Byron Bay shows most promise in North Coast price growth: HTW
Staying ahead of the gentrification curve can prove profitable to investors, say HTW as it reports the NSW North Coast progressing from a rising market in February to approaching the peak in March, according to the latest HTW property clock.
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.
The ongoing low level official interest rates will continue to have a steadying impact on the overall residential market throughout 2016.
One area to keep a close eye on for 2016 is the affordable but modern detached duplex unit. Having a smaller foot print area, i.e. strata site, compared to the modern four-bedroom, two-bathroom, double garage home on typical freehold site of 650 square metres plus, not much is really sacrificed.
The detached duplex design can vary like any other freestanding residence and still possess a similar number of rooms and garaging on a smaller site and smaller open space by employing split level, part two-level or two-storey designs. More and more people are starting to realise that a large backyard is not a necessity for young couples or mature aged couples with no children or pets.
The prices are generally lower than their larger counterparts and yet still provide good quality improvements and living accommodation. It is now commonplace to note that most corner sites in new residential subdivisions are specifically targeted for this type of development. Even within existing residential areas, some property investors are actively seeking out larger residential properties close to the CBD, i.e. houses on corner quarter acre blocks (1,012 square metres) to carry out dual occupancy development of the existing residence rather than starting from scratch with freshly developed parcels of land in a new estate.
Generally, properties within the $250,000 to $350,000 price bracket are likely to be the main price brackets receiving most of the activity within Lismore City for 2016, whereas it would be slightly lower in Casino and Kyogle at $200,000 to $300,000. However, there is an increasing supply of modern and semi-modern homes in the $400,000 plus bracket for Lismore City, thanks in part to the development of the modern residential estates dotted within Goonellabah.
The most affordable property type will continue to be the older stock of the typical circa 1970s and 1980s, two-bedroom brick and tile units of which little have sold in 2015. This is likely to continue throughout 2016, however at affordable price levels of $125,000 to $175,000 (depending on whether renovated or not) and still generating a reasonable rent return in areas close to the CBD and major educational facilities such as Southern Cross University. Good buying opportunities may present themselves providing the body corporate fees are kept in check and to a minimum.
One area of caution is the traditional 100 acre hobby farm or rural lifestyle block in semi-remote to remote localities. With the possible threat of increasing costs to maintain such properties and distance from the main centres, their popularity is continuing to fade. Already at the extreme end of the scale there is a significant fall (up to 50% in some cases) in market value for timbered, remote parcels of 100 acre lots with limited or no services over the past three to five years.
In summary, HTW expect the residential property market for Lismore, Richmond Valley and Kyogle Council areas for 2016 will continue with some assurance of stability. While unlikely to see major growth, quiet confidence should remain while couched in the hope that a low interest rate environment remains, even if there are modest rises in the banks’ rates.
Ballina / Lennox Head / Byron Bay / Mullumbimby / Ocean Shores
The 2016 year within the Ballina residential property market could go two different ways. The strong demand and quick turnover of 2015 may continue or it could slow down around the middle of the year.
Interest rates are still low which is one of the driving factors of first home buyers and investors. If market conditions begin to slow with interest rate increases and a slowing Australian economy, we could possibly see a slump. This could force investors to sell, which in turn would increase stock levels. However, with the new Pacific Motorway recently completed between Tintenbar and Ewingsdale, we could see a trend of Queensland buyers coming down into the Far North Coast and in particular the Ballina region.
If overall economic conditions remain unchanged, the overall market in 2016 will remain steady for the Far North Coast.
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 property markets in Sydney and Melbourne reportedly slowed in the later part of 2015 which in turn will see the coastal resort towns of Byron Bay and Lennox Head remain steady and possibly ease towards the middle of the year (there is generally a lag).
As these towns are generally driven by interstate lifestyle changers, the market conditions upwards of $1 million will be the first indicator that the market has eased.
The lack of stock and strong demand have resulted in the Byron Bay area having tremendous growth over the past 18 months, however economic forecasters and global uncertainty will have an impact.
The lower level or entry points circa $400,000 to $700,000 will remain steady and fare better than the prestige market due to the lack of housing and strong rental returns. Investors will still see opportunity in this price bracket.
Examples of recent sales include a three-bedroom house at 1/2 Marge Porter Place Ballina NSW 2478 (above) for $310,000 recently, while a three-bedroom townhouse at 8/2 Cemetery Road Byron Bay NSW 2481 (below) sold for $585,000.
