Port Stephens Property Watch Q4 2011
The Port Stephens LGA is located 150 kilometres northeast of Sydney and 38 kilometres northeast of Newcastle, in the Hunter Region of NSW. A popular tourist destination, the region is known for whale watching, bushwalking and its wildflowers, all within a two and a half hour drive from Sydney. The region is accessible via the Pacific Highway and Nelson Bay Road, with daily coach services to and from Sydney. The Newcastle Airport is located 30 minutes from Port Stephens and is serviced by most major airlines with regular flights from Melbourne, Canberra, Sydney, Brisbane and the Gold Coast. Tourism is one of the largest industries in the area, injecting an estimated $410 million into the Port Stephens economy in the 2010 calendar year. Other industries include oyster cultivation , fishing, prawning, dairying, timber and mixed farming. As at the end of June 2010 the Port Stephens LGA had an estimated population of 67,825 residents, representing a 1.7 per cent growth from the 2009 population of 66,686 residents.
The housing market received the news of the recent cut in cash rate with cautions optimism. The cut was a reaction to the global uncertainty in Europe and the US, with China now also signalling a slowdown in activity. Further rate cuts are likely to continue if softer economic conditions persist. The NSW housing market remains one of the most resilient in Australia, with only slight softening in prices despite a significant drop in activity. The outlook remains bright for regions with close proximity to mining operations, with employees relocating to these areas from other parts of the state and interstate.
Low vacancy rates in the region were largely a result of mining activity in the Hunter Valley, increasing the pressure on rent prices throughout the LGA. Vacancy rates below two per cent were recorded in October for both the Newcastle and rest of the Hunter Regions, as several mining employees elect to live close to the coast and commute to work in the Hunter Valley. The median rental price for a three bedroom house in Port Stephens increased 6.7 per cent to $320 per week in the 12 months to September 2011. For the same period the median rent for a two bedroom unit increased 9.9 per cent to $250 per week. An analysis of new bond lodgement ranked the Port Stephens Region as one of the most active in the State, with an increase of 9.2 per cent in the number of new bonds lodged between the 12 months to September 2011.
The price recovery that commenced in 2009 is now truly over, with house prices meeting softer conditions in the first half of 2011. In June 2011 a median price of $380,000 was recorded in the LGA, representing a 12 month decline of 0.8 per cent. The first half of 2011 recorded 568 house transactions, representing a three per cent contraction from the LGAs long term average and equating to seven per cent below the June 2010 figure. A price point analysis identified the $300,000 to $399,999 price bracket to represent the majority of sales, while a significant number of transactions occurred in the $400,000 to $499,999 bracket, accounting for 21 per cent of the house market. Stock transacting toward the top end of the market made up three per cent, while 22 sales were recorded at the affordable end. Subdued activity was recorded across most price brackets, with some declining by 39 per cent between June 2010 and June 2011. Reversing this trend were sales in the $200,000 to $299,999 bracket, increasing by 16 per cent, while the $700,000 to $799,999 bracket increased by six sales between the two periods.
PRD Research conducted a resale analysis for house sales over the six months to June 2011. The analysis revealed that houses achieved an average annual capital appreciation of 3.8 per cent per annum, with an average holding period between sales of six years and nine months. The results indicate that despite a flat or negative growth in median price, vendors who exited the market during the period still enjoyed a stable annual growth for their assets. This is best demonstrated by the individual suburbs average capital growth, with houses in Soldiers Point averaging a price appreciation of 7.4 per cent per annum compared with an overall decline in median price. The table on the previous page provides further details.
The Port Stephens unit market has underperformed over the past four years, with only a small increase in price in reaction to the government stimulus of 2009. More recently we have seen the median price declining to $297,500, representing a decline of 11.2 per cent in the 12 months to June 2011 . Unit a ctivity drifted lower in the first half of the year, with 153 transactions representing a decline of 47 per cent from the same period in 2010. Over the past five years units averaged 185 sales per six month period, with 50 transacting in the suburb of Nelson Bay and 27 in Raymond Terrace. A price point analysis confirms that most units transacted in the $250,000 to $299,999 price bracket, making up 19 per cent of sales for the six month period. The analysis also suggests that 16 units transacted under $200,000, while 18 units sold for $500,000 plus.
Vacant Land Market
Vacant land prices in the LGA remained stagnant over the past four years and closed the June 2011 period at $215,000. Steady supply coupled with only lukewarm demand is also evident in the decline in activity. Overall 93 lots sold in the region in the first half of the year, with suburban lots sized between 500 to 750 square metres accounting for more than half of the transactions. Thirty per cent of lots sold between $100,000 to $149,999, with 10 per cent transacting for $400,000 plus and six per cent selling for less than $100,000.