Growing investor activity in the Northern Rivers
Investors looking for growth and rental returns – without breaking the bank – could do a lot worse than the Northern Rivers, for a number of reasons
It might be famous for its music festivals at Byron Bay, but the Northern Rivers region has also recently been attracting residents, as well as tourists.
Located in northeast NSW, the Northern Rivers comprises an area of approximately 20,732 sq km with a population of roughly 288,000 people.
The region’s diverse economy includes the production of agricultural commodities such as dairy, tropical fruits, cattle, poultry, plantation forests, soya beans and sugar cane. This is complemented by local research organisations exploring innovative ways to further improve soil health and mitigate climate change.
The area also has the largest coal seam methane gas reserve in NSW.
Other key industries include building/construction, manufacturing, fishing, education (there is a regional university), biotechnology and tourism.
In fact, the Northern Rivers boasts the second highest level of international tourists in NSW, thanks largely to key tourist icons such as Byron Bay and Nimbin, which deliver world-famous music and arts festivals. Its arts community is continuing to thrive, and the region now has more documentary makers than anywhere in Australia except Sydney or Melbourne.
The Northern Rivers is also well serviced by the Pacific Motorway, the interstate rail network and the Ballina and Gold Coast Airports. Some of the area’s up and coming suburbs include Grafton, Lismore and surrounds, and Ballina.
In recent times, investors have been active in the lower end of the Grafton market, seeking to purchase properties for renovation and resale, says the latest Herron Todd White report.
And for this commercial hub of the Clarence River Valley there is particularly good news regarding infrastructure projects planned by the NSW government.
These include the allocation of funds for construction of the second Grafton Bridge, as well as plans for the new Pacific Highway bypass from Coffs Harbour to Iluka Road.
“These developments are expected to have a positive impact on demand for typical property throughout an extended period of construction,” says the report.
“A typical residential property would include a 1950 part-renovated three-bedroom, one-bathroom fibre cement clad dwelling on a 600 square metre parcel.”
Lismore and surrounds
Even though the typical purchasers in the Lismore, Casino and Kyogle markets are owner-occupiers, there has recently been an increase in investor activity, says the Herron Todd White report.
Residential property in Casino and Kyogle includes newer housing stock averaging in price between $325,000 and $350,000 for three- to four-bedroom, two-bathroom layouts with a double garage. However, for older-style homes with three-bedroom layouts, the price falls to between $200,000 and $250,000.
Investors would be wise to look for a standard house with a large living space, allowing for a third or fourth bedroom to be created, which would help increase the overall rental return.
“However, from an income return perspective, a block of flats or duplex pair could see the rental return increase to around 7% gross or more depending on location and condition,” says the report.
Those looking to invest in North and South Lismore should make sure they buy in an appropriate area, keeping in mind the flood-prone nature of certain sections.
Local agents in Ballina are saying they do not have enough stock to supply keen buyers, says the Herron Todd White report. In fact, detached houses under $500,000 are selling like hotcakes at the moment in Ballina and nearby Alstonville.
“These two suburbs have all the services you need and would be considered safe living,” says the report.
However, if interest rates were to rise this could deter buyers and put the heat on those who have recently entered the market, due to the rise in mortgage payments.
SUBURB TO WATCH
Kellyville Ridge: An affordable option for buyers
Is it any wonder that Kellyville Ridge is such a hit with families? This suburb is renowned for being neat, clean and safe, with plenty of good-quality schools and parks in and around the area.
Even though there are no major shopping centres in Kellyville Ridge, Stanhope Village and the newly developed Rouse Hill Town Centre are extremely close by.
A new high school is also being built nearby in The Ponds. It will accommodate 1,100 new students and is due to open in 2015.
There is also a great mix of apartments and houses in this area, and both are generally modern and well maintained. Units in particular are being snapped up pretty quickly by buyers, and typically spend just 29 days on the market. The fact that prices have increased by 2% in this suburb, while most of its neighbours have recorded double-digit growth, indicates that healthy growth could arrive there in the medium term.
In particular, there are a lot of unit sales on Kilbenny Street, and units there should grow even further in value as they will be within walking distance of the North West Rail Link, as well as being close to the Rouse Hill Town Centre and a bus ride from the Sydney CBD.
There are also many large McMansion type houses, which are popular with families. A large four-bedroom house on Braemont Avenue can be bought for less than $850,000.
Can you afford to buy in this suburb? Find out how much you can borrow