HTW Month in-review-february-2015

Feature – 2015 – The year ahead 3
Commercial – Industrial 4
Residential 20
Rural 47
Market Indicators 53
Contents

3
Welcome to 2015 everyone. Make sure you get it right
when putting the date on contracts. The last annum
was certainly one of note for our Aussie market. Who
could forget the extraordinary highs of the Harbour
City – it was like someone had released a valve and
let the investors run free in Sydney. Of course, many
other big centres watched on with glee waiting for
their turn to come, but it didn’t happen by December
for most.
Now we gaze forward into the 2015 abyss. By the
end of this next set of 12 months, there is only one
guarantee – something will have happened. OK, so
that’s not a startling prediction, but there are plenty
of observers who’ll be watching world unfold in the
New Year, and amongst them are property pundits
ready to pounce.
So what’s ahead? Well, do I need to mention the old
lack of crystal ball’? Good. I won’t. We do have a few
other tricks up our sleeve, however, so read on.
At Herron Todd White, we prefer working in the here
and now, so you can only imagine how uncomfortably
our team shifts in its proverbial seats when asked to
give an opinion on the future. Even so, they’ve been
requested to front up and, to their credit, they have.
The great thing about our annual year-to-come
issue is this – we like to call it as we see it. A level
headed approach based purely on a reading of the
market and not who pays our bills. It’s a position of
pride in our organisation that we can boldly fly an
“independence” banner, so what you’ll see amongst
this month’s pages is the truth as we know it.
Our gals and guys from all the shores and inland of
this great nation have sat around their boardroom
desks and come up with a map of the future based
on their experience and contacts. With an ear to the
ground and an eye on the statistics, there have been
predictions made. We have amongst this month’s
pages all the wisdom we possess on what’s set to fire
and flop in 2015. They’ll also give you the lowdown
on their big local market drivers– new infrastructure,
rising employment opportunities or changes in local
planning policy. Just the thing to have in your box
of investment tricks. To keep things honest, our
December 2015 issue will take a look back and let
you know how they fared. It’ll be a time for self-
assessment – but for now, let’s just tackle the set-up.
In our commercial section, readers will also enjoy
our valuer’s takes on the year ahead in industrial
markets. The specialists let you in on how the sector
should play out in 2015, as well as the things that will
influence whether it’s a good year or not.
So welcome back, relax and take time to make plans
for your best year yet, but don’t just stop at these
pages. Make sure you call your local Herron Todd
White office so you can avoid the dreaded ‘annus
horribilis’ (not as rude as it might sound, but still
painful).
2015 – the year ahead
Is it that time already? Looks like the tinsel is stowed, the champagne flutes boxed
and traffic for the long commute has once again found itself jammed.
Month in Review
February 2015
Feature

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Overview
Like most commercial real estate, industrial market
will continue to ride upon our country’s economic
fortunes. This sector does, however, cover a broad
expanse of property types from entry level units
through to the most massive of sheds.
In this month’s issue, the team gives their predictions
on the year ahead in industrial. It’s a ready guide of
where we expect markets to fly or flop, and what will
drive their direction throughout 2015.
Sydney
Generally speaking, the Sydney industrial market
recovered cautiously as conditions stabilised
following the global financial crisis. In 2014, we
observed restrained growth overall. As confidence
became restored in the sector, we saw the most
prevalent growth in Sydney’s sought after industrial
localities, while other locations recorded little to no
growth (e.g. the Macarthur industrial precinct).
In the year ahead, the trend of restrained growth is
expected to continue in Sydney’s industrial sector.
We anticipate an improvement in confidence in
the industrial sector off the back of a strongly
performing residential market and increased
retail spending. However, we anticipate any broad
improvement in occupier demand to be in its early
stages in 2015 and translate to no more than
marginal rises in effective rents and capital values for
Sydney on average.
As such, we anticipate owner-occupiers will continue
to be the more active buyer type within the low to
mid-tier industrial sector, with the assets containing
2,000 to 6,000 square metres of enclosed space
being highest in demand. Additionally, demand
for strata industrial is expected to continue at
reasonable levels, particularly for modern stock
containing high proportions of mezzanine office
space, with increased demand emerging for this
type of stock (commonly referred to as high-tech
industrial space).
Looking ahead for 2015, we expect:
• South Sydney industrial precincts to continue to
benefit from demand from occupiers seeking close
proximity to Port Botany and Sydney Airport, in
addition to providing accommodation that suits the
shift from older style heavy industrial to high-tech
creative industrial use;
• Wetherill Park and Silverwater to continue to
attract good levels of occupier demand due to
their reputations as leading industrial precincts in
Sydney’s west;
• Strong demand for prime grade space in south-
west Sydney, with demand filtering down into
secondary markets where prime space is limited.
Leasing agents active in this area have indicated
that business sentiment is fairly positive, resulting
in tenants committing to longer lease terms,
while scattered evidence has emerged of tenants
increasing space requirements in the area; and
• Yield ranges to remain relatively steady overall
in the Sydney market, with prime industrial stock
(containing 2,000 to 6,000 square metres of
enclosed space) expected to range from 6.5%
to 8%. Strata industrial markets are expected
to continue to achieve relatively firmer yields
within the sub 6% bracket. Given the current low
interest rate environment, such yields may attract
investors back to the industrial sector, although
most interest is still expected to come from owner-
occupiers.
In summary, a cautious growth period is anticipated
in 2015 for Sydney’s industrial market as a whole,
with sought after localities expected to out-perform
others.
Canberra
The industrial market in the past year has been
in a consolidation phase with little movement or
activity. All sectors of the property market are being
adversely impacted by the reduction in the size
of government being implemented by the current
government. The full impact of these reductions has
not been realised to date.
Two new industrial subdivisions – The Eastern
Industrial Estate in Beard and the government-owned
New West Industrial Park in Hume – significantly
Commercial
Month in Review
February 2015
New South Wales

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increased the availability of vacant industrial land at
a time when the industrial market was weakening.
The two estates, yielding a combined total of 169 lots,
have experienced limited sales activity to date and
we expect this to continue in the short to medium
term as the investment outlook for Canberra remains
subdued. The weaker conditions are evident in some
sales including, 12 Sawmill Circuit, Hume which sold
as vacant land (5,000 square metres) in September
2014 for $797,000, reportedly as a distressed asset.
This site was previously sold in December 2012 for
$1.1 million.
Fyshwick, the primary industrial precinct in Canberra,
experienced a rise in property listings in 2014 as well
as falling rents as new stock came onto the market.
Mitchell in the north of Canberra appears to be the
best performing industrial precinct. A recent sale in
particular, 2 Tooth Street, Mitchell, sold at auction
in November 2014. The 1.75 hectare site (formerly a
Shell refuelling depot) was purchased by a property
developer for $2.7 million, reaffirming the confidence
investors still have in the primary industrial precincts.
The strongest sector of the industrial market is the
top end of the investment market, where value is
determined by the strength and term of the lease
attached to the property, rather than location.
The sale of 34 Vicars Street, Mitchell for $4.17
million in June 2014 analyses to a market yield of
approximately 8%. The property comprises 3,794
square metres of industrial warehouse, office and
showroom on a 5,401 square metre block and is
leased to Woolworths Limited on a five year lease
commencing March 2014, with 20 years of options.
The outlook for 2015 is for much of the same, namely
limited growth and subdued activity. Rents are
expected to remain depressed and yields may soften
further. However, opportunities for redevelopment
in established precincts will arise as older premises
are vacated. Office properties located in industrial
precincts should be avoided, as the broader office
market has weakened and office properties located
in industrial areas will be further impacted by their
inferior location.
South East NSW
The local industrial market started to show signs
of life in 2014 after the stagnant conditions that
remained within the sector largely since the GFC.
Local industry is benefiting from port related activity
at Port Kembla with Kembla Grange evolving into a
significant vehicle transportation hub. Transportation
and logistics are filling the void left by the decline
of the traditional heavy manufacturing sector and
this is expected to continue throughout 2015. It is
also anticipated that the low cost of borrowing will
continue to be a major driver in the market over the
next 12 months with many pundits now calling for
further interest rate cuts.
Headwinds include the scaling back of production at
local coal mines and the restructuring expected to
continue at the major mining companies. Positives
include a stable state economy led by a strong
housing market and construction sector, out of area
investment including foreign capital committing
funds on large residential projects, government
sector infrastructure projects proposed and
currently progressing in the region, and an overall
improvement in business confidence.
Overall, we expect the market to continue on its
current trajectory and for the most part remain
neutral in 2015.
Newcastle
We’re expecting some market change in the
industrial sector in the Newcastle and Hunter Region
in the coming year. We’re a little low on good quality,
well tenanted properties in key industrial precincts.
These types of properties have seen some value
increases and minor yield compression in 2013 and
2014 and our research indicates that investors are
ready to buy the right property at the right price.
We can’t see the secondary or speculative end of
the market moving much, if at all, during the rest of
the year, further widening the gap between quality
properties and secondary stock.
An interesting note is that we’re seeing a lack of
strata industrial stock in the key industrial localities
of West Gosford and Tuggerah on the central
coast and while there’s still a horrific oversupply of
industrial land, there is essentially no land supply in
Commercial
Month in Review
February 2015

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the core industrial precinct in West Gosford. There
is potential for a short term value increase in this
area should buyer interest continue to improve.
Selling periods for this type of property have also
decreased dramatically in West Gosford. Still no real
value increases though and fundamentally, industrial
property values on the central coast are still lower
than pre GFC levels. We’ve seem some significant
property re-sales in Newcastle in late 2014 that
indicate values are generally back up to pre-GFC
levels for good industrial stock.
Rents are still relatively stagnant,
indicating a potential for yield
compression in the industrial
sector which effectively has done
very little in the area in terms of
value movement since 2010.
The central coast industrial market is an interesting
one to watch in 2015 with sub-markets performing
differently in each industrial locality throughout the
coast. Keep an eye out for cheap industrial land and
the potential for value increases in the strata market
in core areas.
Lismore
2014 saw a dominance in the lower end of the
market by owner occupiers who are less concerned
with returns and more concerned with securing a
property to operate their business. Investors are
competing with owner occupiers on entry level
investment opportunities.
In the Lismore locality, investors tend to expect
yields above 9%, where as owner occupiers tend to
be less concerned with yield and more with acquiring
a site to operate a business. This results in indicative
yields between 7% to 8% (with one sale in Byron
Bay showing as little as 4.66% yield and 5% in
Alstonville).
The industrial market was also adversely affected
by a soft rental market, the low rental returns limit
interest by investors both on existing product or
vacant land to undertake any development. Owner-
occupiers are also unwilling to develop sites given
uncertainty in local economy and because existing
improved properties are considered good buying
when considering cost of land and total cost required
to develop a vacant site. As a result the demand
and supply sides of the market are very weak with
little upside seen in the short term, while economic
conditions remain weak.
Our prediction for 2015 year ahead for the industrial
market is that enquiry may increase due to the
return of the investor buyer, however, sale prices
will become dictated by yield expectations. We also
predict that the increased sale rates for entry level
product will continue in the coastal localities of Byron
Bay and Ballina subject to available stock.
Coffs Harbour
The Industrial property sales market appears
to be performing well with firm analysed yields
and reasonable demand from principally owner-
occupiers. This should continue throughout 2015
as there is a general perception the market has
bottomed.
Yields for lower priced property suited to owner
occupation display an analysed range of 6.75% to
8.5%.
There is a market preference for older established
centrally located industrial estates based on the
lower price range.
The rental market remains price sensitive
with a reasonable supply of vacant industrial
accommodation and some downwards negotiation of
rents under the lease review process.
Rents vary however older premises 200 square
metres to 400 square metres in secondary locations
are in vicinity of $60 per square metre to to $80 per
square metre. Good quality modern units lease for
$90 per square metres to $140 per square metre.
With tight yields and price sensitive rents, the market
is principally represented by owner-occupiers. The
market should remain steady throughout 2015.
Commercial
Month in Review
February 2015

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Melbourne
Steady rental returns are anticipated on prime
grade industrial investments in 2015, compared
to the compression of yields seen last year. Over
the past 24 months, sustained lower interest rates
and risk premiums translated into lower returns
required by investors and was the main driver of yield
compression for prime industrial grade property over
that period.
The limited supply of prime industrial properties
($20 million plus market) is causing some investors
to be priced out of the market, motivating them
to look at the secondary market where there are
often opportunities to add value. The ability for
institutional and overseas investors to purchase
prime industrial investment vehicles however is
highly dependent on the global and local economy,
the affordability of credit lines and the value and
stability of the Australian dollar.
Last year, Australia’s manufacturing industry
announced that its three largest motor vehicle
manufacturers, Ford, Holden and Toyota, would
be gradually closing down their manufacturing
operations and moving them to overseas labour
markets by 2017. China’s trending economic slow-
down has also affected Australia’s iron ore industry.
The effect of these factors on our economy is
expected to filter down to the owner-occupier market
of small scale industrial properties that rely largely
on these industries to sustain their businesses.
The falling Australian dollar over the past 12 months
is expected to help ease some of the losses the
manufacturing industry has experienced over
the same period and into 2015. According to the
latest national Balance of Goods* data published
by the Australian Bureau of Statistics, the nation
has seen an overall increasing positive trend in
its trade exports. This trade has been assisted by
the Australian dollar which fell to 0.82 US cents in
December 2014, a level not seen since 2010. Reserve
Bank of Australia (RBA) Governor Glenn Stevens
supports the notion that the value of our dollar
should fall to 0.75 US cents to attract further growth
in our economy.
In the next 12 months the RBA expects national
growth to be a little below trend due to various
factors including an overall increasing trend in the
unemployment rate. If the RBA decides to keep
interest rates on hold in 2015, with some economists
predicting a further 0.25 basis cut before 2016,
investors are expected to continue looking for
higher returns in safe investment vehicles. Prime
industrial properties that are well located with long
term leases in place and strong lease covenants
are expected to attract considerable interest
from institutional investment funds, unit trusts
and local and international syndicates in 2015.
Commercial
Month in Review
February 2015
Victoria

9
*Balance of Goods - This refers to the difference between what Australia
receives for exports (credits or receipts for goods sold overseas) and
what is paid for imports (debits, payments for goods we purchase from
overseas). When export credits are more than import debits, a surplus
exists. When export credits are less than import debits, a deficit occurs.
Inner northern and eastern industrial market
Industrial use continues to be phased out in
Melbourne’s inner northern and eastern industrial
market. Local Council strategic plans and rezoning
have facilitated the transfer of industrial use
within the area to higher residential and mixed
uses. Consequently, there are few industrial areas
remaining within the inner suburbs.
It is predicted that over the next 12 months,
increasingly fewer industrially zoned properties,
primarily Industrial 3 zoning, will be used for
industrial purposes. Despite a trend towards
redevelopment, there is still demand for inner
suburban industrial properties due to their close
proximity to Melbourne’s CBD. With diminishing
stock available we consider capital values will remain
relatively steady.
In 2015 it is predicted that the inner Melbourne
industrial market will see continuation of the
scarcity of available industrial development sites on
the market. The majority of industrial land within
the inner northern and eastern market comprises
Industrial 3 zoning which suggests that nearby uses
include residential accommodation. Developers
interested in Melbourne’s inner eastern industrial
land market are often focused on sites that feature
Mixed Use and Commercial 2 zoning which allow
more intensive residential and retail uses. Such
development sites can command capital value rates
of up to $4,600 per square metre of land area.
The table below provides a very basic and
approximate guide on rental and capital value rate
ranges for secondary stock and development sites
within Melbourne’s inner northern and eastern
industrial suburbs.
Inner North
Feature Suburb: Brunswick
Hypothetical
Net Lettable
Area Range
Rental Range Capital Value Range
Low High Low High
Primary
Industrial Stock
N/A N/A N/A N/A N/A
Secondary
Industrial Stock
(brick)
Circa 600m2
– 800 m2
$80/m2 $90/m2 $1,850/m2 $1,950/m2
Inner Eastern
Feature Suburb: Richmond
Hypothetical
Zoning
Capital Value Range
Low High
Development
Site (circa
150m2 –
350m2)
Commercial
Zone 2
$3,400/m2 $4,600/m2
Inner West
Feature Suburb: Kensington
Hypothetical
Net Lettable
Area Range
Rental Range Capital Value Range
Low High Low High
Primary
Industrial Stock
N/A N/A N/A N/A N/A
Secondary
Industrial Stock
Circa
1,000m2 –
3,000 m2
$90/m2 $110/m2 $1,400/m2 $1,700/m2
Inner West
Feature Suburb: Spotswood
Hypothetical
Zoning
Capital Value Range
Low High
Vacant Land
(circa 110m2 –
140m2)
Industrial
Zone 1
$2,500/m2 $2,800/m2
* rates are dependent on the size of stock and the above ranges are
provided as a very basic guide only.
Inner Western Industrial Market
Similar to Melbourne’s inner east industrial market,
the inner west industrial property market is
diminishing. Industrial areas within suburbs such as
Footscray, West Footscray and Kensington which
immediately abut the western side of the Melbourne
Central Business District have experienced an
increase in capital land values over the past few
years. Older industrial properties within Mixed Use
zones are now slowly being replaced by higher
density residential uses which has been facilitated
and encouraged by planning strategies designed and
implemented by the Melbourne City Council.
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February 2015

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Mildura
Mildura’s industrial sector has proven surprisingly
resilient, and we have seen some strengthening in
yields towards the later half of 2014. The sale of
a former agricultural machinery dealership – with
vacant possession, fronting Benetook Avenue,
indicated a stronger than expected analysed yield
of 8.5% and agents report that there is steady
demand from investors for securely leased industrial
properties up to $1 million.
The industrial sector in Mildura is underpinned by the
transport industry, with Mildura located on several
main transport routes and a significant producer
of wine and fresh fruit, all of which needs to be
transported to capital city markets or export ports.
Vacancy rates for better standard properties
remain low, in part attributable to relatively few new
industrial properties being constructed in recent
years.
Gippsland
The industrial market throughout the Wellington,
East Gippsland and Latrobe Valley shires remained
static in 2014 and is expected to do the same in
2015. Likewise, rents and yields are expected to
remain steady within the industrial sector with yields
hovering around 7% to 9%.
Latrobe Valley remains stronger than Wellington and
East Gippsland, which could be attributed to the fact
it is closer to Melbourne with some major brands
wishing to situate themselves there.
Wellington’s industrial market continues to be largely
occupied by energy companies wishing to be located
close to ESSO’s Longford facility. Many global energy
and resources companies including Halliburton,
Superior Energy Services and Nabors Drilling
continue to occupy substantial industrial properties
in Sale and nearby Wurruk.
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Month in Review
February 2015

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Adelaide
Adelaide’s industrial sector continues to slowly
recover from the GFC and its continued impact on
the manufacturing sector. With limited opportunity
to acquire industrial property over $10 million, many
institutional investors are currently unable to play
an active role in the market. The sale in July 2014 of
the Coles Distribution Centre at Edinburgh Parks to
Charter Hall for $153 million is a notable exception
being the most expensive industrial sale ever
recorded in South Australia. This sale shows that
market interest remains when the fundamentals are
strong and supported by solid lease covenants.
Activity in the sub-$10 million
market improved during 2014 with
total transaction values exceeding
the five year average.
Most active were owner occupiers, syndicated private
investors or individuals. This buyer profile is not
expected to change during this year.
The industrial areas located in the inner north-
west comprising the suburbs of Regency Park,
Gepps Cross, Wingfield, Dry Creek, and Thebarton /
Hindmarsh remain the most sought after industrial
precincts and as such demand within these areas
remains steady. Some capital growth for prime
property is expected during 2015. Both the inner
and outer southern areas are currently finding the
economic conditions challenging and limited capital
growth is expected in the short term.
Leasing activity was down during 2014. This has been
witnessed across Adelaide’s commercial sector in
general and is not expected to improve in 2015.
As with all commercial property, the growing divide
between primary and secondary assets continues
to widen and in the current local economic climate,
there is reluctance to commit to development of
secondary sites. It is expected that once conditions
improve, upgrading and redevelopment of these sites
will become more common.
The next project as part of the continual upgrade and
improvement of the north south connector through
metropolitan Adelaide is a 3.7 kilometre stretch of
South Road between Torrens Road and the River
Torrens. The upgrade will provide a 2.4 kilometre
section of non-stop travel with 1.4 kilometres running
below the Outer Harbor rail line and Port and Grange
Roads. The major works are set to commence
towards the middle of the year with completion due
by the end of 2018. Preliminary works are already
underway.
Once complete this infrastructure project should
improve travel times and access along one of the
main transport corridors through Adelaide. The
short term pain of traffic detours and delays will
give way to the long term benefit of clearing a
notoriously congested and narrow section of South
Road, particularly between Port Road and the railway
crossing.
The lower Australian dollar is good news for
South Australian industry and should benefit local
exporters, including the local manufacturing and
agricultural sectors, especially as it is expected to
remain at similar levels for the foreseeable future.
However, with the speculation that submarine
building in South Australia will be relocated to Japan
and the challenges faced by the manufacturing
sector, including the planned 2017 closure of the
General Motors Holden manufacturing site in
Elizabeth, 2015 is expected to be another challenging
year.
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Month in Review
February 2015
South Australia

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Brisbane
2014 saw a large increase in transactions from
the previous four years, closer to pre-GFC sales.
Looking forward, the demand for industrial property
in Brisbane appears to be improving. Leasing
activity is particularly strong for prime grade quality
warehousing, especially freestanding product. Prime
industrial rents will range from $105 to $150 per
square metre with secondary properties fetching
rentals of $70 to $90 per square metre. Yields are
continuing to tighten, ranging from 7% to 8.5%
for prime buildings. However, we believe that the
secondary stock market will continue to struggle with
yields of 9% and over.
The next 12 months will continue to remain steady.
However an increase in enquiry from tenants and
owner/occupiers will place a strain on the tightening
pool of available stock. Precincts which offer ease
of access to major arterial roads and highways hold
a competitive edge over less strategic locations. We
are starting to see a tightening in yields for prime
grade office and warehouse buildings located within
prime locations such as TradeCoast and South
Western Corridor.
On the development front, two projects currently
under construction that should have a direct benefit
for their surrounding areas and the industrial sector
generally include the port expansion at Fisherman
Islands and Legacy Way (formerly Northern Link),
a tolled road tunnel that will connect the Western
Freeway at Toowong with the Inner City Bypass at
Kelvin Grove.
In summary, we believe that the prime Brisbane
industrial property market will continue to steadily
improve in 2015 with prime investment buildings
being in high demand from tenants and investors
due to interest rates remaining steady. Secondary
industrial properties are expected to remain stable.
With strong investor sentiment, solid occupier
demand and a firming development pipeline,
confidence appears to have returned to the Brisbane
industrial market.
Toowoomba
The Toowoomba industrial market has been
heavily influenced by both positive and negative
movements in the Surat Basin Coal Seam Gas
region. The later part of 2014 saw a reduction in the
non-resident population in the Surat Basin as many
projects moved from the construction phase to the
operational phase. A slow down in the construction
of coal seam gas wells had a flow on effect to the
support industries located in Chinchilla, Dalby, Roma
and Toowoomba and this is expected to continue into
the first half of 2015.
Recent increases in rainfall and resultant growth
of established crops has boosted productivity in
the rural sector which has been good for the local
economy. However continued demand generated
from this sector would be heavily reliant on
consistent rainfall conditions.
The Toowoomba West Wellcamp Airport was
completed in the later part of 2014 with first flights
taking off in November. Work continues on the site
to establish the Wellcamp Business Park industrial
estate and continued growth in this area is expected
to draw large industrial proponents to the region,
establishing the area as a major transport hub for
south-east Queensland and the gateway to the Surat
Basin.
2014 saw the announcement of Federal Government
funding for the second Range crossing with
procurement expected to be completed by mid 2015.
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February 2015
Queensland

13
The position of the Range bypass as shown on the
diagram above will provide highway exposure to
heavy industry located to the west of Toowoomba.
With funding now secured we anticipate continuing
elevated levels of speculative buying of industrial
properties in the western suburbs as investors try to
get in on the action.
Economists have recently stated
that variable interest rates are
tipped to fall in the early stages of
2015 before any rise is considered.
With interest rates at an all time low and this hint
of a further drop, investment yields are expected
to remain firm, placing upward pressure on market
values.
The Range Bypass is also expected to support a $235
million rail freight and industrial hub project with
construction set for 2015. The project, Interlink SQ,
is set on 200 hectares at Charlton and is expected to
incorporate a customs office, manufacturing facility
and the ability to transfer road freight directly to
rail. The property is located adjacent to the existing
western rail route, with upgrades to the route
expected to result in a link between Melbourne and
the Port of Brisbane. Larger industrial properties
in the western corridor are expected to continue to
attract market leading values resulting in extended
selling timeframes, while properties closer to
Toowoomba including those in Torrington and
Wilsonton are expected to remain in high demand.
There was an increase in industrial hardstand
rental rates in 2014 as vacant land became scarce
and support industries to the coal seam gas region
sought storage and holding yards. We anticipate this
trend to continue into 2015.
Gold Coast
In the last quarter of 2014, market activity was
concentrated in the southern parts of the city which
include the industrial region from Miami to Burleigh
Heads and extending further south to the New South
Wales border town of Tweed Heads. There were
a number of transactions in the central suburbs of
Molendinar, Arundel and Helensvale, but activity in
Nerang and Carrara was low, similar to the northern
hot spots within the Yatala Enterprise Area.
In Burleigh Heads, there were two sales of
standalone industrial buildings in the region of
$1.0 million, while a property predominantly of
hardstand at Greg Chappel Drive sold for $1.88
million, reflecting a site area improved value of
$280 per square metre. Some 20 sales of strata
industrial units took place within this district, with
prices generally between $200,000 and $400,000.
A large strata unit on Township Drive with exposure
to the Pacific Motorway went under contract for
$1.425 million. The lettable floor area rate of $1,717
per square metre per annum reflects the premium
that buyers are willing to pay for the benefit of good
highway exposure in contrast to the $1,300 to $1,600
per square metre per annum bracket being achieved
for inside units that are larger than 500 square
metres in size.
In the central Gold Coast, the Arundel Industrial
Estate centred on Harrington Street saw a number
of vacant site sales at prices of $280 to $300
per square metre, while a lower rate of $230 per
square metre was achieved for a large site of 1.4
hectares. Strata units in the vicinity of this estate,
such as those at Kendor Street and along Brisbane
Road, are experiencing stronger demand. Coupled
with dwindling stock available for sale, this has
encouraged developers to seek the fully serviced
sites on Harrington Street to meet anticipated rising
demand.
In Molendinar, there were various sales of strata
units ranging from $160,000 to $450,000. A self-
storage facility in Barnett Place containing 117 units
sold during this period for $1.8 million.
Although market activity was moderate in the
industrial corridor from Upper Coomera to Nerang,
there were a few significant sales of freestanding
buildings. These included a modern building with
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high office content in Gaven Central that sold for
more than $2.0 million, a small factory in Upper
Coomera for $1.5 million and an old style standalone
building on Paling St, Nerang for $2.2 million.
Within the northern Gold Coast, the owners of a
large factory on Lahrs Road sold the property for
$8.5 million on the back of a ten year leaseback
arrangement that will yield the investor an annual
7.5% return. A smaller warehouse with showroom
component at Access Business Park was sold for
$1.78 million which was an improvement on its
previous sale price of $1.5 million in 2011. There
were a few strata unit sales within the range of
$290,000 to $395,000 and one sale of a larger unit
for $750,000.
Overall, this anecdotal evidence is confirmation that
the Gold Coast industrial market is strengthening,
but not necessarily that all sales are transacting
at increased values. The leasing market does not
appear to be moving in the same direction, as
industrial rents remain low and competition amongst
landlords with vacant properties is still keen.
However, rental rates appear to have stabilised at the
level of $120 to $150 per square metre per annum
gross, although for older premises achieving between
$90 and $110 per square metre is challenging. On
the other hand, outgoings are rising, placing greater
financial pressure on landlords.
Buyers are still predominantly owner-occupiers
as net rental incomes are not attractive enough
for most private investors. We have noted that the
investment sales that have occurred are mostly for
newer, modern buildings of good quality backed
by strong lease covenants, longer WALE’s and
reasonably strong yield levels. We expect this trend
to continue into 2015.
Sunshine Coast
The industrial market on the Sunshine Coast showed
signs of improvement during 2014 in different areas.
The main area that improved was for smaller owner-
occupier type industrial stratas up to 350 square
metres. Overall supply of this type of property
throughout the established areas of Caloundra,
Kawana and Kunda Park is considered to be low and
therefore some further improvements are likely to be
seen in this segment of the market if demand holds
at levels noted before Christmas.
Large investment grade industrial holdings have also
seen strong demand and yields of circa 9% which are
more attractive than the circa 8% yields and below
noted for similar value level and lease covenant
properties in retail and office markets. This may
attract more buyers and lead to some improvement
in yields.
However, the underlying problem for the industrial
market is the large level of oversupply of vacant
land. We note that there have been some reductions
in price for this stock which we hope will stimulate
further development and take up some of the
oversupply. While the large level of vacant land
remains, it is likely that any market improvements in
the industrial market will be small and gradual.
Rockhampton
The industrial market in Rockhampton was relatively
steady for the duration of 2014 and we anticipate
that similar conditions will continue throughout 2015.
Recent investment sales of up to
$5.5 million at yields of 9% to
9.5% indicate that there continues
to be interest from investors
at many price brackets in the
industrial market, which is likely to
continue through the next year.
However, we believe that investors will remain
cautious and be sensitive to unexpired lease terms
and the strength of the tenant.
While interest rates remain at low levels, it is likely
that owner occupiers will remain active in the market
up to a price point of about $1.5 million, however
these buyers will generally keep most activity below
$750,000.
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2014 saw the opening of the new Toll facility in
Gracemere’s industrial area. Rezoning of broader
industrial areas and the amendment of long and
heavy vehicle transport routes in Gracemere will
encourage further consolidation of industrial land
uses and this will create some market activity as
participants secure the more desirable sites.
As with many central Queensland industrial markets,
the slow down in coal mining activity has dampened
demand for industrial land and this is likely to
continue throughout 2015.
Across the industrial market, we anticipate rentals
and yields to remain stable, however yields are likely
to be sensitive to any increase in interest rates. There
are few investment opportunities in the market,
however where opportunities do exist, buyers should
be cautious of properties tenanted by short term
mining related businesses.
Mackay
The industrial property market in Mackay slowed
in mid to late 2012, on the back of a softening and
volatile coal industry. The demand for industrial
property in Mackay from investors and tenants
remained subdued throughout 2013 and 2014.
Due to lower coal prices and a volatile economic
climate, the mining industry is becoming increasingly
focused on controlling costs, which is flowing on
to local businesses. Some businesses have seen
large reductions in revenue resulting in reduced net
profits. There have been some business closures
over the past 12 months and it considered there is an
increase in the risk of tenants defaulting on rent, or
owner-occupiers defaulting on mortgages.
There is an increasing volume of vacant industrial
warehouse/workshop property in Paget – at a
time when very few tenants are looking for space.
There is limited recent rental evidence to suggest a
noticeable softening in rental values. However, due to
the volume of vacant industrial tenancies and lower
overall demand in Paget, we consider that there will
be downward pressure on rent levels in the short to
medium term future.
Rent incentives are becoming more common in
the market in order to attract tenants. Incentives
equivalent to between one to six months rent are
being applied. Leasing up periods for properties are
also extending. Larger, heavy engineering workshops
are likely to require up to a 12 month lease up period,
and smaller industrial warehouse stock up to six to
eight months.
Due to the uncertainty and heightened risk in
the industrial property market, demand from
investors is low. Local commercial marketing agents
report very little interest in most property types,
although properties with a strong lease covenant
are an exception to this. Sales since late 2013 have
supported this, and also indicate demand, albeit
limited, from owner occupiers for good quality,
modern properties.
Recent industrial land sales suggest a continued
softening in this market although there are limited
recent transactions which provide a quantifiable
appreciation of the drop in land values.
Looking ahead, it is considered that 2015 will be
similar to the previous year, however there is a higher
probability of more distressed assets entering the
market, or defaults on leases providing more supply
to the rental market. It is considered the property
market is unlikely to improve whilst the coal industry
remains unstable with no volume of significant new
projects in the Bowen Basin region. The only saving
grace may be the commencement of the Carmichael
and associated rail/port development by Adani.
This could provide a boost to local engineering firms
and opportunities for employment for the regional
population.
Gladstone
The Gladstone real estate market is intrinsically
linked to the ongoing activity in major industrial
projects in the district, including liquid natural gas
(LNG) projects. Market conditions have subdued
significantly over the past 12 months. Heading
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into 2015 we consider market conditions to
remain volatile with potential for continued price
vulnerability. This is due to the weakened local
economy as a result of the peak workforce numbers
linked to the construction of LNG projects being
reached. Agents report reduced enquiry and a
relatively slow market all around.
Owner-occupiers have been active
in the industrial market in the past
12 months to a price point of about
$1.5 million, however most activity
is in the sub $1 million range.
There have been few investment sales within the past
12 to 18 months and this is not expected to change in
the coming year.
Enquiry levels for industrial premises have reduced
and in 2015 we are likely to see rental levels drop on
the back of slightly increasing vacancies.
Hervey Bay
With few market drivers, the industrial market is
likely to remain stagnant over the next 12 months.
Owner-occupiers will most likely continue to be the
most active in the market. Rental rates are likely
to remain low due to strong competition between
landlords to attract a tenant with very attractive
terms and incentives on offer. Low rental rates are
currently negatively impacting returns for investors
and until rental rates increase, investment property
lacks appeal. Some investment activity may be
generated from prospective tenants for developers
to purpose build with rental rates negotiated prior to
entering into any agreements.
Bundaberg
The industrial market in Bundaberg has a small and
stable base. Prices have been stable in light of the
oversupply of industrial land. At between $60 to
$110 per square metre, sale prices are reasonably
affordable. In the year ahead, we do not predict
significant movement from this level of value.
We expect the sales and leasing market to remain
at current levels (cap rates between 8.5% and 10%
and rental levels between $60 and $100 per square
metre). There may be an increase in activity as a
result of the expansion of the development in the
bulky goods retail suburb in Kensington, however any
increases are expected to be minimal.
The announcement of a significant manufacturer to
commence operations at the Bundaberg Port has
been pending for some months. The Port and the
Bundaberg Regional Council are also in the process
of providing freehold tenure over industrial land that
is currently leasehold tenure, The addition of a new
manufacturer and freehold tenure should provide a
boost to the Bundaberg industrial market in 2015.
Other notable developments in Bundaberg include
the increase in retail construction in Kensington with
a new Bunnings and a bulky goods complex and the
anticipated construction of a new Masters store in
Kepnock.
Townsville
The year ahead in the industrial market is likely to
remain at status quo as the market continues to
exhibit uncertainty and a lack of confidence.
High unemployment levels, low business confidence
and the softening in the mining industry are all
factors impacting this market. Townsville is a service
centre and ancillary provider to the mining sector
and with the softening of this sector along with other
economic factors, 2015 is not expected to provide
any real change in the local industrial market.
There is a plentiful supply of industrial property
for sale, much of which emanates from reluctant
vendors who would not otherwise be selling in the
current market environment. Despite the cost
of finance being attractive, it is still difficult for
buyers to get their purchases over the line, leading
to a complete market mismatch at present in the
expectations of buyers and sellers. The majority of
sales taking place appear to be in the sub $1 million
range and are primarily to intending owner occupiers
rather than investors.
Overall the industrial market in 2015 is likely to
remain static with activity building at the affordable
end of the market, however unless the mining
industry and other economic factors improve, it is
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Month in Review
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unlikely that we will see any change to the bottom of
the market cycle position.
Cairns
The industrial sector in Cairns is relatively small with
areas close to the CBD showing the stronger demand.
There has been a slowing in the rate of sales and
yields have eased back by about 10% to 15% from the
record low levels observed at the start of 2008. We
believe that yields for industrial premises at present
analyse in the 8% to 9% range, from the 6.75% to
7.25% range evident at the market peak, though
well leased investments to national tenants could
show sub 8%. Commercial agents advise that there
is limited availability of good quality stand alone
warehouse stock with slow to reasonable demand
for this type of premises. Strata titled industrial
warehouses are also limited in numbers to both sell
and lease with similar limited demand.
The tight serviced industrial land supply situation
that previously existed was alleviated by the State
Government introducing 37 additional lots to the
market at Woree in 2009. The State Government lots
were initially slow to sell in line with the slow market
conditions, with only six sold between 2009 and
June 2013, but our understanding is that following a
price reduction, a further eight to ten lots have since
been placed under contract. Nevertheless we would
maintain that industrial land is adequately supplied
for the immediate future.
Due to the downturn in the local economy and
reduced demand from tenants and purchasers, rents
reduced after the GFC but have recently begun to
claw back some lost ground as the economy has
slowly improved.
There is limited quality investment stock available
for purchase in the Cairns market. This will tend
to support values for well-leased properties over
the short to medium term. The market has been
gradually consolidating and the immediate outlook
is for further consolidation and improvement in
the year ahead. A lack of new stock should see
availability tighten as we move through 2015. A
recovery in the vacant industrial land market in
Cairns will continue to depend on more widespread
recovery in the local economy which appears to be
underway.
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Darwin
Falvey’s tips for 2015:
1. Stuart Highway land to Coolalinga - gold, gold
gold! Just keep buying. There is no more being
made. Retailers and other businesses will pay the
higher rents just for the exposure.
2. Industrial rents in the better precincts will
continue to show steady growth with land and
construction costs applying upward rental
pressure.
3. Holtze Industrial is a sleeper location that offers
cheap land close to the Stuart Highway. Plans
for the defence hub in this location will underpin
this in the medium term. Don’t be surprised if
roads are significantly improved to accommodate
defence demands.
4. 102 Coonawarra Road Winnellie – small industrial
strata title units in this new development appear
to be great value with long term upside in rental
and better than average leasing demand.
5. Berry Springs – just keep buying, preferably the
dry acreage blocks which represent good value
close to Palmerston. Medium to long term future
for this designated activity centre is very positive.
The amenities such as a shopping centre with
major supermarket and improved infrastructure
will come just as they did at Coolalinga.
6. Commercial CBD office – time to sell or do deals
with existing tenants to extend leases as I can
only see severe and prolonged pain in rentals and
leasing demand which is virtually nonexistent.
Rentals will trend downward and incentives to
lease will rise. There is no quick fix.
7. CBD residential units $700,000 plus – hard to
sell. I believe that with increased supply, some of
the asking prices may have to reduce significantly
to achieve a sale and may offer an opportunity
to purchasers with patience. No urgency, but
watch this market during the next two years. For
the last few years it has been propped up in part
by stronger than average rentals and leasing
demand.
8. Near city residential sites 800 square metres
plus - larger size lots in quality suburbs such as
Fannie Bay, Larrakeyah, Stuart Park and Nightcliff
all represent opportunities for higher density
rezoning. The key is to purchase at near land
value with the improvements providing a holding
income until redevelopment.
9. CBD development sites – buy only with a
strong holding income as there are some 1,800
residential units planned over the next two years.
Many of these developments may not proceed
due to lack of pre-sales or tightening of finance
to developers. Large sites are becoming difficult
to amalgamate. Unless the macro economics has
another stimulus such as US military demand we
see a tough few years for CBD development site
values.
10. Good luck for 2015. Remember that fortune
favours the brave and developers last longer
when they buy sites with a holding income to ride
out the market waves.
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Month in Review
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Perth
The Perth office market will continue to be on the
nose for the foreseeable future with vacancies
continuing to climb. Unemployment is predicted
to increase as a result of the softening in resource
projects. Retail spending is predicted to fall over the
course of 2015 as households tighten their purse
strings. That leaves the industrial market. As a result
of a thriving resource market and low interest rates,
small to medium scale properties were snapped up
by owner-occupiers, often out-bidding the investor
sector.
An increase in the supply of
industrial land however saw prices
stabilise and in some cases fall
over the course of 2014.
Having said that and with most other property
investment sectors performing below par, demand
for Australian industrial investments is still high.
Investors are attracted to the high entry yields on
offer relative to the other commercial property
sectors, the yield spread to the risk-free rate and the
income return outperformance of industrial over
other non-residential sectors.
Strong industrial property investment yield
tightening has occurred in the last 18 months,
particularly for prime grade assets. The industrial
sector is being re-rated as an asset class and
investors aggressively chase core logistics assets
with long-dated leases. We expect this will entice
some vendors into the market in 2015 to crystallise
some gains from this strong pricing cycle. As a
result, there remains an exceptional spread available
between secondary grade assets and prime grade
assets in many markets and we expect to see
investors exploring this space more in 2015.
With some owner-occupiers facing tough times ahead
as a result of the current state of the resource sector,
there could be some opportunities for investors to
re-enter this market.
South West WA
The industrial market in the south west was relatively
quiet during 2014. The Busselton industrial market
remains tightly held and there have been very few
transactions to gauge any real direction however
rents are understood to have softened slightly.
The larger industrial areas in Bunbury are considered
to have taken a hit with increasing vacancies, lower
rents and softening cap rates, particularly for large
industrial properties. Industrial land values are also
considered to have fallen. Without any major new
projects in the region, it is considered unlikely that
conditions will improve throughout 2015.
The Vasse Light Industrial Area took a long time to
get going but with the new residential subdivision
stages opening close by, the population in the
locality is now considered large enough to support
establishment of smaller businesses in the industrial
area. This is the area to keep an eye on as further
development will bring more life to this well located
industrial area.
Dunsborough has also done relatively well, mainly on
the back of small local owner-occupied businesses.
The opening of further residential stages nearby will
also assist in the growth of this area.
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Month in Review
February 2015
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21
Overview
As we head into the New Year, there are plenty of
property operators waiting with baited breath to
see how their local residential markets play out. To
help relive the anxiety, our specialists have fronted
up with their hit predictions on what lies ahead for
markets in 2015. It’s a ready guide on the drivers and
sectors worthy of your time and consideration.
Sydney
2014 was a year that provided continued strong
growth across a wide sector of the Sydney market,
with record breaking sales and blink and you’ll miss it
marketing periods. We believe that 2015 will continue
this trend to some degree but not at the rates seen
previously, with the key factors being strength of
demand and volume of supply.
Opportunities below $1 million
Below the $1 million mark, we believe that a focus on
low maintenance dwellings and units will continue
due to an ageing population wanting to downsize and
time-poor owners desiring not to have large blocks
to maintain. This is evident with new estates on the
fringes of Sydney metro providing blocks starting
from 200 square metres, particularly evident in
newly released community planned estates in the
south-west growth corridor including Leppington and
in the north-west growth corridor in Marsden Park.
Areas to keep an eye on are suburbs surrounding
Parramatta which will continue to be developed
as Sydney’s second CBD. Strong and continued
investment is planned in Parramatta over the next
decade with the surrounding suburbs set to also
enjoy the benefits of this investment. Examples of
this include Westmead for units, as they provide a
lower entry point than a similar product in adjoining
Parramatta while having a close proximity to the CBD
and strong infrastructure with the hospital precinct
and rail and bus interchange. Adjoining the CBD to
the east, Harris Park which is within walking distance
of Parramatta infrastructure, is dominated by low
rise 1970s units that are ripe for renovation.
Suburbs to look out for in 2014 will be Penrith and
Seven Hills. These and their adjoining suburbs are
established suburbs with typical single residential
development that have lower entry points and
limited stock available. Benefits include proximity
to established transport hubs, employment and
shopping facilities.
First home buyers and investors may also be
interested in the development within the south-
west growth areas such as Gregory Hills, Oran Park,
Catherine Fields and Leppington. For sub $600,000,
buyers can enter these markets and acquire a
4-bedroom, 2-bathroom family home for lower than
the median house price in Sydney, which is currently
over $800,000. The upside for this region will be the
construction of the second airport in Badgerys Creek
and surrounding employment and commercial areas
as a result.
With our crystal ball in hand we believe the western
Sydney property market in 2015 will continue to grow
but not at the rates seen in the past 12 to 18 months
with property professionals keeping a close eye
on interest rates, consumer confidence and supply
levels.
$1 million to $3 million
2014 was a year of high growth particularly in areas
in the north-west of Sydney such as Castle Hill,
Cherrybrook, North Rocks and Carlingford. House
prices in the $900,000 to $1 million plus market saw
above average levels of growth. This was mostly
due to the low interest rates, increased demand, a
lack of supply and the actual commencement of the
much anticipated North West rail link. The question
remains of how sustainable this growth in values
will be. We believe these suburbs will continue to be
popular with families as they have the fundamentals
of quality local schools, new transport hubs and
established shopping precincts. Australian Property
Monitors indicates that the median house price for
Cherrybrook is $980,000. We believe this will rise to
in excess of $1 million in 2015.
Month in Review
February 2015
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22
Opportunities exist within established areas. For
example, a new estate to be known as Shearwater
Landing at Greenhills Beach is soon to be released
with vacant lots expected to sell for between $1
million and $2 million. Given the scarcity of new land
releases in the Sutherland Shire, the close proximity
to Cronulla beaches and cafes and the strong sales
results of completed homes in the adjacent estate,
the demand for these properties is expected to be
very strong. A number of beachfront reserve lots in
the estate are expected to be so highly sought after
that they are to be sold by auction.
Another section of the Sydney
property market that could see
an increase in demand this year is
lifestyle acreage on the fringes of
the metropolitan area.
Traditional acreage locations are planned in some
locations for urban consolidation and this in turn
has pushed that sector of the market that wants
the lifestyle of acreage living further afield. The
Hawkesbury and Camden regions in particular are
considered to be locations that will benefit from
urban sprawl in the nearby growth zones. The
Hawkesbury has the added attraction of the river
and with planned upgrades to the Richmond and
Windsor bridge crossings, the appeal to purchasers
will strengthen. Quality residences with facilities for
horses, sheds and arable land are still available for $1
million to $2 million.
Prestige Residential $3 million plus
The prestige residential market in Sydney is generally
considered to comprise those properties with values
in excess of $3 million. These properties tend to
be located within the eastern suburbs and eastern
beaches, lower and upper North Shore and northern
beaches, and include some waterfront localities in
the southern suburbs and the larger rural residential
estates to the north-west of Sydney.
Traditional prestige residential localities across the
Sydney metropolitan area showed an increase in
transaction activity during early to mid 2014, with
some weakening in sales volume towards the end of
2014.
Given that there has been some gathering
momentum in transaction volumes in this market
sector with a corresponding reduction in stock
levels and an array of super prestige trophy homes
transacting, we expect 2015 to show a maintained
cautious optimism and confidence in the prestige
market and further tempered recovery.
With possible further weakening of the Australian
dollar and the possibility of additional interest rate
cuts, there may be increased demand from overseas
purchasers, including expat purchasers, and further
interest from local high net worth buyers.
We feel that the $3 million to $5 million end of
the prestige market has strong appeal to those
purchasers seeking to trade up into the prestige
market and should perform well in 2015, buoyed
by low interest rates and the possibility of further
interest rate cuts, as well as the ongoing strength
and demand in the traditional residential market sub
$3 million.
Prestige apartments in the CBD may be subject
to further competition in 2015 from a number of
developments to be sold off the plan, although
further strengthening in the empty nester market
may offset any impact of this increased level of
competition.
Canberra
The median prices as at December 2014 for standard
residential ($552,000) and medium density
($415,000) housing in the ACT have remained steady
over the past year. In both cases the volume of
sales remained volatile but decreased to a total of
1,609 sales for the last quarter. Long term averages
indicate circa 2,070 sales per quarter.
The supply of established property available to
the market is approximately 2,150 dwellings as at
January 2015 compared to almost 2,250 dwellings
a year earlier. The precincts of Molonglo and
Gungahlin continue to be the primary source of
greenfield land to the Canberra residential market.
In line with the draft ACT Planning Strategy, the
Month in Review
February 2015
Residential

23
suburbs of Coombs, Moncreiff, Kenny, Wright and
Lawson as well as Kingston Foreshore, Greenway
and Flemington Road are scheduled for release of
dwelling sites in 2015 and subsequent years.
Near record low interest rates and low
unemployment levels have resulted in continued
strength in the ACT economy and property market,
particularly the residential sector. Despite market
uncertainty in the lead up to the September 2013
Federal election and the subsequent restructuring
and downsizing of the Australian public service in late
2013 and early 2014, the ACT property market and
the broader economy have remained resilient.
The impact of Mr Fluffy asbestos contaminated
homes and the eventual removal of these properties
from the market will have a positive effect on the
broader ACT economy. Accordingly, demand for
residential property is set to increase.
Given current stock levels both for sale and rent,
softening dwelling commencement numbers
and increased demand levels, we anticipate the
residential market in the ACT to tighten over the
short term with prices to firm. Small segments of
the market, including units along the Flemington
Road corridor in Gungahlin and properties situated
in less sought after locations or providing inferior
accommodation, are expected to remain soft.
Illawarra
On the back of a very strong 2014 where the Illawarra
real estate market exceeded expectations, January
2015 continued this trend with a strong start. We
predict that this will continue until at least mid 2015
and after that, continued growth although at a
slower rate. Local real estate agents are bullish that
results in 2014 will be replicated in 2015, with many
claiming that the past 12 to 18 months strength is
simply the catch up that was needed. Whether that is
true is debatable. In our view we can simply attribute
the strength of the local market to one thing – a
continued low interest rate.
Major infrastructure such as GPT’s new Wollongong
CBD shopping centre, West Keira and the
Shellharbour Marina will be beneficial to employment
prospects in the area and keep investors in the
market. This will be felt principally in off the plan
sales of new units in and around the CBD and vacant
land in Shell Cove and Flinders.
The current Government rebates offered for
purchasing vacant blocks and building or buying new
homes will also see large subdivisions such as Brooks
Reach Horsley continue to show growth and keep
developers playing a positive role in the market.
As mentioned previously, the continued buoyancy in
the market in 2014 across all residential sector types
was largely due to near record low interest rates,
but a strong local economy with relatively good job
prospects also provides a base.
For 2015 to continue the same trend as 2014, interest
rates must remain relatively low. These low interest
rates are crucial for investors, first home buyers
and also renovators and extenders to maintain
confidence.
Buyers and lenders should also be cautious about
not extending themselves in this low interest rate
period to avoid financial stress when interest rates
inevitably do rise.
The employment climate in 2015 in the Illawarra
will also be a key factor in helping to determine the
strength of the local market. Employment security
in the mining and manufacturing sectors is still
uncertain.
Overall we predict the market to continue its strong
growth at least for the first half of 2015. In the latter
part of the year, we believe sales will slow and we will
no longer see a seller’s market but rather a steadier
environment.
Tips for best localities are much the same as always…
inner northern suburbs up to Bulli offer the best
value for money in our opinion and postcodes
such as 2519, 2517 and 2518 rate highly. Look for
flat blocks, beach and train access. Sea views are
Month in Review
February 2015
Residential

24
becoming less valued than proximity to shops,
schools and transport.
In the southern areas, Shellharbour and Kiama are
our picks. Shellharbour Marina is well underway and
will really boost this seaside village, particularly now
that the new train station has opened at Shellharbour
Junction. Kiama is a well preserved seaside location
with relatively low rise development and that special
village feel.
Southern Highlands
After several subdued years, the Southern Highlands
and Wollondilly residential property markets have
both started to improve. Over the past 18 months,
this increasing trend in prices is most apparent in the
lower price bracket (under $1 million). The market
for properties under $700,000 is increasing briskly,
with short selling times. There has been marked
increases in both volumes and values in all of the
towns and villages of the Southern Highlands. Our
conversations with local real estate agents also
confirm that the enquiry rate is up and the market
is increasing. For the year ahead, we anticipate this
increasing trend to continue. The rental market in the
Highlands had increased and is now steady.
We note that there are further planning revisions in
2015 proposed for release by Wingecarribee Shire
Council that will allow for further density in town
centres. This should see an increase in medium
density development in towns like Bowral, Mittagong
and Moss Vale. This will lead to more villas and
townhouses that are relatively close to the town
centres. There has also been an improvement in rail
services to Sydney over the past 12 months.
There has been good demand for vacant land and
for new properties throughout the Highlands region.
New construction is mainly in Renwick-Mittagong and
on the outskirts of Bowral and Moss Vale. There has
been an increase in investor activity generally. We
also expect these trends to continue in 2015.
The middle of the market ($1 million to $2 million
price bracket) is also increasing and this should
continue throughout 2015.
The prestige end of the market (over $2 million) is
steady and some caution is still evident in buyers. If
properties are priced correctly, then they will sell. If
vendors’ expectations are excessive, longer selling
periods apply until the vendors eventually meet
the market. We are expecting this sector to remain
steady in 2015.
Southern Tablelands
The regional city of Goulburn has been stable
throughout 2014 and we expect the market will
continue to be steady in 2015. Crookwell Village and
the rural residential property market have also been
stable and we predict that these markets should
remain steady throughout 2015. The rental market
in Goulburn has actually declined slightly as tenants
return to the Canberra area.
Newcastle
How is 2015 going to look from a property
perspective in the Hunter? The biggest news in town
is the truncation of the rail line into the centre of
Newcastle from Wickham. Lots of divided opinions
on this one although at this point in time, traffic flow
through Newcastle appears quicker, but a sample
size of January school holidays is probably not long
enough to adequately tell.
In this column we have picked a couple of suburbs
to highlight from various perspectives. First up is
Wickham which is a vibrant up and coming suburb
that if compared may resemble the hip suburb of
Brunswick in Melbourne. With its industrial history
you can find terrace houses intermixed with older
warehouses and the addition of some funky cafes
and boutique retail stores could really make this
area thrive. We have seen good growth and strong
demand for residential property in this location
and coupled with a relatively tight rental market,
we foresee further growth. The ever expanding
University of Newcastle has a second city-based
campus in the construction phase expected to be
completed by 2016 which could only help with growth
prospects.
From a straight investment perspective Jesmond
and Birmingham Gardens still offer plenty of upside.
There is continued strong demand for rentals within
Birmingham Gardens as the close proximity to the
main campus of Newcastle University allows students
Month in Review
February 2015
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25
to live within walking distance but still have the
independence of living off campus. The demand for
rentals in this area could be expected to continue
to rise with the expansion of the University and the
appeal of the cosmopolitan nature of the city. This
can only mean upside for values in the short to
medium term.
Nelson Bay is a strong getaway destination for
families and is enjoying sustained patronage from
retirees downsizing from larger city homes to a
more sustainable beachside dwelling. After many
years of negative growth and over representation
of mortgagee in possession sales, 2014 was a year
of growth and increasing returns. We expect this to
continue into 2015 with ongoing low interest rates
expected. This is welcome news for home owners in
the Bay area after years of wondering when it was
gong to be their turn.
We have spent a fair while highlighting the Singleton
situation and we haven’t seen any signs that will
change our commentary in the short to medium
term. Mines significantly scaled back investment in
2014 cutting jobs and costs, which trickled through
to the entire economy in and around the town.
This has increased the pressure on people seeking
employment and speculation of further cuts is high.
A vast amount of the population living in these
suburbs is employed within the mining industry and
if these job cuts continue we could see an adverse
impact on the housing market out in theses rural
areas. We have seen rental rates fall significantly and
have also witnessed discounting of prices in order to
achieve a sale.
NSW Mid North Coast
This month we will look forward to what is in store
for the property market in 2015 along the mid north
coast.
Last issue, we reviewed 2014 and how it affected
our region and we noted that the region was
experiencing increases in both values and sale rates
during the later half of the year.
Continuing low interest rates will fuel the residential
market across the mid north coast and we expect
that these increases will continue throughout the
first half of 2015, especially within the larger coastal
towns throughout the region.
We expect demand to continue to rise in these larger
regional centres, although perhaps at a slower rate
than the last few months of 2014, and values to
continue to increase over most market segments in
varying degrees.
The current increase in demand and a lack of listings
or stock available in the low to mid segments of the
market will continue to drive up values as purchasers
compete for properties.
The higher value prestige and rural property
markets in the region remain slow, with a continuing
oversupply of product available for sale and limited
demand combining to produce generally static
values. We expect this to continue over the fist half of
the year.
The investor market will continue to be strong
during the fist half of the year, with low vacancies
and good competition to lease properties resulting
in increasing rents, which have in turn increased
investor returns and made the lower to mid value
range properties good value for investors. These
properties are often positively geared due to the
current high rentals.
At the start of 2014 we were more optimistic for the
year than we had been in previous years and for 2015
our optimism continues.
Dubbo
The Dubbo residential market appears to be
steadying as we commence 2015 after a period of
strong growth in 2014. Low interest rates combined
with low vacancy rates saw an influx of investors to
the Dubbo property market last year which pushed
median house prices to a record high of $290,000
and median unit values to $220,000 (source: RP
Data).
A large number of vacant allotments was also sold
off the plan as demand for new housing construction
skyrocketed in 2014. Many lots are due to settle
Month in Review
February 2015
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26
early in 2015 so we expect to see some significant
new housing construction in the early part of the
year. The Council-owned Keswick Estate has been
popular with investors, currently having the cheapest
available land suitable. Maas Group Properties
who acquired the Southlakes Estate development
have also had record numbers of sales off the plan.
This estate is most popular with families due to its
artificial lake and parklands features. Dubbo’s newest
subdivision, Huntingdale Estate in the city’s south
west, has also begun its marketing plan in 2015 with
lots starting from $180,000.
There has been strong demand
for median density properties and
estates such as La Dolce (opposite
Orana Mall) which saw strong
demand from professionals and
investors in 2014.
It is expected that more medium density subdivisions
will come onto the market in mid to late 2015
to accommodate increased demand for these
properties.
Uncertainty surrounding interest rates and potential
increases in 2015 may contribute to a steadying of
the residential market for established dwellings.
After the rapid increase in values throughout 2014,
it is quite possible the Dubbo residential market is at
or near its peak. Vacancy rates have increased from
1.5% at the start of 2014 to around 2.8% towards the
end of 2014. This can be attributed to an increase
in available rental properties due to the influx of
investors last year. Although this rate is still low, new
housing construction set to increase again in 2015
will further ease the pressure on the rental market.
Only time will tell which direction the Dubbo market
will head in 2015, but if interest rates do increase
we will most likely see a plateau of values across
the residential sector and an increase in property
listings.
Tamworth and Northern NSW
Some thoughts for 2015...
Overall steady as we gain market confidence again
after a flat period driven by drought. In our mining
affected areas such as the Hunter Valley, there is
further potential to fall as the rental vacancy remains
high and more desperate investors try to sell or
are sold up. In the Gunnedah and Narrabri areas,
the market is strongly influenced by mining and
agriculture, however mining in this area has remained
stable over the past 12 months and it appears that it
will continue to do so throughout 2015.
The middle to higher price bracket in the
residential and rural residential markets is slow
and opportunities to buy will arise as buyers in this
market are limited. Stay away from mining affected
regions and stay in the big centres such as Armidale
and Tamworth for the safest bet for 2015.
Continual growth and expansion is expected in
residential development, large service centres with
board industries and services. Consumer confidence
in the agriculture sector will also return if it continues
to rain.
Hunter Valley prices in both the residential and rural
residential sectors are declining and transactions
are minimal. The best buy would currently be rural
residential as the miners have dropped out of the
market and prices have reduced, creating a buyer’s
market. Residential is still an uncertainty as prices
continue to fall. The Hunter Valley residential market
would be a no go zone with an over supply and
potential for the market to continue to fall. In general,
the higher end of the lower price bracket is often a
trap with poor to average quality new builds. Pushing
though to the next price bracket often pays its way in
the end.
Bathurst / Orange
There is an air of enthusiasm in the central west
as 2015 will see the celebration of the 200th
anniversary of the proclamation of Bathurst.
Bathurst is known as the gateway to the central
west and is the oldest inland settlement in Australia.
Activities over the year can be found on the Council’s
website (http://www.bathurstregion.com.au/
event/2015/1/).
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February 2015
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27
Unfortunately it is unlikely that the property market
will see the same level of enthusiasm over the next 12
months. Demand and prices appear to have peaked
in Orange in early 2014 and numerous Bathurst
vendors are failing to achieve their asking prices that
they may have based on a trajectory from previous
price growth, albeit with minimal reduction in price.
Properties that benefited most from the flattening
of market segments in the times of higher demand
are expected to experience the most effect as the
market segments return to more historical norms
of relative willingness on the part of purchasers
to buy at a given price. Such a property might be
one offering basic amenity that was attractive as
an investment when rents were higher, that is now
subject predominantly to the owner-occupier market.
Another property type that will also be affected are
small rural residential properties of limited aesthetic
appeal around mining areas. Evidence suggests there
is more than an average amount of such properties
on the market. This shift will continue to be partly
attributable to the state of employment in the local
area.
The end of the mining boom will continue to affect
the local area, although the effect will not be on
a par with the highly publicised boom and bust
scenario of some mining towns. The economy of the
central west is diverse and the overall population
is expected to continue to increase. The broader
economy is expected to be sluggish in 2015 and this
is the likely scenario for the highly interdependent
local economy. This will be due to non-mining
economic activity such as construction and services
being unable to fully replace the broad employment
opportunities and profitability of mining in the short
term. Construction of new dwellings will continue at
a similar pace to the past few years and 2015 will be
the year when price signals that determine future
construction will reach the industry.
Overall 2015 will swing slightly in favour of the buyer,
but with no expectation that the bottom will fall out.
With interest rates at a record low and forecast to
fall even further from 2.5% to possibly 2%, liquidity
will remain good and will encourage first time buyers
and investors into the market, although with reduced
expectations of return and capital gain.
Leeton
How our markets will travel in the area in 2015
will relate closely to what is happening within our
local economies. Activity in the residential market
will reflect what is happening in the employment
market. The ability to keep your income or earn
more of it will have a larger impact on the housing
market than interest rates. Vacant land prices and
modern 4-bedroom homes in Griffith are likely to
experience upward price pressure as stock levels in
the Collina area dry up. Tidy, entry level properties
below $150,000 in Leeton and Narrandera are also
likely to lift due to competition from investors looking
for bargains and first home buyers. New home
construction will increase but the majority of houses
will be smaller and cheaper than the region has
historically experienced. Caution should be exercised
by those looking at house and land investor packages
in the area. Land is still being purchased well above
its current market value, so ensure you do your
homework.
Lismore
The residential market for the 2015 year ahead is
expected to remain relatively steady with continued
improvements in consumer confidence and sale rates
which occurred throughout the 2014 calendar year
(especially for coastal based localities within the
Byron and Ballina Shires). However, the residential
market for the year ahead in the Lismore, Richmond
and Kyogle Shires is expected to remain relatively
subdued with softer consumer confidence and sale
rates.
The ongoing low level official interest rates will likely
to continue to have a steadying impact on the overall
residential market throughout 2015.
It is difficult to see a significant change for the
coming year of 2015 for the residential/rural
residential real estate markets of Lismore, Richmond
Valley and Kyogle Shires with continued reticence
likely to be expressed by investors and home owners
despite record low level interest rates. This activity
Month in Review
February 2015
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28
is expected to continue with predominantly macro
economic factors having a dampening impact upon
general market confidence in bricks and mortar.
There are no significant LEP changes expected
for the coming year with all the respective local
authorities of Byron, Ballina, Lismore, Richmond
Valley and Kyogle now governed by new LEP’s and
DCP’s as per the NSW Government edict.
Within the Lismore and surrounding village localities,
older residential stock will struggle to sell for
anywhere near their prior purchase price of three
five years ago.
New residential building stock for first home
buyers (together with stamp duty exemptions and
other incentives) & “upgraders” will depend on the
availability of vacant land. The current supply of
vacant residential lots within Lismore, Richmond
Valley and Kyogle will become more limited in the
short to medium term.
The general residential markets for the Yamba,
Ballina and Lennox Head regions are expected to
remain generally steady following on from improved
rates of sale and slight value increase throughout the
2014 calendar year. As with the Lismore, Casino and
Kyogle markets, if properties are competitively priced
they will continue to sell.
The Byron Bay residential market during 2014
(and in particular the past six months) has been
performing strongly with increased rates of enquiry
and resultant sales. The increased volume of sales
has generally been concentrated in the lower and
middle market price point segments; however, there
has also been good activity in the prestige sector
as well. We are now seeing a shortage of stock with
some properties presently being marketed receiving
multiple offers. This is resulting in continued upward
pressure on prices in this market sector. However, the
buyers will remain well educated and properties will
need to remain realistically priced.
There are considered to be potential capital gains to
be made within the township of Mullumbimby due
to the affordability and price point of the residential
product compared to the more coastal based areas.
The most difficult market for 2015 will continue to be
the larger rural residential properties and farmlets
within the Lismore, Richmond and Kyogle Shires. The
increase in “costs” to maintain such properties will
be a pertinent factor.
In summary, we expect the residential property
market for Lismore, Richmond Valley and Kyogle
Council areas for 2015 will continue with a period
of softening activity and confidence despite the
low interest rates. However, in contrast the coastal
localities within the Byron and Ballina Shires will
continue to remain steady and will be dictated by
available stock levels. Current sale rates for vacant
land will continue resulting in continued building
activity.
Coffs Harbour
2014 saw the market bottom and the start of the
recovery from the proceeding four to five year
decline following the Global Financial Crises in late
2008. Consumer confidence has returned to the
market place driven by low interest rates, change of
government (Sept 2103) and a strong rental market.
The start of 2015 will continue
to see the market characterised
by higher enquiry and sale rates
primarily centred within the
affordable sector (sub $500,000)
of the market which will filter
through to the mid to upper price
bracket.
More promising signs in the upper price bracket ($1
million plus) have been seen with several beachfront
properties having sold and selling agents reporting
renewed interest from the Sydney and out of town
markets. The possibility of an interest rate cut in
early 2015 would only add to the growing consumer
confidence.
The northern beach suburbs between Coffs Harbour
to Woolgoolga including Sapphire Beach, Emerald
Beach, Moonee Beach and Sandy Beach traditionally
have been stable markets and we expect these
Month in Review
February 2015
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29
localities to continue to improve with the now
completed Sapphire to Woolgoolga highway upgrade
reducing travel time to the main service centre of
Coffs Harbour.
To the south of Coffs Harbour the townships of Valla
Beach, Valla, Urunga, Macksville and Nambucca
Heads will continue to see increases in rental and
sales activity in the short term due to the ongoing
highway upgrade between Warrell Creek and Urunga.
The pick of these areas is Valla Beach which has
already seen demand outstrip supply for rental and
sales stocks with values expected to increase into
2015.
We note the road works are ahead of schedule and
are due to be complete in mid 2016 which will see this
demand fall to more traditional levels.
The rural residential market continues to remain
stable with increased activity for the well located
properties close to Coffs Harbour such as Boambee,
Bonville, Karangi, Upper Orara and Bucca and
typically within the lower to middle price ranges.
Rural properties in secondary locations or at the high
end of the market segment are still showing signs of
subdued market activity with longer selling periods.
The notable ‘blueberry’ expansion of 2014 which has
seen several $1 million plus sales in recent times sees
no signs of rebating with selling agents reporting
good interest from growers for land which has
suitable characteristics for producing blueberries. We
note this has forced up land values in some localities
such as Bucca with traditional rural residential
purchasers having to compete with the blueberry
producer for the land. We caution the continued
demand and high value level of this classification of
real estate is contingent upon commodity prices and
the viability of the Blueberry industry into the future.
Traditionally agricultural sectors such as this are
risky over the long term.
In short the Coffs Coast market is relatively stable,
does not experience significant shifts in property
values and is underpinned by a relatively low socio-
economic base.
There is no surprise that it is this affordable end of
the market sector we are seeing the most activity
with prices firming and selling periods shortening.
We consider this market will continue to improve
throughout 2015 and possible price increases of 5%
to 10% may be seen if this demand continues whilst
supply diminishes. The upper end (700,000 plus)
and rural residential market will naturally increase in
activity as demand and confidence grows which will
result is more sales activity more so than increases
in values.
Month in Review
February 2015
Residential

30
Melbourne
There is a generally positive outlook for property
market growth in 2015 as the RBA has kept interest
rates at 2.5% for 16 months in a row and the inflation
rate is 2.3%. What this means for investors is that
the cost of borrowing money from mortgage lenders
is relatively cheap, leading to greater investment
and competition in the property market. According
to RP Data, since the beginning of 2009 Melbourne
property values have risen by approximately 45%.
Growth of approximately 10% in 2013 and strong
growth levels in 2014 were recorded according to
QBE. The RP Data Home Value Index results for
September 2014 showed a negative growth figure of
0.8% for the month, however this did not hinder the
quarterly growth from reaching 3.7% and 8.1% for
the year. The QBE Australian Housing Outlook 2014-
2017 states that the high number of new dwellings in
the pipeline is likely to tip the market into oversupply
from 2015/16, leading to a rise in vacancy rates and
progressively weaker property growth.
According to REIV’s median house price index,
September 2014 revealed a $649,000 median price
for the city of Melbourne. Price growth was impacted
by buyer demand especially within Melbourne’s
middle suburbs as significant price increases were
recorded. Coburg has proven to be a suburb of
interest for 2015 as purchasers have been priced
out of suburbs such as North Fitzroy, Northcote
and Thornbury. A 16.7% rise for property in Coburg
was recorded over 2014 as the median house price
soared to $745,000, a $69,000 increase since
2013. Doncaster has shown recent improvement
as its close proximity to schools, parks, transport
and shopping led to solid capital growth of 11.9%
over 2014. The growth in these areas reflects an
increase in consumer confidence levels in the
market, as low interest rates and population growth
is proving to encourage buyer activity. As buyers
were priced out of the higher priced suburbs, they
sought more affordable options further out, but with
infrastructure such as schools and shopping. Noble
Park and Box Hill North have shown an increasing
popularity in auction results in recent months as
infrastructure plans to improve the appearance
and development of these suburbs is strongly
encouraged by their local governments.
The median price for a 3-bedroom detached house
in Seaford is $435,000 and $370,000 in Frankston.
The property prices in these two suburbs are
considered to be relatively affordable. The rental and
investment demand is strongly supported by close
proximity to public transport and amenities as well as
local employment opportunities. Seaford currently
generates an annual growth of 5.89% and a rental
yield of 4.06%. The annual growth and rental yield
for Frankston are 5.2% and 4.5% respectively. Both
suburbs offer promising future capital growth and
rental yield owing to the expected population growth
in the City of Frankston, their convenient locations
and infrastructure.
The outlook for the Melbourne property market
for 2015 appears positive in the short term, as
interest levels are sustainable and encouraging
greater investment in the market. A weak Australian
dollar at US$0.79 encourages a greater level of
foreign investment in the property market as the
affordability of properties strengthens and interest
on loans becomes more sustainable. Investors should
be conscious of macro market risks such as rising
unemployment, sluggish household income growth,
affordability issues and cost of living pressures
if interest levels fluctuate and population growth
doesn’t slow down. Modest growth is expected in
housing prices, especially for property in prime
locations and with a point of difference. The outer
eastern suburbs are strongly attracting buyers due
to their affordability.
PARC – Peninsular Aquatic Recreation Centre (Frankston)
Month in Review
February 2015
Residential
Victoria

31
Westfield Shopping Town - Doncaster
Keast Park – Seaford
Ballarat
The residential market in the Ballart area will face
some hurdles in the coming 12 months. A recent
change of government in Victoria will see a decrease
in the amount of money the government will inject
into the economy as a whole; this will have a trickle
down effect to the residential property market.
Having said that the reserve bank it appears is now
considering decreasing interest rates, this perennially
has a positive effect on the property market as
an entirety. These two factors will be the fulcrum
upon which the market will sit for the coming 12
months. The stronger of the two forces will dictate its
eventual direction.
The areas in the Ballarat market which will be
interesting to keep an eye on in the coming year will
the developing estates. Increasing infrastructure and
development in the Insignia and Lucas estates over
the past 12 months have increased there liveability,
amenity and overall appeal. As such the supply of
quality property in a close vicinity to the Ballarat
CBD has increased. The effect this will have on the
modern home market in other estate areas less
than six years old will be instructive as to the level of
demand in the area.
Of the inner Ballarat suburbs Ballarat East appears
to be comparatively affordable as compared to its
more fashionable neighbours Black Hill and Soldiers
Hill. The average dwelling price in the area is very
affordable at around $300,000 which includes a
reasonable block of land. The area is very close to
the CBD with attractive streets and many period
properties which would respond well to renovation. In
our opinion the area is ripe for gentrification.
Of the price points to be aware of it appears the $1.2
million plus market has stagnated. There have been
several prestige properties which have been on the
market since the commencement of spring which has
been unsuccessful in finding a purchaser. This market
has shown significant growth over the past 10 years
in a large part due to its affordability in comparison
to Melbourne prestige market. However as that
comparable affordability has dissipated so to has the
growth of the sector.
Horsham
The Horsham property market started 2014 with
a bang following a number of good years in the
surrounding farming district. The residential
property market was hot with buyers tripping over
each other at auctions and often paying above
market odds to secure a property. Later in 2014, the
market slowed significantly as the community waited
for rain to fill crops. The poor 2014 local harvest and
below average yields in the Wimmera is likely to see
the Horsham residential market above $250,000
ease in 2015 as local owner occupier spending slows.
Properties in the lower price bracket are expected to
remain commonly traded although at lower volumes,
and values are expected to remain relatively static
thanks to steady investment for rental returns and
first home buyers in this lower end market.
Properties within close proximity of amenities, the
hospital, river and shops are likely to be the best
performing in 2015.
Month in Review
February 2015
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32
Mildura
In 2015 we expect to see a continuation of the
improved buyer activity that was evident in much of
2014, and see no reason why prices for mid range
properties should not continue to firm. This improved
activity is most noticeable for dwellings in the
$200,000 to $400,000 range. Buyers are continuing
to look past those properties in poor condition, and
the pool of buyers looking to spend over $400,000
remains relatively low.
Developers have enjoyed relatively
short selling periods and higher
sale prices for those subdivisions
completed in 2014, and we expect
this trend to continue, mainly due
to a shortage of serviced lots on
the market.
This trend has been evident with both “in town
“subdivisions - containing average lot sizes of around
600 square metres to 700 square metres, as well
as rural residential subdivisions containing 4,000
square metre lots.
We have seen an increase in rents for both homes
and units during the past three to four years on the
back of a shortage of available accommodation, and
this trend seems likely to continue. Most agents are
reporting that their occupancy rates are in excess
of 99%, and that properties are being re-let within 1
week of becoming vacant. This will likely flow through
to further rent increases, which in turn would be
expected to keep investors attracted to our region
and underpin the market for the foreseeable future.
Gippsland and Latrobe Valley
Late 2014 showed an increase in sales activity,
however prices remained similar to 2011 and 2012.
The overall feel of the 2015 market is similar with
prices estimated to maintain at 2011 and 2012 values
with the possibility of slight increases. Traralgon
has seen a spike in residential development with
increased vacant allotments becoming available.
This has seen Latrobe land prices decrease in recent
years due to a larger supply. There have also been
some competitive building prices promoted in an
attempt to stimulate new home builds.
Rents remain strong throughout Latrobe Valley and
have increased in the Sale and Maffra areas due to
increased employment and higher demand. Sale is
worth watching with the possible expansion of the
East Sale RAAF Base and current development of a
gas conditioning plant at ESSO’s Longford site.
Coastal areas along the 90 mile beach including Loch
Sport, Golden Beach and Paradise Beach remain slow
to steady with a large number of vacant residential
allotments and houses on the market for extended
periods. However they are seen as quite affordable,
at $40,000 to $50,000 for a vacant block of land.
In summary, the market throughout Latrobe and
Wellington shires is seeing some real positivity and
increased market activity.
Early signs are showing that what we experienced in
late 2014 will be maintained in 2015.
Baw Baw Shire
The residential market around Baw Baw Shire is
expected to continue as it did in 2014 with stable
to minor increases in prices. Rural residential
properties have shown a minor increase of
approximately 0.5% to 1.5% in terms of resale prices
from the previous 12 to 18 months.
Some of the older pockets of Drouin, Warragul,
Yarragon and Trafalgar have been popular with
DIY home renovators with some properties selling
between $250,000 and $290,000.
Some of the new residential subdivision land in
Drouin appears to have stagnated in price and
volume sold, possibly due to oversupply.
During the latter months of 2014 within the Baw
Baw Shire there were two main forms of trading
up. First is the second home buyer who is seeking a
newer, larger, better equipped home on a residential
allotment. The second type is the move out of town
buyer, who is looking to occupy the acre block on the
edge of town or a larger outlying rural property. This
Month in Review
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33
recent activity is expected to remain for the most
part of 2015.
As with 2014, the market in 2015 is expected to
remain stable with potential for slight price increases
in the $350,000 to $400,000 range up to the $1
million plus rural residential market as locations
such as Warragul, Drouin and Neerim South become
popular destinations for willing south-east Melbourne
buyers looking for more bang for their buck.
In the latter months of 2014, house prices in the area
remained fairly stable although sales seem to be
increasing slightly which would suggest a continued
increase in early 2015 as consumer confidence
continues to rise.
Overall, 2015 in the Baw Baw Shire (West Gippsland)
residential area is expected to remain stable with
the potential for slight increases in prices and sales
activity.
East Gippsland
Similar to the Latrobe Valley, East Gippsland
experienced increased sales activity in the latter half
of 2014. Some months throughout the year were
stronger than others. It is envisaged that prices will
remain steady throughout 2015 while sales activity
increases slightly in line with consumer confidence.
A number of recent residential subdivisions, such
as Shannon Waters Estate on the western fringe
of Bairnsdale, has seen increased house and land
packages being acquired. Sales within these estates
are expected to remain steady throughout 2015 as
building companies offer competitive house and land
packages. Second and third home buyers looking
to upgrade make up the main market segment
purchasing house and land packages.
The preference for rural residential properties is also
expected to remain steady throughout 2015 in areas
such as Nicholson, Wy Yung and Eastwood.
Month in Review
February 2015
Residential

HTW Month in-review-february-2015

HTW Month in-review-february-2015

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