National Overview. NSW/ACT Property Report January 2015

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1 NSW/ACT Property Report

2 National Overview This quarter we asked Herron Todd White s team of valuers to identify those suburbs ideally suited to upgraders. Despite differing market conditions around the nation, it is clear that upgraders often have remarkably similar aspirations when it comes to climbing the property ladder. FOCUS ON NEARBY SCHOOLS The move to a second, third or even fourth home is often triggered by the needs of a growing family, so proximity to quality schools and familyfriendly facilities is often at, or near, the top of an upgrader s wish list. This is certainly the case in Sydney, where the population growth zones north-west and south-west of the city are proving extremely popular among second and subsequent home buyers. With homes priced anywhere from $500,000 to over $1 million in prestige locations such as The Ponds, these areas of Greater Western Sydney will benefit from improvements to transport infrastructure and the development of new employment hubs such as the Western Sydney Airport. Melbourne upgraders can take the opportunity to buy into one of the near-city suburbs that offer cosmopolitan living and charming character homes, such as South Melbourne, Thornbury, Williamstown and Essendon. It s a similar story in Brisbane, where upgraders are favouring familyfocused northern suburbs such as Ashgrove, Wilston, Bardon and New Farm. Price growth in Brisbane has hovered around 5-10% in the past 12 months, and if interstate migration picks up, we could see further longterm gains in value across the city. A CHANCE TO ENJOY MORE DESIRABLE LOCATIONS Melbourne upgraders can take the opportunity to buy into one of the near-city suburbs that offer cosmopolitan living and charming character homes, such as South Melbourne, Thornbury, Williamstown and Essendon. The weak Australian dollar may stimulate further foreign investment in Melbourne, thereby supporting future capital growth. In some areas, upgraders are taking advantage of increased home equity to trade up to more desirable locations. In Hobart, for instance, proximity to water frontage is a key drawcard, so we are seeing plenty of upgrader activity in waterfront locations such as Howrah, Sandy Bay, Lindisfarne, Bellerive and Blackmans Bay. It s a similar situation in Adelaide, where the inner north-west suburbs between Croydon and St Clair offer nearby beaches and an easy commute to the CBD. 2

3 In the Northern Territory, government incentives are enticing upgraders to consider brand new dwellings and units. This has underpinned the popularity of newer suburbs in Palmerston, including Durack Heights, Johnston, Zuccoli and Bellamack. THE APPEAL OF LOCAL EMPLOYMENT OPPORTUNITIES Not surprisingly, many upgraders regard local employment opportunities as an important location factor. In Perth, the opening of the new Fiona Stanley Hospital in Murdoch has stimulated upgrader activity in nearby Kardinya and Winthrop. Upgraders are more experienced than first home buyers, and the buying trends we are observing suggest that many of today s upgraders are very selective about the area they buy into. As location remains a driving force of future capital gains, I am confident this considered approach will pay off over time. Brendon Hulcombe CEO - HERRON TODD WHITE 3

4 New South Wales SYDNEY GROWTH CORRIDORS ATTRACT UPGRADERS Sydney s new south-west and north-west growth zones are increasingly popular among upgraders. The Ponds in the north-west, and Gregory Hills and Oran Park in the south-west, are key new suburbs to look out for, often featuring community estates that combine modern construction with recreation areas, walkways, preschools and schools. Access to transport links and major shopping facilities is an additional attraction of these estates. New family-size homes are priced from $500,000 to $800,000 in community estates in the south-west, and from $750,000 to $1.2 million in the north-west. Over the past 12 months prices have increased rapidly in the Western Sydney region. Buyers perceive they are getting good value for money in the area, and the overall growth trend is likely to remain strong as infrastructure Greater Western Sydney improves. The development of Parramatta CBD and the construction of Western Sydney Airport at Badgerys Creek will create more jobs in the region, further underpinning property values. Over the past 12 months prices have increased rapidly in the Western Sydney region. In Sydney s Inner West, upgraders are typically looking for quality schools and good public transport. Summer Hill and Dulwich Hill tick both boxes, and for buyers who can afford the typical price tag of $1.2 million to $1.5 million, a house is likely to deliver stronger capital growth than an apartment. Inner West values have appreciated by around 15% over the past 12 months, and capital growth is expected to stabilise at around 5-8% throughout Central Coast Property values have risen across the Central Coast s traditional mortgagebelt suburbs of Woongarrah, Hamlyn Terrace, Narara and Lisarow, and upgraders are either buying a better home in their current suburb or moving to more desirable suburbs such as Jilliby, Holgate and Matcham. Median house prices on the Central Coast range from $520,000 to $570,000. In some areas, such as Umina Beach, property values have climbed by around 45% over the past 2 years, however this level of growth is unlikely to be sustained. 4

5 Newcastle Newcastle upgraders would do well to consider The Hill, Cooks Hill, Bar Beach and The Junction, which are all close to the beach and harbour. More-affordable inner-city suburbs include Wickham, Mayfield and Hamilton, though houses within Adamstown, Kotara and New Lambton tend to be better suited to families. A typical upgrader in Newcastle s middle market is looking at prices of around $500,000 to $600,000. The Newcastle market is continually strengthening and we believe housing prices will slowly increase during Mid North Coast For upgraders along the Mid North Coast, it is worth targeting the larger coastal towns of Port Macquarie and Forster-Tuncurry, which combine good local infrastructure and proximity to the beach, schools and retail centres. Middle market prices in Port Macquarie and Forster-Tuncurry are around $400,000 to $600,000. Coffs Harbour Upgraders in Coffs Harbour are often attracted to new estates such as The Lakes at North Boambee Valley, the smaller new enclaves within Coffs Harbour or Bonville, where prices range from about $475,000 to $650,000. The northern beaches through to Woolgoolga have benefited from the opening of the Sapphire Beach Woolgoolga highway upgrade, which has cut travel times to Coffs Harbour. Albury Albury upgraders are chiefly considering Thurgoona for newer homes, and Central for older-style dwellings. Across the two suburbs, median prices range from around $350,000 to $450,000. The local market has been static over the past 12 months and only modest price increases are expected over the next 5 years. Illawarra Suburbs such as Balgownie, Fairy Meadow, Keiraville, Gwynneville and Towradgi are currently experiencing a boom period, with prices ranging from $480,000 to $550,000 for a 3-bedroom house. Further north, Helensburgh, Austinmer and Thirroul are attracting Sydney upgraders seeking a sea change plus more affordable housing. The new subdivisions in Shell Cove, Flinders and Tullimbar are also popular among upgraders, with local facilities including Stockland Shellharbour and a variety of schools, supported by rail and road links. House and land packages in these suburbs cost around $550,000 to $650,000. A typical upgrader in Newcastle s middle market is looking at prices of around $500,000 to $600,000. The Newcastle market is continually strengthening and we believe housing prices will slowly increase during

6 ACT Canberra is widely regarded as one of the strongest property markets in Australia owing to generally steady employment and a perception of good job security; perhaps the key weak spot of the market is limited population growth. The ACT economy remains resilient in the face of continued job losses and federal government cutbacks, but negative market sentiment remains a real risk in Canberra given its dependency on the public sector for direct and indirect employment. Upgraders are active in Canberra s housing market and mostly comprise young families looking for more space. The mid-market price point for these upgraders tends to be around $500,000 to $700,000 as these buyers are typically moving away from a 2-3 bedroom home in preference for a 4-bedroom, 1-ensuite home with proximity to services, schools, shopping centres and parks. Hot spots worth a look for upgraders include Narrabundah, considered an affordable Inner South location, and Macquarie in Belconnen, which offers proximity to the University of Canberra and Belconnen Town Centre. Established suburbs within the districts of Woden and Weston Creek also provide mid-market housing opportunities for upgraders, notably the suburbs of Holder, Warramanga and Duffy. After a stable 2014 with limited market growth, we believe house prices in Canberra will rise throughout The market for homes under $750,000 is particularly active, and well-located properties providing modern accommodation continue to be sought after. 6

7 Local expertise. National strength. Trusted solutions. Herron Todd White is Australia s leading property valuatiuon and advisory group. For more than 45 years, we ve given our customers peace of mind and the confidence to make good-decisions for their vital property investments. Whether you are buying or selling, expert independent advice is the smartest property investment you can make. Liability limited by a scheme approved under Professional Standards Legislation. The scheme does not apply within Tasmania. Telephone admin@htw.com.au htw.com.au