NSW Central Coast market struggling: Herron Todd White
Eight suburbs on NSW Central Coast, a popular retirement and lifestyle location for ex-Sydneysiders, registered price falls of more than 5% over most of 2011, with mortgagee sales rising notably, according to property valuer Herron Todd White’s December report.
According to Fitch's latest mortgage delinquency report, the Central Coast suburb of Budgewoi is Australia's worst performing post code with a delinquency rate of 3.5%
The biggest price falls occurred in Ourimbah, at the entrance to the Central Coast on the Pacific Highway, where houses depreciated by 16% over the year to November 2011, falling to a median of $343,000.
Sales prices ranged between $268,000 and $560,000.
Properties in the semi-rural lifestyle location of Matcham declined by 12% to a median price of $960,000, with Herron Todd White describing this result as “somewhat surprising” and suggesting that “trading slowed during 2011, with a resulting shift in affordability levels”.
Matcham is part of the City of Gosford, where overall sales numbers declined from 2,601 in 2010 to just 2,059 in 2011 and median dwelling prices falling 3% over the past 12 months.
Other markets to register declines of more than 5% included the popular coastal suburb of Terrigal, where unit prices declined by 7.5% to $495,000, with houses declining by a more modest 1% to $559,000.
Highlighting the patchy nature of the market, houses in Killcare, about 16 kilometres south of Terrigal declined by 9.35% (to $775,000) while houses overlooking the beach in Killcare Heights (just down the street) increased by 7% to $590,000.
The only other suburb to register an increase in values was Woy Woy on Brisbane Water, where unit and villa prices appreciated by 7% to $319,000.
Source: Herron Todd White
The report notes that “mortgagee sales have once again been all too common on the Central Coast”.
“Advertisements of these mortgagee sales include ‘must sell, under instructions to sell,’ etc, which are regularly seen on the coast.
“The Central Coast region has been ‘red flagged’ by the lenders for some time now for closer monitoring. This year, we have seen a steady flow in valuations being provided to mortgagees finding it necessary to carry out a forced sale.
“Bearing in mind that we are just one of a number of valuation firms present on the Central Coast, our in-house records indicate that 44 individual instructions for mortgagee-in-possession valuations from various lenders have been received to November.
“The number of these forced sales would indicate that the Central Coast real estate market, particularly in the ‘mortgage belt’ areas, is vulnerable as owners struggle with mortgage payments and living costs.”
The report highlights that dwelling and unit sales in the sub-$400,000 category, including vacant land sales, accounted for about 50% of the overall number of property sales on the Central Coast, “confirming reports from real estate agents that first-home buyers and investors are sustaining the market”.
“The residential unit market lived up to our expectations as the most volatile of the various market segments. Values were erratic as this market struggles to gain stability after the oversupply situation we have been experiencing over the past several years. Good buying was regularly seen in this segment,” the report says.
Overall, sales volumes declined by approximately 20% across all sectors and price bands compared to last year and are close overall to figures achieved five years ago in 2006.
The segments that have shown the least activity during 2011 included dwelling sales of between $1million and $ 2million and vacant land sales, especially in the Wyong municipality, along with dwelling sales over the $3 million mark in Gosford.
The surprise for the year was a 31% increase in sale volumes of dwellings in the $1 million to $2 million price band in Gosford.
Source: Herron Todd White
HTW attributes the slowdown in sales to the “erratic supply of funds being made available through the major lenders, with exposure and risk models undergoing “a regime of adjustment”.
“The result, it appears is that owners in this segment seem to have largely opted to delay the sale of their properties until the market improves, rather than take a hit.
“It could be said that another two or three business reporting periods without controversy and boards left intact may stimulate this segment once again.”
Photograph by Kate Dreyer