A combination of wet weather and expectations from the banking royal commission are predicted to bring a refreshing change to some regional hotspots in NSW, according to leaders in a top real estate network.
Executive chairman of Raine & Horne Angus Raine said that it’s a matter of simple economics.
“Despite softer dwelling prices in Sydney, downsizer activity is driving demand for real estate in some of NSW’s major regional growth centres.
“Regional cities such as Bathurst, Wagga and Tamworth offer real estate prices that are significantly below the Sydney median, while rental returns above 5 per cent 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.”
Director at Raine & Horne Dubbo Brentley Goodwin said that the drought and the banking royal commission left an impression in the Dubbo real estate market in 2018.
He said that both could have a positive impact on the market in 2019.
“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.
“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.”
Raine & Horne’s principal Tamworth Bryan Bolitho said that some December rainfall has lifted the spirit of the whole town.
He said that while Tamworth enjoys the benefits of a diversified economy, “a sprinkling of rain” has brought a different perspective to consumer confidence.
“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 said.
Mr Bolitho said that some investors and business owners, fed up, 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,” he said.
Co-principal of Raine & Horne Wagga Wagga Grant Harris said that stock levels in the southwestern NSW town will remain steady in 2019, but that 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.
“Sydney coming off the boil will have some effect as it’s taken some previously equity-rich investors out of our market.”
Mr Harris said that the first home buyer super saver scheme has filled some of the void in Wagga’s entry-level property market left behind by Sydney investors.
“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.
“The state government has [lent] Wagga Council $25 million to put the infrastructure in place to support the land releases. This is pumping up the local building industry, which is also good for the local real estate market.
“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.”