Downsizers eager to take advantage of Sydney’s long-term capital growth, along with more rainfall and less banking red tape are set to underpin property values in NSW regional centres such as Dubbo, Tamworth and Wagga Wagga in 2019.
“Despite softer dwelling prices in Sydney, downsizer activity is driving demand for real estate in some of NSW’s major regional growth centres,” says Angus Raine, Executive Chairman, Raine & Horne.
“Regional cities such as Bathurst, Wagga and Tamworth offer real estate prices that are significantly below the Sydney median, while rental returns above 5% compare favourably to those generated by properties in the capital city.
“These growth centres appeal to owner-occupiers and investors because they have quality schools and hospitals, employment opportunities, robust and diverse economies, and comfortable living standards,” Mr Raine says.
More rain and less financial red tape to underpin Dubbo property
In Dubbo, in NSW’s central west, first home buyers represent about 30% of the market, along with upgraders (30%), investors (20%) and intrastate downsizers, says Brentley Goodwin, Director, Raine & Horne Dubbo.
“Most of our downsizers come from Sydney or the NSW Central Coast. They can buy a 3-4 bedroom house from $350,000 in Dubbo which leaves them with money to invest in super, spare cash and funds for travel,” Mr Goodwin says.
The drought and the Banking Royal Commission impacted the Dubbo real estate market in 2018, according to Mr Goodwin.
“We had some rainfall in December, and if this continues into the new year, the extra water will inject more confidence into the region’s rural sector and get farmers back spending money on real estate,” says Mr Goodwin.
“Likewise, by March or April the banks should have absorbed the lessons from the royal commission, and it’s fair to expect lending will be back on track by the middle of 2019.”
Mr Goodwin believes this combination of positive factors will have a constructive impact on real estate pricing along with average days on market in the Dubbo area for 2019.”
December rain is a good sign for Tamworth
Bryan Bolitho, Principal of Raine & Horne Tamworth, says that while his town in NSW’s northwest enjoys the benefits of a diversified economy, “a sprinkling of rain brings a different perspective to consumer confidence in Tamworth.”
“Tamworth enjoyed a few days of rainfall in early December, and while we haven’t broken the back of the drought, more rain will improve consumer confidence, spending and bring the local Tamworth property market to life in 2019,” he says.
Mr Bolitho says that in Tamworth, some investors and business owners are not waiting for the banks and are taking their business to non-bank lenders.
“Many people in our region are tired of the big banks and are shifting their business to the credit unions. This change in behaviour is bringing money back into our real estate markets and is set to underpin activity in 2019,” Mr Bolitho added.
First home buyers to fortify Wagga Wagga market in 2019
In Wagga Wagga, in southwestern NSW, Grant Harris, Co-Principal, Raine & Horne Wagga Wagga says stock levels will remain steady in 2019, while buyer numbers will start to improve.
“While stock levels are normal and buyer numbers are a little down, real estate values in Wagga Wagga will hold steady in 2019. There’s no evidence that we will replicate the market conditions in Sydney and Melbourne,” Mr Harris says.
“Sydney coming off the boil will have some effect as it’s taken some previously equity-rich investors out of our market.”
In contrast, younger buyers armed with the ‘First home buyer super saver scheme,’ which allows them to save for a deposit using super have filled some of the void in Wagga’s entry-level property market left behind by Sydney investors, Mr Harris explains. An entry-level three-bedroom house in Wagga starts from the mid-late $200,000s.
“Moreover, the banks are making it easier for owner-occupiers to buy real estate than investors. This situation will continue to an extent in 2019.”
A massive boom in new stock is also catering to the needs of first-time buyers who can benefit from a $10,000 grant on a new home valued up to $750,000, Mr Harris notes. “The state government has loaned Wagga Council $25 million to put the infrastructure in place to support the massive land releases. This is pumping up the local building industry, which is also good for the local real estate market.”