also add to the increased market acceptance and gentrification of this precinct within Ballina.
The Coffs Coast is made up of several small coastal and rural communities and has not yet experienced significant gentrification. There are several well established and sought after localities which continue to experience redevelopment or modernisation of old to new, however these have not been gentrified, more they have always been prime locations. In Coffs Harbour, localities of this type that have experienced new development include Sawtell and the Jetty/ Harbour precinct and the northern beaches localities of Moonee Beach, Sapphire Beach and Emerald Beach. Valla Beach to the south and the popular rural township of Bellingen are also areas to which people tend to be attracted.
The township of Woolgoolga (25 kilometres north of Coffs Harbour) is also experiencing new development within the central location close to the CBD and beach.
Several older style cottages along the headland and central town positions are being purchased and redeveloped for more upmarket housing or higher density development. This is also coupled with increasing commercial activity seeing further development of the cafe and restaurant scene attracting increased popularity as a holiday destination and permanent address.
There is one locality where the future for gentrification would appear to be the brightest – Park Beach (approximately five kilometres north-east of Coffs Harbour’s CBD). This area was established in the 1970s with modest low-rise holiday and unit accommodation buildings and several single residential homes scattered throughout. Along the esplanade (Ocean Parade), higher density development has taken place with medium rise unit buildings, the landmark tavern known as the Hoey Moey and Park Beach Caravan Park making this area a popular tourist location.
The locality has suffered from a history of negative social features and while these have been largely addressed, a stigma remains which has reduced broader market appeal. The advantage of this locality is the beachside position with major shopping facilities such as Park Beach Shopping and Home Base centres located nearby.
This area is divided into two sections by a distributor road known as Hogbin Drive to the east and west. Although the whole locality has seen considerable new development take place in the past two years, predominantly through the construction of new townhouse complexes, the major development of new high-rise buildings to the east of Hogbin Drive has seen the area lift in stature.
The area is predominantly made up of unit complexes with limited single residential dwellings available. The entry point in the area for a modest 2-bedroom unit is around $150,000 to $180,000 with average prices ranging from $200,000 to $250,000. New 3-bedroom townhouse units (west of Hogbin Drive) sell for $360,000 to $390,000 while modern units east of Hogbin Drive are $420,000 to $460,000. The new high-rise buildings start at around $400,000 on the lower levels and up to $1 million plus for penthouse units.
The Clarence Valley town of Maclean is continuing to experience somewhat of a transformation due to the extensive infrastructure going ahead in the region. This includes a new Pacific Highway upgrade with several bridges, the second Grafton Bridge crossing and a new Grafton Gaol.
Maclean is one of the old Clarence River ports and features much older style dwellings and buildings which appeal to various sectors of the market. The township is also benefiting from increased development, planning and investment.
Botero Coffee is an example of the increasing number of successful businesses growing within the area. A new shopping complex is also planned near the Maclean CBD. These aspects are definitely strengthening demand for residential property within Maclean and other nearby localities such as Iluka, Gulmarrad, Harwood and Yamba.
Vacant land purchases and new home construction have increased which have been good for local employment. Due to these positive influences the area is expected to continue to gentrify.