Illawarra's strong dual occupancy push: HTW

Illawarra's strong dual occupancy push: HTW
Illawarra's strong dual occupancy push: HTW

Due to the strength of the residential property market in the Illawarra, small infill developments are currently more feasible than ever, in fact quite lucrative for owners where development is possible, according to Herron Todd White’s latest market report.

The property advisory firm states that the most common small scale development is a dual occupancy, often with Torrens or strata subdivision.

"We are noticing two types of dual occupancy.

"The first is typically an older established dwelling on a larger block around 700 to 1,200 square metres and with a frontage over 16 metres," the report stated.

R1 or R3 zoning makes council approval easier. The current house is kept as is and a new detached dwelling is constructed at the rear of the block.

Usually a garage or other site improvements need to be demolished to allow for construction of the new dwelling.

Illawarra suburbs where this is prevalent include those close to the main CBDs such as Fairy Meadow, Coniston, Bomaderry and Nowra.

The second type of dual occupancy is the construction of a new duplex pair. This can involve the knock down and re-build of an older dwelling in an established area or allowable construction in a new estate.

These blocks of land (or older houses) with dual occupancy potential are often purchased by small scale developers, with both duplexes sold individually once construction and subdivision are completed.

This type of dual occupancy is widespread in recent land subdivisions in Lake, Heights, Berkeley, Flinders, West Nowra and South Nowra.

There is currently strong demand for new properties which is driving up prices of duplex properties, thereby increasing developers’ profit margins.

A ten year old, semi-modern duplex recently sold in May 2016 for $564,000 after the vendor had purchased it in March 2015 for $462,000 - an 18% increase in just over one year.

Where possible, developers are best to hold off selling their new constructions for as long as possible while prices continue to increase rather than selling them off the plan early on in the project.

With strong prices in the residential market being achieved across the townships of Moss Vale, Bowral and Mittagong, it is not surprising that there is an increase in activity in the stand alone renovate, extend and sell market.

Traditionally 1910 to 1920s cottages close to the town centres have been the subject of the first wave of this style of development.

This has more recently extended to second ring areas that historically have been characterised by affordable, stand alone dwellings of circa 1950s to 1960s.

Under the current Wingecarribee LEP 2010, there have been infill development opportunities for villa development, which have now become economically viable with the increase in completed unit sales prices.

"This is particularly the case in the townships of Bowral and Moss Vale.

We have also noticed the emerging popularity of dual occupancy developments across the hamlets of Hill Top and Bargo being located in reasonable proximity to the freeway," the report stated.

Entry prices range from $500,000 to $1 million and experienced developers have been obtaining normal profit on costs of 10%, timing and quality being the key.

Similar to the Southern Highlands, HTW suggested redevelopment opportunities of stand alone cottages within walking distance of town seem to be the most popular type of development for the small developer.

"Again key to success is experience in the market and control of costs via utilisation of local reliable contractors," the report stated.

Entry prices are between $450,000 and $600,000.

Illawarra Htw

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