Real estate markets are cyclical, with the same patterns emerging every time we enter a new growth phase.
Traditionally, when the Sydney market starts to move, regional areas follow in due course – sometimes a year or so later. This time around, it’s happening faster and in some areas almost in parallel with Sydney. In fact, some of our regional areas along the eastern seaboard are decidedly sellers’ markets already after several dormant years favouring buyers.
RP Data recently analysed the sales activity of all NSW councils – including those in Sydney, over the past year. Among house sales, six of the top 10 council areas were in regional NSW and four of them were on the North Coast, which has certainly been the stand out area among McGrath’s regional offices in 2013.
Ranked 7th for sales activity, Newcastle is running hot with more strength to come following the state government’s announcement of the long-term lease of Newcastle Port, with much of the proceeds to be invested locally in infrastructure projects that will rejuvenate the tired CBD.
Nearby Warners Bay is the best we’ve seen it in more than a decade. Warners Bay is within the Lake Macquarie area, which had the second strongest sales activity in the state behind Sydney’s Blacktown.
Far north markets such as Ballina, Byron Bay and Tweed Heads are sellers’ markets, with Port Macquarie also very strong. The Central Coast is hot under $1M, with the more slowly recovering prestige sector ripe for the picking. Wyong and Gosford council areas recorded the state’s third and fourth highest transaction rates.
There are a few reasons why regional NSW real estate markets are reacting to Sydney’s strength more quickly than usual.
Firstly, many Sydneysiders have been sitting on the sidelines for years, particularly downsizers and retirees who lost a large proportion of their savings in the GFC and therefore decided to keep working and put off selling. This enabled them time to re-build their super while their family home appreciated a little further.
Now, with the Sydney market the strongest I have seen it in 20 years; coupled with the stock market also turning around in 2013, many downsizers and retirees feel the time is finally right to sell and head to the coast or Southern Highlands for their long-awaited lifestyle change. Young families are also seeing an opportunity to sell well in Sydney and move to affordable but nearby lifestyle markets, such as Newcastle and Wollongong.
Secondly, the ‘fear of missing out’ factor is also driving new activity in regional markets from both locals and Sydneysiders, with most buyers recognising that we’ve passed the bottom. The latest RP Data-Nine Rewards Market Sentiment Report shows 3 out of 4 respondents in regional NSW feel now is a good time to buy.
Across the regional markets, local and city-based investors are out in force. Buying through self-managed super is a strong and growing trend in Sydney and we are seeing this in regional markets more and more. Many people are taking the option of buying their future retirement home now, enabling an income stream for the next few years until they are ready to leave the city permanently and cash in on their super.
For those buying solely for investment, rental yields in regional towns are just as good as Sydney – if not better; and affordability is much greater. We’ve seen a jump in investor enquiry on the Central Coast – in fact enquiry is the highest it’s been in 10 years; as well as in Newcastle, Warners Bay and Port Macquarie.
Regional markets are also benefitting from the same macro factors as Sydney. A new federal government and record low interest rates are prompting locals to upgrade or invest for the future. Low interest rates in particular are driving new first home buyer activity in areas such as Gosford, Newcastle and Port Macquarie.
Upgraders are keenly looking to move up the ladder, with great opportunities for buying well in several blue ribbon areas. In Ballina and Byron Bay, homes in the $700,000 to $1M bracket are still 10-20% off their pre-GFC peak, representing once-in-a-lifetime value. In Port Macquarie, Sydney and Melbourne medicos coming to work at the upgraded Port Macquarie Base Hospital are adding to demand for high end property.
As with Sydney, stock is very tight. Home owners are excited to see new activity and many want to hold on and see how far local prices improve. Those who do want to sell are finding it difficult to buy first, with the few properties coming onto the market selling at premium prices in a very short amount of time.
The upcoming Christmas holiday period might break the cycle, with regional vendors more able to directly market their homes to thousands of holidaying city-dwellers. This is a great time to capitalise on Sydney confidence and renewed interest in regional investment opportunities, weekenders and homes for future retirement or a lifestyle change.
If you’re a regional home owner wanting to sell, I recommend talking to your preferred agent today about how you can market your home to holidaying Sydneysiders with minimal disruption to your own plans for the break.
Agencies with a strong Sydney presence and a cooperative network will give you a marketing edge. Our offices routinely work together to assist our Sydney sellers with their regional purchases; and with a big finale to the Spring season coming up in Sydney, we are expecting more buyers to be coming your way this December/January!