Tweed Heads Area Property Watch Q3 2012
The following Property Watch report is the result of an investigation into the
historic and current market trends of the Tweed Heads Area, which encompasses
the suburbs of Tweed Heads, Tweed Heads South, Tweed Heads West,
Terranora, Bilambil, Bilambil Heights and Banora Point.
The Tweed Heads Area property market has regained traction recording growth,
albeit modest, in both the house and unit markets during the six months to April
2012. The house market registered a total of 208 transactions for the April 2012
half year period, representing 11.8 per cent uplift in activity from the
corresponding period in 2011. The unit market registered a total of 183
transactions for the April 2012 half year period, a marginal improvement from the
level of activity recorded during the corresponding period in 2011.
The median price for both house and unit markets has continued a softening to
pre-2007 levels, recording $426,000 and $300,000 respectively for the April 2012
half year period. Observing the House and Unit Price Points chart over the page,
it appears as though much of the buyer demand is still within the lower price
points, specifically the sub $450,000 range for houses and sub $350,000 range
for units. The increase in activity during the April 2012 half year period suggests
that vendors are beginning to meet market expectations, acknowledging
extended time on the market can often dilute the net proceeds from the eventual
sale. Interest rate cuts since November 2012 appear to have made a positive
impact to impeding a further decline in activity, with interest rates currently on
hold at 3.5 per cent (as at July 2012) and anticipated to decrease further by the
years end. As lenders continue to pass on these rate cuts (mostly in part), the
increase to mortgage affordability is without a doubt enticing would-be home
owners to consider a purchase while bargains still exist in the market place.
The year to April 2013 will be a very interesting time in the Tweed Area Property
market, with the NSW Government looking to revamp the lacklustre home
building industry by restructuring incentives such as transfer concessions and
grants. Effective as at July 1, 2012, a New Home Grant Scheme has been
implemented providing buyers of new homes, whether off the plan or newly built,
with a grant of $5,000 (for property with a value up to $650,000). The First Home
Owners Grant (FHOG) has been scrapped completely though will be replaced
with the more lucrative FHOG (New Home) Scheme from October 1, 2012. The
grant will increase from $7,000 to $15,000 from October 1, 2012 to December 31,
2013, complemented by full transfer duty exemption. A first home buyer who
decides to purchase a $550,000 new home after October 1, 2012, will receive
$35,240 in assistance. This may come as good news to first home buyers and
especially developers who have been very quiet in the Tweed Heads Area since
2007. However, the implications this new policy will have on the established
market are quite alarming as vendors may need to continue discounting their
properties in order to compete with new developments that begin to enter the
market by the years end.
The Land Sales Cycle chart above reiterates the necessity to stimulate new
development in the Tweed Heads Area, with very few sales transpiring after the
economic downturn in 2008. There is no doubt that this new policy is indeed a
significant drawcard that will attract many first home buyers south of the border.
The key to the success of this new tool will be to ensure affordability remains the
target of new developments as lending practices remain conservative.