Urbis Think Tank
Apartment developments in regional coastal precincts are more susceptible to economic downturns
A recent Urbis project on the NSW Central Coast has revealed some important insights about coastal developments outside of the capital cities – particularly in the units/apartment sector. Unit sales rates in the Central Coast peaked in 2002/2003, but fell by as much as 45% in subsequent years.
The median price in the Central Coast peaked in 2005 ($315,000) but as at 2011, the median unit price in the Central Coast was 9% below the 2005 peak.
The residential unit market in the Central Coast is experiencing a period of weakness, still recovering from the impacts of the GFC, with a number of mortgagee in possession sales of both individual apartments and whole development sites. This is in contrast to the broader NSW apartment market, where prices have risen since the end of the GFC.
The Central Coast apartment market has been particularly affected by the withdrawal of investors and holidays makers. The premium market has particularly struggled, with higher priced units experiencing the most significant price reductions. Two bedroom units are currently selling in greater numbers than other larger product types, with 3 bedroom units being priced out of the range of those currently looking to purchase.
Comparable waterfront developments nationally – including Newcastle, Wollongong, Geelong, Mandurah and Darwin show some similar trends:
- Most buyers are locals. Most non-locals are first home buyers who find the region more affordable than the near-by capital city (with the exception of Darwin).
- Apartments at the lower to medium end of the market (generally below $400,000) have sold well, especially two bedroom apartments.
- The premium end of the markets was significantly adversely affected during the GFC, exposing a limited depth of market for this type of product during times of economic uncertainty.
- Subsequent to the implementation of urban renewal projects, the waterfront precincts generally achieved above average levels of price growth coming off a relatively low base, however prices have subsequently been affected by market conditions which have eroded much of the price gains of the revitalisation projects.
Director: Clinton Ostwald
Associate Director: Chrystal Desange
