What the heck is going on with Gosford

[letiha]

I saw in API this month that Gosford isn't performingthat well. i didn't realise how much so till i was looking at re.com.au and saw that 2 of the blocks of units i was renting in 1998 have only gone up in rent by $5 and $10 respectively.

Plus there is a lot of brandnew apartments offering 4 weeks free rent and rent cheaper than where i'm living in Brisbane.

Is it just a case of over supply because they are in good locations walking distance to the train station.

 

[BAZARI]

Hi letiha,

Are you familiar with Jan Somer's yield/growth charts?
It is believed that higher growth = lower yield and vice versa.

Have you had a chance to research the sales market for that area?

Rich.

 

[Aimjoy]

Hi Letiha,

Is it just a case of over supply because they are in good locations walking distance to the train station. YES

Lots of units, many that are now being sold in some of the towers to Housing Commission just to move them.

Might be a case of like the Docklands was in MEL a while ago - but the slack will get taken out of the market and things will get back to "normal" eventually.

My 2 c.
Aimy

 

[letiha]

Thats what I assumed Aimjoy, we were looking at a 3 bedroom +study in a new building with pool and gym for $282 a week!!!! But these are listed for the high $300ks. Must be really hurting if you are an owner at the moment.

I suppose it would be great to beable to move down there (I love the Central Coast) but too much going on in Brisbane to move there st the moment.

 

[tiger]

Does anyone have any thoughts on the Gosford market at the moment?

 

[Aimjoy]

Tiger,

I sent you a PM in response to your PM to me.

Cheers,

Aimy

 

[evand]

The central coast market is pretty much depressed. Beside a few small isolated upmarket pockets that i know of. (Pearl Beach, Terrigal etc).

The Woy Woy peninsula (Umina, Ettalong, Woy Woy) is deadsville. Over supply of listings and not enough buyers. Low sales volume, properties sitting on the market for ages, big discounts of 10% - 20% from listing prices are not uncommon.

Yields are 2.5-4% so little interest from investors.

Gosford market and surrounds are very slow. Too much supply and not enough demand for similar reasons as above.

The problem think is that the central coast (excluding a few small beach areas ) is very much an anglo, senior citizen, low income, blue collar region with a high percentage of welfare recipients. Some areas very much so, like the Woy Woy Peninsula which has a lot of social problems, possibly dampening demand in the current market.

Does anyone have any thoughts on the Gosford market at the moment?

 

[tiger]

Yes but will it stay that way?
With its coastal lifestyle and close beach proximity to many suburbs, surely at some point its going to boom or at least have some nice growth.

Umina, Ettalong and Woy Woy is actually where Ive been looking.
Over supply would mean room for bargaining.. could be a good thing, i mean how many times have you heard about people buying in a depressed market then having big gains a few years later.

Ettalong and Umina are beach suburbs, they cant stay dead forever!

 

[evand]

People have been saying that for a long long time Tiger. The problem is a lot of the central coast has a stigma. Most of it is still economically depressed in the middle of an economic boom.

I suppose because it has a high rate of welfare recipients and unemployed. It also has bad vandalism problems and a high ratio of renters to home owners.

And that all affects property prices. Prices have dropped in the vicinity of 20% from the boom of late 2003. And thats net of inflation, so probably quite a bit more if you take inflation into account. The price/yield curve is very similar to outer Sydney. Say from Blacktown to St Marys or so. (where i also have an IP) Its not called Mt Druitt by the sea for nothing.

I have IPs and relatives on the central coast and i keep a close eye on the property market. I also know a couple of agents.

I actually expect the market to fall further after 1 or 2 rate rises. I will only buy there when yields are much better. Beside that there is little sense from an investors point of view as opposed to a speculators point of view.

Yes but will it stay that way?
With its coastal lifestyle and close beach proximity to many suburbs, surely at some point its going to boom or at least have some nice growth.

Umina, Ettalong and Woy Woy is actually where Ive been looking.
Over supply would mean room for bargaining.. could be a good thing, i mean how many times have you heard about people buying in a depressed market then having big gains a few years later.

Ettalong and Umina are beach suburbs, they cant stay dead forever!

 

[tiger]

Hmm well its really my only option along with regional Victoria and over there we dont get stamp duty exemption.
The properties Ive looked at on the coast have pretty good rental yields, saw some 220k townhouses bringing in $210 a week... perhaps thats not as good as i thought?

 

[alexlee]

The properties Ive looked at on the coast have pretty good rental yields, saw some 220k townhouses bringing in $210 a week... perhaps thats not as good as i thought?

I could get that sort of yield in many places in Sydney. If you're saying the area has a stigma, that yield is nothing special.
Alex

 

[tiger]

Yeah for sure but I cant get a nice property in Sydney for 200k odd (yes mt druitt i know)
Its not a great yield but its not horrible.

I'll post up if i buy there, Im still feeling positive about it.

 

[evand]

If your'e getting 4 to 5% gross yield, add 2% for costs (management, insurance, maintenance etc) and if your'e paying 7.5% - 8% IO loan. You're well in the hole, at least by 5% - 6%.

You can pull some back with neg. gearing and depreciation if applicable but why bother with no or negative cap. growth, net of inflation which takes another 3-4% per year. Better putting your coin elsewhere i reckon.

BTW: A friend of my rellos recently refinanced and found they had negative equity in their properties on the Woy Woy peninsula. And not by a little bit!!

And theyre not far from one of those big plastic playgrounds for kids that recently was firebombed by teenagers. Apparently a favorite pastime of teenagers with quite a few being bunt down lately!!

They also take their kids down to Umina Surfclub nippers on Sundays and have to dodge a huge amount of broken glass everywhere after the regular Saturday night rampage by drunk teens. The local police have given up.

And apparently this is the tip of the iceberg.

 

[tiger]

Well there is crime everywhere. People were shot in the shopping mall car park in my suburb yesterday. Doesn't affect me though or anyone else. We still feel safe here.

I'm also looking further up the coast. Newcastle is out of my range but Im wondering what vacancies and yields are like in the Nelson Bay or Raymond Terrace areas.
I should take a trip up and speak to some re agents me thinks

 

[Aimjoy]

evand, evand, evand,

I respect your personal views and your right to put them on this forum BUT please, please be accurate.

Caveat on what I have to say below is that I live there & own 5 IP's there.

The problem is a lot of the central coast has a stigma. Most of it is still economically depressed in the middle of an economic boom.

I think to say "a lot" and most of it is still....." is a GROSS exaggeration. This is just a broad sweeping statement which is similar to saying the SYD market is depressed. It may be in some areas BUT Gosford house medians actually went UP by 23% in the 6 months to Sept 07. (Source Home Price Guide - same for other stats quoted here)

I suppose because it has a high rate of welfare recipients and unemployed. It also has bad vandalism problems and a high ratio of renters to home owners.

A high ratio? 39% fully own, 31% are purchasing and only 24% rent (top 3 nature of occupancy). This compares with SYD as a whole that has 30% renters. On that basis evand SYD looks bad and add to that the weekly stabbings / shootings and vandalism - then no-one would want to invest in SYD - clearly ridiculous! SYD historically has the highest CG in AU.

And that all affects property prices. Prices have dropped in the vicinity of 20% from the boom of late 2003. And thats net of inflation, so probably quite a bit more if you take inflation into account.

Again a sweeping statement. There is NO Central Coast property market just like there is NO SYD property market. Well researched IP's purchased below or around the median price in desirable areas on the Coast have had only 5% declines since the boom and some have stayed flat, while others have increased. That's why we all do so much DD. Sure some properties would have fallen 20% - maybe some 30% - but we (investors) don't generally buy that sort of property.

I keep a close eye on the property market. I also know a couple of agents.

Look harder, expand your horizons

I actually expect the market to fall further after 1 or 2 rate rises.

Oh dear God, another gloom & doomer. Geeze, I am a realist (and you are correct it might fall a bit if we have more rate rises) but I'm getting utterly sick & tired of listening to all the negative stuff when clearly some people are doing very well in exactly the same market. (houses in Gosford in the last 6 months for example)

I will only buy there when yields are much better. Beside that there is little sense from an investors point of view as opposed to a speculators point of view.

I don't think you have to be a rocket scientist to see that the Central Coast is 80km away from the largest AU city with has over 4M people. It has clean pristine beaches and a relaxed life-style. It is an easy commute to SYD on the F3 - less than 1 hour with express train services. I'm sorry I don't share your views on the market here - IMHO it represents excellent buying opportunities from sellers who look at the world as you do (sorry THAT was a sweeping statement of my own - I can be biased too )

Cheers,

Aimy

 

[evand]

Sorry mate. I stand by what i posted and just stated the facts s i see them. No bias and if it comes across that way i apologise.

I said the central coast is 'mostly economically depressed in the middle of an economic boom.' There was no mention in that statement of the property market so how can you compare the Sydney property market to my statement. Please be accurate.

I did state in a previous post that some parts of the coast are doing ok, but not many. Have a look how many for sale signs are on the peninsula, they are absolutely everywhere and mostly have been there for along time. The info on discounts, time on the market, volume etc came straight from an agent with one of the biggest and most active franchises on the peninsula and my own on the ground observations agree with this.

To say the central coast is not a low income area, high welfare, does not have a stigma etc is just plain wrong. Could be a case of Rose colored glasses.

And to qualify as you did I was born there, have a lot of rellos and friends there, know the southern part of the coast backwards and own 3 IPs there.

I dont believe Gosford has risen by 23% in 6 months. That has to be patently incorrect and inaccurate. Possibly skewed by a small sample or something but it could not be correct. Are you talking about Gosford Council area or CBD or what? The council area is huge as i'm sure you know.

What do you mean by 'look harder, expand your horizons'? How can you say that when you dont even know me. I keep my eye on the market but its not the only place i have IPs.

Talk about sweeping generalisations.

 

[Aimjoy]

Sorry mate. I stand by what i posted and just stated the facts s i see them. No bias and if it comes across that way i apologise.

I said the central coast is 'mostly economically depressed in the middle of an economic boom.' There was no mention in that statement of the property market so how can you compare the Sydney property market to my statement. Please be accurate.

I did state in a previous post that some parts of the coast are doing ok, but not many. Have a look how many for sale signs are on the peninsula, they are absolutely everywhere and mostly have been there for along time. The info on discounts, time on the market, volume etc came straight from an agent with one of the biggest and most active franchises on the peninsula and my own on the ground observations agree with this.

To say the central coast is not a low income area, high welfare, does not have a stigma etc is just plain wrong. Could be a case of Rose colored glasses.

And to qualify as you did I was born there, have a lot of rellos and friends there, know the southern part of the coast backwards and own 3 IPs there.

I dont believe Gosford has risen by 23% in 6 months. That has to be patently incorrect and inaccurate. Possibly skewed by a small sample or something but it could not be correct. Are you talking about Gosford Council area or CBD or what? The council area is huge as i'm sure you know.

What do you mean by 'look harder, expand your horizons'? How can you say that when you dont even know me. I keep my eye on the market but its not the only place i have IPs.

Talk about sweeping generalisations.

evand,

All good responses. I have a WSOH - so you would not know that half my reply was a bit tongue in cheek - but my rose coloured glasses are getting a bit tinted by some negative posters here lately.

The Penninsula does seem to have a bit of a problem I'll admit - but it is by no means everywhere. I'm up the Northern end.

Anyway - hope to keep seeing your posts and welcome the feed-back - we need it all.

The Gosford stats did take me a bit by surprise I'll admit - can be a blip??

Anecdotal evidence up my way is getting a hotter market now.

Cheers,
Aimy

 

[Don and Liz]

Big area to talk about collectively

Originally Posted by tiger
Does anyone have any thoughts on the Gosford market at the moment?

Looking at residex there is at least one gosford proper suburb that is in the top 100 for nsw in terms of predicted capital growth - houses - at 14% pa (or equal highest of all residex growth predictions for houses in the state of NSW over the next five years) .

There is another a short drive from the town centre that also makes the list at 12%.

Then if you are looking at the peninsula then you will find another suburb with an equally high predicted growth rate over the next five years. That whole postcode even gets a nice 8 to 10 pa %.

 

[tiger]

Looking at residex there is at least one gosford proper suburb that is in the top 100 for nsw in terms of predicted capital growth - houses - at 14% pa (or equal highest of all residex growth predictions for houses in the state of NSW over the next five years) .

There is another a short drive from the town centre that also makes the list at 12%.

Then if you are looking at the peninsula then you will find another suburb with an equally high predicted growth rate over the next five years. That whole postcode even gets a nice 8 to 10 pa %.

I'm buying there soon, would love to know the suburbs...

Im guessing the last one is probably The Entrance, Terrigal or Avoca Beach.

 

[evand]

Theres 2 postcodes on the peninsula. 2256 & 2257.

Is Residex saying the peninsula will grow at 8% - 10% per year for the next 5 years? I don't know what they're on but that would have to take up a huge amount of supply and have a correspending huge amount of demand in that time frame. And its not very likely thats going to happen.

In fact, it probably did little better than that in the boom.

I wouldn't be basing my investing on theoretical forward predictions with no accountability. Especially with rental yields being currently so low. And we all know how optimistic those Residex reports have always been.