Coffs Harbour Property Watch Q3 2013

This report investigates the residential real estate market within the Coffs Harbour local government area (LGA) and provides detailed analysis of four sub- markets within the region: Sawtell, Sapphire Beach, Woolgoolga and the central Coffs Harbour region. A rise in activity provided early signs of a recovery despite soft prices, although demand for well-priced properties remained strong. The local rental market was resilient, with much of the rental demand coming from companies and individual workers associated with the Pacific Highway upgrade project.

House activity in the first half of 2013 increased by 48 transactions (12 per cent) compared to the corresponding period in 2012, while the number of unit sales increased by four sales (two per cent). Demand came from investors targeting high-yielding properties toward the bottom end of the market. Their investment fundamentals were positive cash flow in the short term and capital growth in the short to medium term. Locals upgrading into larger accommodation and downsizers represented the balance of buyers, while the share of first home buyers remained small.

Despite a recovery in activity, the median price of a house softened by 2.6 per cent over the 12 month period, closing the June period at $370,000. The decline was caused by soft sales above $500,000, decreasing by six per cent from June 2012, while transactions in the largest ($300,000 to $399,999) and adjacent price points firmed. A balanced unit market kept the median price of attached dwellings largely unchanged at $266,155. Toward the bottom end of the market a unit in Taloumbi Road transacted for $116,000, while toward the top end a three-bedroom apartment on Ocean Parade sold for $875,000 in June 2013.

Rental activity offset the largely unchanged dwelling prices, with some tenants reluctant to move into home ownership despite a record-low mortgage rate. Experienced investors returned to the region as steady demand for accommodation and capital growth prospects proved attractive. A 4.3 per cent increase in the median weekly rent for a three bedroom house since June 2012 reflected a firm rental demand. For the same period the median rent of a two- bedroom unit increased by 4.2 per cent to $250 per week. The median rent for a one-bedroom unit, accounting for less than five per cent of dwellings in the area, increased by ten per cent in the 12 months to June ($220 per week). Demand for single-bedroom accommodation came largely from contractors working on the Sapphire to Woolgoolga road upgrade project.

The rental vacancy rate in Coffs Harbour (2450 postcode) closed at two per cent in July; seasonal factors are expected to tighten the market in the fourth quarter of 2013 as is the turnover of employees working on various construction projects.

Observing the house activity across the four sub-regions the southern regions of Coffs Harbour and Sawtell increased by 17 and 14 per cent respectively, while sales in the northern regions of Sapphire Beach and Woolgoolga averaged 11 per cent. The median price of a house experienced small increases in the Coffs Harbour and the Woolgoolga regions, while Sawtell and Sapphire Beach prices eased.

Coffs Harbour represented the majority of unit transactions, with a smaller number of sales in Sawtell and Toormina. Unit activity in the Coffs Harbour region softened by seven transactions between June 2013 and the corresponding period in 2012, while the median unit price recorded a moderate rise to $262,500.

The solid sales of units in the Platinum building over 2012 and 2013 encouraged developers back to the area, with the recent sale of development lots signalling a cautious return to the Coffs Harbour market. With that said, developers are mindful of buyers price sensitivity and allow for long selling periods for product priced over $400,000.

The Time on Market chart highlighted a significant amount of stock staying on the market for a period of six months or more, while 18 per cent of units were listed for 30 days or less. Impacted by owners reluctant to meet the market, Septembers median days-on-the-market equated to140 days. However, price adjustment reduced the sales period, allowing vendors to reinvest the funds in preparation for a recovery in price.