Regional NSW Property Market Update May 2019

Ballina /Byron Bay Property Updates

The majority of land within the Ballina Shire is available in the new estates of Lennox Head, Cumbalum and Wollongbar. Prices generally range from late $200,000s to early $300,000s for a block of land in Wollongbar, through to early to mid $400,000s for a block of land within the Epiq Estate at Lennox with gentle topography and local view. You would expect to pay somewhere in the mid $500,000s plus if you wanted a block of land within Lennox Head with some sort of ocean view.

Build costs typically start at around $1,400 per square metre for a basic project home on a near level block. This would increase for a higher quality fitout or sloping block of land. Over the past five years, those who have bought land and built have typically done quite well, as the cost of land plus the cost to build has in most cases been noticeably less than the end value. In recent times as the market has slowed and the cost of building has increased, there is less cream on top for those who choose to buy land and build.

In the Byron Shire, vacant land parcels are more commonly available in the suburbs of Lennox Head and Skennars Head. Average sizes of these parcels range from around 500 square metres to 700 square metres. Average price points range from $450,000 to $550,000 in Lennox Head and $550,000 plus in Skennars Head. Values for vacant land in the current market are stacking up. As registration nears for each new deposited plan, resales from the original are indicating a rise of circa 10 per cent. There are no differing areas that appeal to that of investors versus owneroccupiers. Limited availability sees investors and owner-occupiers having to buy in the same market.

In relation to building costs in the Byron Shire, there are varying prices depending on the style of home. Project style dwellings range from $1,250 to $1,550 per square metre, whereas independent builders of a slightly higher quality finish range between $1,650 and $1,850 per square metre. It is a very competitive environment for finding builders at present. The rates per square metre in the past 12 to 18 months across all building genres (be it project or architectural) have risen significantly due to the lack of availability. It is known throughout this locality that builders are booked up almost 12 months in advance.

Values in the Byron Shire are holding up. The market for established housing between $800,000 and $1 million has been somewhat hurt given that the availability of land has changed. Prospective buyers are opting to build new on land for around the same cost as purchasing an older established home. This is quite consistent across this region and does not vary from location to location.

What is interesting to note is that rental prices continue to surge in Lennox Head and Suffolk Park which creates an opportunity for investors to buy and build.

Speak with a Lismore Mortgage Broker today.

Clarence Valley Property Updates

The Clarence Valley boasts available residential land holdings in areas such as Grafton, Townsend and Yamba and rural residential vacant land lots in Gulmarrad. Across the valley, there is a plethora of vacant land lots for sale in the sub-$200,000 category with the median price currently at $170,000. Yamba on the other hand has recorded a median land sale price range over the past twelve months of $260,000 to $335,000, with infill in lots situated in highly desirable pockets achieving particularly high sale prices.

Given the current property climate, the supply of vacant land is equalled if not surpassed by the demand. Build costs in the valley remain relatively competitive with standard builds ranging from $1,200 to $1,800 per square metre.

At present, whether you’re building new or dealing with an established product, the market remains steady with no indications of immediate decline.

Speak with a Yamba Mortgage Broker today.

Coffs Harbour Property Updates

The Coffs Harbour market experienced very strong capital growth and activity in the vacant land market over the recent boom period.

There is never an oversupply in the market at any one time given the natural constraints of supply, however the increased demand over the past two to three years has seen values rise significantly. It has not been uncommon in developing estates such as North Sapphire Beach and Sandy Beach for a high proportion of sales to have occurred off the plan to either spec builders, owner-occupiers or investors with values rising five to 10 per cent as each stage becomes available for sale. Take the example of North Sapphire Beach when the more recent stages were released in 2014. Prices for 550 to 800 square metre sites ranged from $230,000 to $260,000. By the final release in 2017, sites were worth $280,000 to $350,000. If you can find a block for sale now, then $360,000 would be the expected price.

Seacrest estate at Sandy Beach also experienced similar value increases (although at a lower entry level) originally starting at $150,000 to $200,000 (2012 to 2014) currently selling for $230,000 to $260,000. These sites range in size from 450 to 650 square metres. There are many examples of similar price rises throughout the region and as vacant land has become scarcer, these values continue to climb.

Below is a list of recently completed, under construction and proposed projects within the locality of Coffs Harbour. Whilst not an exhaustive list, it does demonstrate the potential stock levels in this area.

As demand has increased for land, so has building activity and cost. It is no surprise that there is a direct correlation between building cost and land sales; the more land sold, the greater the demand for builders and with limited builders available, costs must go up. Typically, a project style brick and tile home on a level site would have set you back $1,000 to $1,200 per square metre of living area in 2013 to 2015. We see the same product in 2019 costing anywhere between $1,400 and $1,600 per square metre and if you wish to put in the high-end finishes, costs of up to $2,500 per square metre have not been uncommon for prestige builds.

What does this mean in terms of overall end product value? Entry level is now $500,000 to $550,000, which typically three to four years ago was $450,000 and this property rents for $480 to $550 per week. However, if you wish to live closer to the beach (east of the Pacific Highway) then entry level is $650,000 to $700,000.

Who is purchasing these new homes? That depends on the location and value level. In estates such as Sandy Beach where land value is still reasonably cheap at the circa $250,000 mark, we see a lot of investors and first home buyers, i.e. entry level product which shows reasonable rent versus value return. Beachside estates such as Sapphire Beach, Korora and Moonee Beach typically see second and third home buyers and retirees looking for more upmarket lifestyle homes and who can afford the $700,000 plus tags.

What does the future hold for the land and building market? Well, given the current limited supply, one would suggest not too much in the medium term, however we are seeing more spec homes currently on the market within some of these estates which may cause a slight oversupply in the short term.

Speak with a Coffs Harbour Mortgage Broker today.

Mid North Coast Property Updates

Surrounding the Port Macquarie region are a number of outer fringe subdivisions that are highly concentrated on vacant land plus construction or home and land packages. Whilst some areas within these subdivisions may be classed as prestige lots, some areas or lots are not. With changing markets, there is always the risk that future development of new stages within a pre-existing subdivision may not lend itself to the same quality of dwelling.

In saying that, level or gently sloping vacant land is appealing to purchasers due to the fresh slate status and cheaper associated building costs. With the peaking and now slowing of the market, developers have adjusted their vacant land prices to attract a transaction.

Average building companies have stabilized their building costs and a range of $1,450 to $1,800 per square metre is the norm depending on the quality of build and improvements.

Other vacant land lots in the subdivision have higher build costs due to the contour of the land and the proximity to the beach and facilities. We have noticed that building activity in these areas has eased with land sales taking longer to achieve.

As a sign of the declining market, we have noticed that some building contracts have adjusted progress schedules and are front loaded. This adjustment allows builders to better manage their cash flow.

So, the question remains, is it better to build or buy?

Location! Location! Location! is always the winner. It should always be a priority to seek investment properties where there’s strong potential for the land component of the overall value to rise.

Therefore, let’s look at the comparisons in the table above.

Speak with a Lismore Mortgage Broker today.

Central Coast Property Updates

The New South Wales Central Coast region sits midway between the Sydney metropolitan area and the Newcastle/Hunter region to the north. Many say our region has two parts – the northern end and southern end.

The southern end is pretty much closing in on fully developed status with very few opportunities available to secure vacant land. The last residential subdivision offering a decent number of new land parcels was the Kings estate at Terrigal. It provided good land and a controlled standard of new dwelling requirements. Resales of vacant land are now well above the $600,000 mark. There have been several infill subdivisions, but not a great number.

The northern end of the region is a different story and anyone looking for vacant land within new estates offering vibrancy, livability and affordability needs to be looking here in the suburbs that include Woongarrah, Hamlyn Terrace and Wadalba. Good quality land can be secured from a little over $300,000 with plenty of house and land packages also available.

On the subject of house and land packages, we see them generally as a good option for those wanting to move straight into a new home with minimal fuss. We do caution however that prices vary and sometimes we are at a loss to explain why when outwardly, there does not appear to be any apparent reason, so our advice is to investigate carefully and compare.

Cost versus value

By now, it’s no secret that the market has turned. The heady period of being in a sellers’ market with buyers scrambling to secure property are behind us for the time being. What we are now seeing is that the market has moved to correct itself.

This comes with a whole new range of issues and challenges and when we talk about new builds, there is definitely some heartbreak.

Building costs seem to be reasonably stable and have been for some time now, but we are increasingly seeing examples of land cost and new build cost falling short of current market values. This isn’t just isolated to newer areas with project style homes around $1,700 to $1,800 per square metre across the living areas. Architecturally designed houses, often upwards of $3,000 per square metre of living have had some enjoyment on a cost versus value scenario, but this has also passed us and we are seeing a negative result on a market value basis. The upside of the architectural designed market is that values tend to hold stronger during the tough times as most are located in areas with a higher base value.

Speak with a Central Coast Mortgage Broker today.

Southern Highlands Property Updates

As mentioned in previous editions of the Month in Review, the Southern Highlands region is currently experiencing an oversupply of recently registered residential land sub-division projects throughout the region coming on line across the main townships of Bowral, Moss Vale and Mittagong such as Renwick (Mittagong), Darraby Estate and Throsby Views (Moss Vale) and Retford Park (Bowral) which has resulted in some vacant lots being discounted to achieve a sale within a normal selling period.

Since the beginning of the year, the outlook in the short to medium term has been uncertain, however there are signs that vacant parcels within these (either nearing registration or recently registered) sub divisions carry a greater inherent risk of value diminution over the next twelve months. This in turn is making it more difficult for vendors to obtain a construction loan, particularly now with tighter credit conditions.

A standard project style build contract will range from approximately $1,500 to $2,000 per square metre varying with location, size and quality of the construction. These contracts will almost always exclude provisions for driveways, fencing, floor coverings and basic landscaping. The lack of provision of the excluded items was seen as a minor detracting factor in the subject’s presentation, saleability and end value, however we have seen in more recent times that newly built dwellings with an incomplete street appeal or of an incomplete nature internally which are placed on the market are being heavily discounted by the buying public.

Despite the Sydney market continuing to soften over the current period, we are noticing that particular dwellings of higher quality from local builders are still fetching good money in Bowral’s most recent subdivision, Retford Park and the prestigious suburb of Burradoo. The current market values of the lower quality, stock standard style project homes in Renwick, The Darraby Estate and Nattai Ponds in Braemar have been more adversely impacted as the market changes direction.

Speak with a Mittagong Mortgage Broker today.

Tamworth Property Updates

Over the past several years, Tamworth has seen an increase in land subdivisions with building being a popular choice when it comes to getting into a home. At present there are approximately 15 subdivisions underway, with lots ranging from around 600 square metres up to around 4,000 square metres, giving buyers and investors alike myriad choice in where to buy.

For smaller home sized blocks of 600 to 1,000 square metres, a buyer will typically look in Calala and North Tamworth with nearly half of all subdivisions occurring within these areas. A typical block will set you back between $125,000 and $160,000 depending on size and view. It is also these lots that attract investors as the finished houses tend to attract a higher rental return than houses on larger lots.

Now for those looking for a bit more space, Moore Creek and North Tamworth are the places to go, with four subdivisions underway, with lots between 1,000 and 4,000 square metres. These lots will cost between $160,000 and $240,000, with the higher end being the 4,000 square metres lots with good district views. It is certainly the domain of owner-occupiers for these areas as the added up-keep of such large blocks is less enticing for investors and tenants alike.

Overall, the vacant land market has held up well in Tamworth. Even with the array of options there has been stable value growth over recent years. The past six months or so has seen a slowing of construction which has in turn slowed down the turnover of vacant lots. Whilst we have not seen a decrease in values, we are certainly seeing longer marketing campaigns to get the lots sold.

Right, so now that you have your block, it is time to put a house on it.

Construction in Tamworth tracked well for the past several years, but has hit a slight slowdown in the past six months. Local builders are reporting that they have less projects in the pipeline than previous years, but this does not mean that they have not got anything on the books. With builders having fewer future projects, it is freeing them up for more work, giving buyers more options on builders who are ready to go and not having to wait for them to finish up other builds.

A typical project build by one of the major builders in town is going to cost you about $1,300 to $1,400 per square metre. This will typically include stone bench tops, ducted rc/ac, driveway and a mid-range quality fit-out. It will exclude landscaping, window furnishings and fencing. New builds are holding their values well and we are starting to see a few of the more recently built houses (one to three years old) hitting the market as the owners move on to their next project. A recent sale in Calala for $502,000 showed a return of approximately 17 per cent, with a cost to build of $430,000 (including land and excluding landscaping) over a two year period. This level of growth makes building a new home a strong option for those looking to get into the housing market, upgrading or even downsizing with values holding well, as well as increased tax benefits for investors.

Speak with a Tamworth Mortgage Broker today.