Regional NSW Property Market Update October 2020

By Herron Todd White
October 2020

Southern Highlands Property Update

Over the past six months as the impacts of the COVID-19 situation have increased, there has been a notably positive shift in market sentiment across the Southern Highlands. Initially this was concentrated to high end product as well as tightly held properties positioned in good central locations (think the central townships of Mittagong, Bowral and Moss Vale) however as the months have gone by, we have seen this shift in positive market sentiment across the board including the fringe villages of Exeter, Burrawang and Robertson. What seems to be a common denominator is high demand from Sydney purchasers as regional hubs have become more appealing due to working from home arrangements becoming more flexible for more industries, technology advancements and overseas travel restrictions resulting in people focusing on stay-at-home lifestyle choices now rather than overseas travel which looks a long way off into the future.

Recent months have provided continued evidence that the previously flat vacant land market is strengthening. This is clearly evident in Moss Vale’s Darraby Estate which is in its final land release stage. These parcels moved slowly until a surge in activity since June 2020 which has seen the majority of these parcels now snapped up. The surge of activity has also seen some strong results for resales of new houses in these newly established estates. This again is particularly evident in Moss Vale, Renwick and Bowral. As a consequence, we are noting house and land valuations stacking up comfortably over the past quarter in terms of contract price.

As always, country style cottage construction sympathetic to the local heritage area is achieving higher end results from a resale point of view. When completed with a high level of finish and a good level of landscaping, this style of dwelling has resulted in premium prices being achieved within certain new developments. By way of example, the recent sale of a newly built Bowral Country Cottage within Retford Park for $2 million on 1,250 square metres of land broke the previous record of $1.75 million for a similar style home in Retford Park set in quarter two of 2019.

Moss Vale has also seen similarly strong prices for this style of home. For example, within the Farnborough Estate , three kilometres form Moss Vale town centre, one acre parcels with substantial family homes have recorded sale prices varying between $1.5 million and $2 million over the past six months.

Overall, the medium term outlook for this area looks to be a continued trajectory of the good growth which has clearly been accelerated in the wake of COVID-19 by the region having a very strong underlying appeal to predominantly Sydney buyers seeking a secondary home or weekender style of accommodation or lifestyle buyers seeking a change from urban living. The area benefits from its commutable distance from the Sydney CBD and distance to Canberra, with appeal to young families at any entry level all the way up to the Southern Highlands’ prestigious rural village style living.

With respect to future land releases, the larger style land developments are slated to continue in the medium to longer term, most recently with up to 1500 new homes to be built in Moss Vale (Coomungie Land Precinct). The caveat here however is that the region is now at a point where there is a substantial infrastructure backlog thanks to years of lack of vision and investment by Wingecarribee Council with respect to required road, sewerage and stormwater headworks upgrades to enable large scale developments to come online. This will curtail commencement of larger scale development.

Tim Stevens
Property Valuer

Lismore/Casino/Kyogle Property Update

Whilst the Council areas of Lismore City, Richmond Valley and Kyogle cover a wide physical swathe of the Northern Rivers, most of the land and build activity is generally taking place in the Lismore City area and, more particularly, the suburb of Goonellabah and the popular satellite suburb of Perradenya on the Caniaba plateau, approximately ten kilometres south-west of the Lismore CBD.

For the smaller country towns of Casino and Kyogle, there have been limited land releases of late generally due to either scarcity of available land or the unwillingness of larger land holders to make land available. As a result, the forwardthinking Richmond Valley Council took the initiative to purchase a small developable parcel of land (Canning Grove Estate) on the north-west fringe of Casino to enable some semblance of growth. Already, the ten lot (Stage 1) has received plenty of interest.

Anecdotal evidence from local builders and larger building companies indicate that they have plenty of work on the books currently and for the months to come.

In the regional centre of Lismore City, there are a number of new residential land estates and extensions to existing estates which, after what appears to be a protracted time frame in getting registration of titles even after development has completed, are now experiencing a hive of activity in building work.

New residential estates such as Eastwood, Hidden Valley, Valley View Estate, Pinnacle Estate and extensions of existing estates including Mount Pleasant Estate in the burgeoning suburb of Goonellabah have and are providing a plethora of opportunities for the upgrader to secure a brand new home and plenty of dwangs and noggins for local builders to construct well into the near future, regardless of COVID-19.

“COVID, what COVID? Hasn’t slowed us down!” they say.

In terms of cost, we have definitely seen an uptick in the construction cost, which does put some pressure on the property owner to make a deal work. In most cases so far, the summated cost of the confirmed recent land sale price and the cost to construct a dwelling measure up to market value. However, what borrowers and lenders MUST realise is that the usual to-be-erected valuation requests generally includes the land, dwelling construction and possibly a driveway ONLY. Other items which tend to feature after the initial building of the dwelling include the additions of landscaping, fencing, turf, gardens, paths, solar power systems (very popular), pool – all of which are outside the standard building contract. These items can cost upward of $50,000 to $75,000 in total…even more with a pool.

Therefore, the typical summated cost of a new dwelling, driveway, rainwater tank and land sale price for a property, say, in Goonellabah, could be in the region of $500,000 to $575,000 (depending on location and land slope etc). Hence, the inclusion of these ancillary improvements could push the market value or selling price bracket to well over $600,000. In the 12 month period from today, we have already noted 13 sales of improved residential dwellings over $600,000 in Goonellabah alone. Two years ago, this would have never been contemplated. So, in essence, the land and build cost has been measuring up in the current economic climate so far. That’s not to say there haven’t been any anomalies.

A few instances have been noted of building companies from outside the area coming in and providing supposed land package deals for prices well above the known original asking land sale price and inflated construction costs.

In our experience, whilst these proposed dwellings have been described as having four bedrooms, two bathrooms and double garages, their total living floor areas are virtually 50 per cent of the size of other residential dwelling development in Goonellabah and generally occupy sloping sites.

The recent extension of the Perradenya Estate saw 20 lots snapped up in a matter of weeks prior to road construction with prices in excess of $225,000….and already we are seeing builders hover around this area ready to move.

In summary, Lismore City appears to be chugging along quite nicely with plenty of land to build on and builders available to build on the land for the foreseeable future. The demand is there in Casino and Kyogle, but unfortunately there is a lack of supply.

The COVID pandemic has had an interesting impact on the local housing market around the coastal areas of Lennox Head to Evans Head. So far there seems to be a very strong demand for properties which in turn has left agents with a limited supply of properties for sale. Our market seems to be artificially inflated due to the movement of people from the major cities and in particular Sydney. This movement has kept property prices at a premium and in some areas has also shown a slight increase in values. Usually our local area is influenced by the performance of capital city markets however this flow on effect has not been seen to date.

Future property prices may be impacted by the banks once the mortgage relief has been lifted and people are then required to go back to paying their full mortgage payments. Without full knowledge and future impacts of COVID, people are uncertain as to jobs and incomes looking forward. The building industry has also been impacted due to the significant number of trades living in Queensland not being able to travel to the Mid North Coast for work.

Vaughan Bell
Property Valuer

Speak with a Lismore Mortgage Broker today.

Byron Bay Property Update

The Byron Shire has seen most of its building activity occur within the home renovation and reconstruction sector. There is currently a very limited supply of vacant land in the Byron Shire which is driving buyers who want that new house feeling towards existing property in need of renovation or redevelopment.

Building activity has remained relatively buoyant throughout the COVID-19 crisis with construction work being undertaken on a range of projects ranging from granny flat and studio additions, part renovations and full renovations or rebuilds up to and including bespoke high-quality finishes in prestige locations.

The small number of vacant land allotments is centred around Mullumbimby and Bangalow with house and land packages ranging from $600,000 to $800,000 for medium quality houses.

The construction sector in the Byron Shire is likely to remain buoyant given the good support the shire is receiving from local and absentee buyers, however the supply of materials and labour is becoming constrained by the border closure with Queensland.

Mark Lackey
Property Valuer

Ballina Property Update

The COVID pandemic has had an interesting impact on the local housing market around the coastal areas of Lennox Head to Evans Head. So far there seems to be a very strong demand for properties which in turn has left agents with a limited supply of properties for sale. Our market seems to be artificially inflated due to the movement of people from the major cities and in particular Sydney. This movement has kept property prices at a premium and in some areas has also shown a slight increase in values. Usually our local area is influenced by the performance of capital city markets however this flow on effect has not been seen to date.

Future property prices may be impacted by the banks once the mortgage relief has been lifted and people are then required to go back to paying their full mortgage payments. Without full knowledge and future impacts of COVID, people are uncertain as to jobs and incomes looking forward. The building industry has also been impacted due to the significant number of trades living in Queensland not being able to travel to the Mid North Coast for work.

Bernard Walter
Property Valuer

Clarence Valley Property Update

Within the Clarence Valley there is vacant land in several new estates being offered for sale with prices ranging from $150,000 in Grafton up to $290,000 in Yamba. Agents have reported good purchase rates with strong interest from both capital city and local buyers. There is a shortage of good quality vacant land in well located areas. These parcels are highly sought after. Demand is being driven by recent strong government infrastructure spending on a new M1 Motorway making access to the Gold Coast, Brisbane and Coffs Harbour much easier to access. A new jail has also recently opened up within the Valley. These elements increase population in the area and therefore the need for housing. Another aspect increasing demand is the increased desire of city dwellers to move to regional areas to avoid lockdown problems currently impacting cities. The lower prices of the Clarence Valley could also be seen as a hedge against a possible downturn in property prices which may impact the capital cities more. Construction is strong in the area with some builders reporting they have never been busier. Construction of four-bedroom, two-bathroom, twogarage accommodation is popular. Construction costs typically range from $1400 to $1600 per square metre of living area, with premium rates up to $1,800. Generally these prices are acceptable based on market evidence. Low interest rates are expected to help the continued direction of this market in the short term. The medium and long term is unknown and depends greatly on how the government protects asset prices with incentives, benefits, infrastructure spending and interest rates.

Caitlin Davies
Property Valuer

Coffs Harbour Property Update

Coffs Coast has always had a limited to balanced amount of supply of vacant land releases at any one time. The area has experienced steady growth over recent years with regard to new home construction with strong demand for land released especially within the more sought after beachside locations such as Sapphire Beach, Moonee Beach, Safety Beach which have seen stage sellouts well before construction has commenced.

Recent demand for vacant land has noticeably increased due to COVID-19 stimulation packages geared towards new construction which has seen available supply diminish and prices being achieved for available land increase. As an example, a new infill development at North Boambee Valley (two kilometres south of central Coffs Harbour) had 450 to 550 square metre sites selling in late 2019 and early 2020 for $265,000 to $275,000. These sites are now being contracted for $290,000 to $300,000 if you can get one. We note the majority of demand is for level to easy contour sites which suit project builders more than sloping sites do. Agents are reporting more limited demand for sloping sites due to higher construction costs.

We are also seeing a rise in building costs as demand increases for new homes which has put pressure on the local building industry to cope with this extra demand. This extra demand results in longer waiting times, increased cost for building products and ultimately more expensive homes. Couple the increase in land values with rising building costs and we are now seeing the end product values exceeding existing value levels in many areas. The Coffs Coast is still an affordable locality with the majority of house and land packages meeting the government stimulus threshold of less than $750,000. This makes it attractive to first home buyers, investors and up sizers alike, creating strong demand. Given the current lack of supply and increased demand for land and construction, we cannot see this bubble being popped any time soon, however we must caution that once the stimulus packages have ended and given the country is in a recession, any decline in the broader economy or decrease in market sentiment could see a softening in the market which could result in downward pressure on values.

No one has a crystal ball to accurately determine the state of the property market long term, however the Coffs Coast is well placed to ride a storm given the location and lifestyle benefits, continuing population growth, regional infrastructure expenditure and soon to start Pacific Highway bypass which will all play a role in strengthening the local economy.

Grant Oxenford
Property Valuer

Central Coast Region Property Update

The Central Coast region is located along the New South Wales east coast, approximately 80 kilometres north of Sydney and 100 kilometres south of Newcastle, with an estimated population of 333 119 according to the Australian Bureau of Statistics. With the Australian government guiding us through the COVID–19 pandemic, it seems as though the property market is slowly regaining an element of confidence in the marketplace with early signs of increased activity across the region in all segments of the market.

In particular and in focus this month is the residential vacant land market. The implementation of the HomeBuilder Scheme by the federal government has given homeowners or land holders an added stimulus to potentially build a new home or undertake substantial renovations or additions to an established property with a $25,000 grant on offer for eligible applicants. Although the scheme is in its early stages, we are starting to receive enquiries from private customers in relation to satisfying the eligibility requirements. Opportunistic property owners are already securing finance with consistent instructions being received for on completion valuations for new builds and substantial renovation or addition projects from lenders.

The south end of the Central Coast has seen limited residential land release with developers concentrating on higher density villa and townhouse unit development. Bucking this trend is the Kings Estate, located off Kings Avenue in Terrigal. Marketed as “the last land release in Terrigal”, many vacant land lots have already been purchased with resales of land now transacting. Recently constructed dwellings have also been selling in the estate with agents reporting strong buyer enquiry.

A unique development slowly gathering interest from the environmentally minded community is the Narara Eco Village, located on Research Road. Government support was received in the early planning phases of the estate with a vision to put sustainable development first. Each dwelling constructed required a minimum NatHERS 7 stars rating. Landowners are required to purchase a membership which entitles them to use of the community land and buildings located on the estate. Development of lots released in Stage 1 has commenced and we are seeing industry leading design concepts implemented. The Narara Eco Village website confirms that vacant land is currently being released for Stage 2 with civil works yet to commence.

The northern end of the Central Coast has been the epicentre of residential land release with Hamlyn Terrace and Woongarrah leading the way. Wyee has recently released the Radcliffe Estate off Hue Hue Road with land holders, mainly first home buyers, sparing no time to build their dream homes. Investors have also been active in this estate with newly constructed dual occupancy dwellings emerging.

New land buyers on the Central Coast commonly provide feedback centralised around the affordability the region offers compared to Sydney. We have monitored land sale contracts and a large segment of buyers reside in the Sydney metropolitan area. The acceptance of employers allowing employees to work from home seems to be increasing demand across all market segments, however in particular the residential land market with agents receiving increased interest in recent times. This is expected to continue throughout the remainder of 2020 until further uncertainty returns to the marketplace when the JobSeeker and JobKeeper government stimulus packages end.

Syd Triggs

Albury-Wodonga Property Update

The Albury-Wodonga community has shown resilience, patience and innovation during the past month. Border restrictions finally eased on 17 September with a combination of the border region being expanded and border region residents able to travel anywhere within the region with a permit. This is set to benefit local business within the region.

In regard to the Albury-Wodonga property market, as touched upon last month, strong sales activity in all residential land subdivisions remains and builders report they are at capacity for new construction well into the new year as people literally scramble to meet the deadlines for Home Builder and First Home Ownership Scheme.

Albury-Wodonga and surrounds are an excellent case study for the almost immediate effects of government stimulus on the property market. Agents report a continuing lack of supply in the existing dwelling market, which is also a driver of strong sales in this segment, whilst vacant land sales are through the roof (albeit not constructed yet). Residential land across all segments is in demand and we are definitely seeing increased contract prices for standard suburban allotments through to two-hectare rural lifestyle allotments. Developers who had stages ready to bring to market in the past few months could not have timed it better and quick moving land purchasers may have scooped a relatively good price compared to the new stages where we are really seeing listing prices much higher as everyone gets on the bandwagon of taking advantage of the incentives on offer.

Of course, the one constant through any market cycle is that quality property always remains quality and usually this is reflected in the market value, with vacant land being no exception. Topography, aspect, views and proximity to recreation, shopping, schools and health all rate highly in desirable subdivisions. The trend in high demand periods due to the stimulus means that all vacant land prices are increasing, including allotments that may have been disregarded at the higher price by the market under normal market conditions.

So bottom line here is that purchasers are paying more for land and if you have not purchased land yet, 2021 land releases are going to be substantially higher than 2020 releases. Then you will want to get a house on that dirt you just bought; are you going to pay more to build that house? Probably. Whilst we have not seen any price gouging in construction costs, in fact even some very competitive builds, across the board, customers may find they are going to pay more for the house as well as the land!

The smart money is with the purchasers who keep their heads at the display village, factor in the extras of landscaping, fencing and window furnishings and have chosen good allotments in good locations. The standard suburban dwelling, from basic to mid-range is showing that land and build will indeed equate to the assessed market value at present. However the regional market has a fairly high sensitivity to overcapitalisation across the entire range of segments, although there has been good market activity in the new forever home market if the location and overall finished product is spot on. The new rural lifestyle segment is where things very often do not stack up and this will not be assisted by strong vacant land sales in areas such as Jindera, Table Top and Wodonga, where the cost of establishing the rural residential allotment is high and the market expectation of ancillary improvements is also high and sales evidence often limited.

Spring has definitely sprung in the Albury- Wodonga region and if all the land sales and as if complete valuations convert to actual builds, we are set for a local construction boom, with the obvious risks of builders being able to meet demand in a timely manner without compromising on quality and employment in the region holding through the continued economic uncertainty ahead. Agents report they have a backlog of enquiry for existing property from Melbourne, local tourism is at the ready to resume and our employment base includes many sectors unaffected by the pandemic, so it continues to be a busy and quietly confident sentiment in the region. And we love where we live.

Rachel Anderson
Property Valuer

Port Macquarie Property Update

As in many locations, spring has traditionally been a hot time in the property market along the Mid North Coast and we expect this year to be much the same, with the warmer weather bringing everyone out of hibernation and into open homes. This year’s market however is unlike any we have seen for quite some time. It remained strong but somewhat subdued during the first half of 2020 on the back of historically low interest rates, high population growth and out of town investors.

Activity has certainly ramped up over the past few months since the start of the COVID-19 pandemic, mostly due to increased demand from out of town purchasers and a lack of stock available for sale. In Port Macquarie, we have some of the lowest stock (for sale) numbers in memory. We believe we will continue to see this over the coming months. Hopefully the warmer weather and continued easing of restrictions will see a higher level of stock hit the market. An influx of cashed up, non-local purchasers will also see the high-end brackets as well as inland rural residential localities continue to perform well, with the more sought after and prestige properties achieving prices rarely seen. The increased activity appears to be across the market, from vacant land, units, established houses to high-end properties.

The recent recovery on the Mid North Coast appears to be driven by low interest rates and buyers from major capital cities looking to relocate. With increased working from home capabilities for a number or professions, we expect this trend to continue in the short to medium term. Whilst the potential breadth of impact of the COVID-19 pandemic is difficult to quantify at this point, it appears that the tourism and some retail sectors may have suffered from the early impact.

Adam Lipscombe
Property Valuer

Speak with a Port Macquarie Mortgage Broker today.