Yields in beachside Byron Bay remain firm: HTW

Yields in beachside Byron Bay remain firm: HTW
Yields in beachside Byron Bay remain firm: HTW

As Covid-19 travel restrictions have eased, property sellers and real estate agents in Byron Bay have heaved a collective sigh of relief, according to the August Herron Todd White (HTW) residential report. 

The valuation firm presented an 'investor playbook' of real estate performance within each service area this month. 

"Property sales have kicked upward over the last month in the Byron Shire as intrastate and interstate travel brought non-local buyers back into the fold. But in the blink of an eye, we are faced with border closures on the Murray River and hot spots in Sydney restraining the market once more," the valuation firm said. 

It is truly a fluid situation and one that will develop further as rates of Covid-19 infections wax and wane, the report noted. 

The COVID-19 issue is of particular relevance to the Byron Shire market as many of the transactions that occur are for investment purposes with many of those investors originating from Sydney, Melbourne and Brisbane with a smattering of buyers from overseas.

The absence of these buyers from the market because of coronavirus has caused much angst to sellers.

"In turn, some absentee investors have resorted to purchasing properties sight unseen in what must be an indication of their strong desire to invest in the Byron Bay area. Maybe it’s a bit of FOMO?" the valuation firm said. 

There are some locally-based investors active in the area as well.

There is very little new land being released in the Byron Shire but with a growing population there’s increasing pressure on housing affordability, particularly for first home buyers, and with a large portion of the population unable to afford a unit or house (see last month’s topic “lazy $700,000”) and a steady turnover of short- to-medium stay holiday makers utilising AirBnb style properties, there is consistent, if not strong, demand for rental accommodation.

Because of the high buy-in prices of property in the area, investors are looking to maximise returns by utilising the holiday market or by purchasing properties with multiple letting opportunities such as dual occupancy properties, the report noted. 

A three bedroom house in Mullumbimby with possibility for dual occupancy development has been sold for $857,000.

Set on a 854sqm block, the home at 8 Myokum Street (pictured below) is only two blocks from Mullumbimby town centre. 

It comprises three bedrooms, open plan lounge and dining, and huge backyard. 

Yields in beachside Byron Bay remain firm: HTW

Yields for investors in the area can appear to be relatively modest. For example, a one-bedroom unit in a new development on the northwest fringe of Byron
Bay recently sold for $610,000 and was leased for 12 months at $550 per week, or $28,600 per annum, gross income.

That reflects a gross yield of 4.68 per cent. Costs such as rates, body corporate fees, management fees and incidentals will eat away at that before the buyer has to meet their mortgage payments.

A one bedroom loft apartment in Byron Bay has been listed for rent with a price guide of $570 per week.

The 39 Easy Street top floor home (pictured below) comes with one bedroom with built-in, mordent bathroom, kitchen and private balcony. 

It is situated within close proximity to cafes, restaurants and the beach. 

Yields in beachside Byron Bay remain firm: HTW

The relatively modest return is a reflection of the popularity of the area, the report noted. 

"In the more central and beachside locations of Byron Bay, yields are firmer still. It’s a good thing we still have negative gearing, right?

"Many of those absentee buyers are not, however, investing for the rental returns alone. The properties they buy are seen by many investors as a future retirement destination or as a holiday home, so rental return is but one facet of some investor’s decision process," the valuation firm said. 

Byron Bay Htw

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