2019-2020 Market Outlook for Central Coast, NSW

2019-2020 Market Outlook for Central Coast, NSW

The Central Coast Council area lies between the urbanizations of Sydney and Newcastle and is commutable to both cities. The proximity to major commercial centres, good work prospects, and attractive costal communities put this local government area into the top 20 most expensive for housing in the country.
 
As can be seen in the map below, property in the urban area of Sydney has been falling in value recently. By a ripple effect, the Central Coast has also seen falls, but to a lesser extent than areas closer to the centre of Sydney.
 
The market for houses in all LGAs around Sydney performed badly 2019 Q3. However, inner suburbs fared far worse.
 
The LGAs to the north of the Central Coast form the urban area of Newcastle. In general, the housing market fared progressively better, travelling north up the coast from the centre of Sydney. Northern Beaches, the Shire of Hornsby, and the Hills Shire to the south experienced price falls of 3.24, 6.16, and 5.5 percent respectively. Prices in the Central Coast fell by 2.6 percent and houses in Lake Macquarie, Cessnock City, and Newcastle City to the north increased by 0.57, 2.86, and 0.41 percent respectively.
 
The housing market in the Central Coast LGA is very active, with far more sales than any of its neighbours, including the densely populated areas of central Sydney. The sales of 680 houses in the Central Coast area during 2019 Q4 dwarfs the sales volumes of houses in Lake Macquarie (342), Cessnock City (141), Hawkesbury City (116), the Hills Shire (159), the Shire of Hornsby (278), and Northern Beaches (225).
 


 
The market for units is not as large as the market for houses in the Central Coast. This can be seen in the sales volume for 2019 Q3, which at 54 units sold shows less than ten percent of the sales volume for houses. Never the less, units proved to be a better investment in the last quarter because the average sale price rose by 0.5 percent.
 
The unit market price rises in Central Coast was a pocket of good news in the region – all but one of the surrounding LGAs experienced price falls on unit sales. Unit prices fell by 3.47 percent in Northern Beaches, by 6.01 percent in the Shire of Hornsby, by 4,78 percent in the Hills Shire, 0.8 percent in Hawksbury, and 3.67 percent in Lake Macquarie. The only neighbouring LGA with price growth in the unit market was Cessnock, where prices increased by 2.39 percent.
 
Although unit sales volume in Central Coast is low compared to the house market in the area, it is much higher than in many of its neighbouring LGAs. For example, Cessnock City only experienced 9 unit sales in 2019 Q4 and Lake Macquarie had only 25. Northern Beaches to the south and closer to the centre of Sydney has a much larger unit market with sales of 185 units in 2109 Q3.
 
The demand for houses in the LGA is far higher than the average rate of sales for all local government areas in Australia, while the sales rate for units is slightly lower than the national average. Demand for houses and units for rent is a little lower in the area than the national average.
 
Over the past year, prices for houses have fallen in the LGA by 2.6 percent, while prices for units rose slightly. The movement in prices the rental sector was the reverse of the picture for sales – rent levels for houses fell considerably (4.71 percent) and rents for units showed strong rises (4.1 percent). The yield on rental fell over the last year, brining investment returns very close to those of Lake Macquarie to the north, where yields rose.
 

 
The demand profile, below, shows that three and four bedroom houses sold in far greater quantities than any other property type and size during 2018 – 2019.
 
The only property size in which units sold in a greater quantity than houses was the one bedroom category. In 2018-2019, 54 one bedroom houses and 71 one bedroom units where sold in the Central Coast LGA.
 

 
 

 


Houses

 
The first graph below shows the long-term view of the house market in Central Coast – the top graph details house sales sand the second shows the rental market for houses. House sales volumes peaked in 2015, but prices continued to rise after volumes declined. Prices peaked in 2018 Q4 and since then have declined slightly. HtAG analysis expects that sales volume will rise slightly while prices will fall very slightly over the next two years.
 
The rental market showed a gentle rise in both volumes and prices since 2009, with some plateauing along the way. Rent levels peaked in 2018 Q4 and have fallen slightly since then despite continuing quarterly increases in sales volumes. HtAG expects that rent levels will be back up to their 2018 Q4 highs by 2020 Q4 and should then continue to grow.
 
HtAG’s bedroom-level forecasts are currently using a beta model source, so expect these forecasts to be revised once the model is fine-tuned by our data science team.
 
Price changes in the house market shows that the Central Coast has been a good long-term investment. Prices have risen in every year since 2008 except for price retreats that lasted a little over a year in 2001/2012. Price increases accelerated up to 2015. Since then, they kept increasing, but at a progressively slower rate. The beginning of 2019 saw prices fall by 2.6 percent. This was the first price fall in seven years and HtAG expects that the market will return to price gains by 2022.
 
 


 
The heatmap of house price changes in 2019 Q4 shows a mixed picture for Central Coast. Three districts showed prices fell in the quarter. These are Budgewoi with 12 house sales that showed price falls of 1.58 percent, Halekulani with 9 sales and a price fall of 2.29 percent, Blue Haven where prices fell by 1.75 percent over 18 house sales, Gorokan with a fall of 1.16 percent and 24 sales, Wadalba with 9 sales and a price fall of 0.19 percent, San Remo, with 16 sales and a price fall of 0.22 percent, and Mannering Park with 13 sales and a price drop of 0.52 percent.
 
Although these districts are all close together, there is no distinctive feature between them that can explain a property or district characteristic that caused prices to fall. All are in the north of the LGA, but are sited alongside areas with large price gains. For example, Wadalba is next to Tuggerawong, which saw price increases in 11.14 percent, though over only two sales.
 
The south of the LGA saw strong price gains with some districts, such as Avoca Beach and Empire Bay showing double digit price gains. Only two pockets of price falls exist in this zone of the LGA – Daleys Point, which borders Empire Bay, but saw a price fall of 3.81 percent and Horsfield Bay, which saw prices fall by 2.39 percent, but with only two sales in 2019 Q3.
 
The scatter map below shows the locations of all house sales over the past quarter and their prices. The overwhelming majority of these markers are yellow and orange showing a dominant price range of A$500,000 to A$700,000.
 

 

 


Units

 
The market for units in the Central Coast Council LGA is not as active as the house markets with only 54 units sold in the last quarter. The rental sector is much more active, with 810 contracts being finalized in the LGA in 2019 Q3.
 
Sales volumes peaked in 2015 Q4 with 170 units sold, falling to a low of 46 unit sales in 2019 Q2. HtAG predicts that unit sales volumes will stay around this low level for the foreseeable future. Despite falling sales, unit prices have remained buoyant, climbing up until 2018Q1 to reach a median price of A$530,000 and then plateauing to the present day. HtAG expects prices to rise slightly over the next two years to a median level of A$540,000.
 
The rental market’s volume has risen since 2009, with a stagnant period from 2010 to 2013. The turnover in Q2 and Q4 2019 at 810 contracts represents an all-time high and HtAG expects the volumes in the unit rental sector to continue to increase. Despite the volume highs in the last two quarters, rent levels fell slightly during Q4 from a peak of A$360 per month to A$350 per month. HtAG predicts that rent prices will increase gradually to reach A$370 by 20121 Q3.
 
The price change graph for units has a very similar trend to the graph for house price changes in the LGA. However, the period of price falls for units at the beginning of this decade lasted longer. Recent quarters have seen unit prices continue to increase and HtAG doesn’t see any price falls in the sector during the next two years.
 


 
The heatmap of unit sales in Central Coast shows how spares sales volumes are for units in the LGA. Many zones in the LGA experienced no unit sales at all. However, those districts where unit sales did occur show strong price growth. Only one area, Berkeley Vale saw prices fall (by 0.46 percent). Three districts in the LGA showed very strong price gains, but with low unit sales volumes. These were Woy Woy with 2 sales and a 13,78 percent price rise, The Entrance North, with 4 sales and a 15.14 percent price raise, and Point Frederick with 3 sales and a 19.04 percent price rise.
 
The scatter plot of unit sales shows that more units in the price range of A$400,000 to A$600,000 were sold than in other price brackets.
 

 

Conclusion

 
The Central Coast Council local government area is a good bet for property investors. The unit sector, despite having low volume is a particularly good pick. This is because prices are expected to increase over the next two years. Forecasters expect the market to fall in general in Australia until 2021, so that makes the Central Coast a safe haven for investments in troubled times.
 
Steady rent levels with a slight increase over the next two years make the Central Coast LGA a good location for buy-to-let investors. The rental sector is buoyant with a strong turnover, which is another encouraging factor for property investors.
 
 
 

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Evgenia Evdokimova
Evgenia Evdokimova

Evgenia is a part-time HtAG Data Analyst, specialising in data manipulation and visualisation. She has been instrumental in enhancing and breathing life into our model by producing actionable insights from the data it generates. She is passionate about her work and brings a healthy “outside of the box” thinking attitude to the team.

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