Coffs Harbour Property Watch Q3 2011

Introduction
The following Property Watch is the result of an investigation into the house and unit markets of the Coffs Harbour area, located approximately 430 kilometres north of Sydney in the coastal Local Government Area (LGA) of Coffs Harbour. Most major services are found in the City of Coffs Harbour, the home of 27,222 residents (including North Boambee). The citys train station and regional airport, as well as major shopping and entertainment facilities are the centre of the regions economy. Coffs Harbour City Council and the State Government recently announced the City Plan Project, which aims to establish Coffs Harbour as a regional growth centre. Contributing to this centre are plans to redevelop the former Base Hospital site in the middle of the city, a new Coles supermarket and the expansion of the Park Beach Plaza Shopping Centre. The creation the Pacific Highway Bypass just north of the City will achieve a smooth flow of traffic in the regions main arterial road.

House Market
Houses account for the majority of dwellings in Coffs Harbour, despite a large number of medium density developments across the city. House prices remained stable through the middle part of the decade and reacted favorably to low interest rates and government incentives during the Global Financial Crisis. After peaking at $392,000 in September 2010, the median house price softened to $365,000 in March 2011, in line with other regional markets throughout NSW and indeed Australia. The softening is the effect of a large number of market participants during 2009 and 2010 that are now in the market and will remain inactive until induced by more favorable conditions to buy or sell. The price point distribution graph reveals a decrease in the number of transactions across most price brackets. The only bracket to reverse this trend is $350,000 to $399,999, increasing from 30 transactions in the March 2010 half year to 43 for the same period in 2011.

Unit Market
The unit market which includes all strata titled dwellings in the area exhibited a superior growth and similar activity trends to the house market. Units closed the March 2011 six month period at a median sale price of $265,000 stemming from 115 transactions and representing a 12 month growth of 5.3 per cent compared to -2.7 per cent for houses. The five year average growth of 4.8 per cent per annum compares favourably with the average house growth of 3.3 per cent. The decrease in sales activity is in line with other coastal regional markets in NSW and demonstrates a declining consumer confidence in response to the November 2010 increase in interest rates.

Rental Market
The latest data from the REINSW shows vacancy rates in the region have increased from a low of 1.6 per cent recorded in October 2010 to 2.8 per cent in April 2011. This figure is above the regions average of 2.4 per cent recorded over the past 18 months, however still below the three per cent vacancy commonly referred to as a balanced market. In the year to March 2011 the median rent price for a two bedroom unit in the LGA increased 9.1 per cent to $240 per week, while the median rent for a three bedroom house increased 9.4 per cent to $350 per week.
Sawtell Region

House Market

The Sawtell Region includes the suburbs of Sawtell, Toormina, Boambee and Boambee East where detached houses are the dominant dwelling type, accounting for 78 per cent of total dwellings. According to the House Sales Cycle graph the latest median house price of $352,000 was derived from 119 house transactions for the six months to March 2011, representing a 12 month decline of 2.2 per cent. This decline began after the median peaked at $360,000 in March 2010. Activity continued to contract from the September 2009 period, with the March 2011 volumes being 14 per cent below the March 2010 levels, and 30 per cent below the September 2009 half year period. A look at the price point distribution reveals that properties selling at the bottom end of the market accounted for eight per cent of house sales, although most transactions occurred in the $300,000 to $349,999 bracket representing 24 per cent. Activity in all price brackets declined from the March 2010 period, with the $450,000 to $499,999 bracket halving in size from 14 transactions during the March 2010 period to seven for the same period in 2011.



In order to ascertain the returns to home owners, PRDnationwide Research has undertaken a resale analysis of all house product sold within the six months to March 2011. This study yielded an average annual capital growth of 6.8 per cent per annum. The suburb of Sawtell recorded the highest annual capital growth at 7.2 per cent per annum and a median price of $450,000.



Unit Market

The 2006 ABS Census data shows that strata titled properties represent 20 per cent of total dwellings in the Sawtell Region. Apartment dwellings dominate the Sawtell and Toormina markets, while townhouses and villas are popular in Boambee East. Unlike houses, that seem to have better weathered the market downturn, the median unit price in the region declined 10 per cent in the 12 months to March 2011 to $225,000. However, in contrast to the house market and indeed to most regional markets in NSW, activity has been increasing since March 2008 and is now at levels last seen before the Global Financial Crisis. A price point analysis helps us explain the decline in the median unit price. It shows that units transacting between $350,000 to $399,999 declined from seven in March 2010 to one in 2011, while activity below $100,000 and between $150,000 to $199,999 increased. It is expected that the median price will continue to decline in the short term, influenced by the economical uncertainty, while an increase in activity in the lower price brackets will be led by investors and first home buyers, seeking strong yields (investors) and a foot into the market (first home buyers).



Vacant Land Market

Soft land sales were recorded in the Sawtell Region over the past eight years, with only five lots transacting in the six months to March 2011. In Boambee East a 295 square metre lot exchanged for $102,000, while in Sawtell a suburban lot in Twenty Fifth Avenue exchanged for $280,000 in February.