NSW suburb ticking investment boxes
An area in southern Wollongong may be ticking the boxes for investors with a number of experts noting interest in the area starting to pick up.
PRDnationwide’s research analyst, Oded Reuveni-Etzioni, found that investors were attracted to Dapto as it ticks a number of fundamental investment check boxes, including a sub-$400,000 median price, an achievable rental yield of six per cent or more and future capital growth potential.
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Dapto has recorded zero per cent growth over the past year, according to the most recent RP Data statistics.
"The median house value for the postcode was $355,000 in the October 2012 half year. The figure represented a half-yearly rise of 0.9 per cent and a 1.4 per cent increase compared with the same period in 2011,” said Mr Reuveni-Etzioni.
PRDnationwide’s House Price Point research charts noted strength in the lower-end buying activity of the market.
"Houses selling for less than $300,000 represented 21 per cent of the market, while toward the top end stock transacting for $500,000 or more totalled 11 per cent," he said. Forty-seven per cent of transactions were for detached houses in the $300,000 to $399,999 price point.
Positive Real Estate's CEO Sam Saggers agrees that the area has become attractive. He told Smart Property Investment that the proximity to Wollongong and the southern parts of Sydney were beneficial.
"It's an easy commute on the free-way system and the area is serviced by trains," Mr Saggers said.
"According the HTW in 2012 the Illawarra property market has generally been dominated by owner-occupiers, predominantly mum and dad buyers looking to secure the family home in the mid-tier price range."
The stigma of the area as being a "lower socio economic" suburb is also changing, with "The introduction of publicly listed companies land releases ... turning the area into one of the most sought after by owners and interested investors alike. Landcom, Australand and other majors all have major holdings. House and land packages start from around $480,000. This phenomenon is really helping values. This may skew growth rates, as new house and land packages are selling for much more than older established housing," he said.
"It's certainly becoming an attractive proposition if you can get the right property, and the area is beautiful. It has lots of parks, gorges, access to beaches and Warrawong Westfield's isn't far. I think, in some respects, depending on where you work, it's a much better acquisition for lifestyle investor owners, than western Sydney."
Other indicators pointing to strength in the suburb included reduced days on market compared to Wollongong (84 compared to 94 days on market).
"The area's affordable rent attracted tenants from other parts of the Illawarra region. Demand was reflected in rent prices, with the median weekly rent for houses (four or more bedrooms) increasing by 4.7 per cent to $450 per week in the 12 months ending September 2012," said Mr Reuveni-Etzioni.
"That said, the median rent for a three-bedroom house remained unchanged at $350 per week, highlighting the emerging trade-off between rent and ownership."
Census data show a slowly increasing population for Dapto, from 10,480 people in 2006 to 10,735 in 2011.
For wHeregroup's Todd Hunter, while the flat growth over the past five years isn't a "bad sign", this slow population growth is a "problem" for the area, meaning very few people are actually moving there.
"A reasonable percentage of that two per cent is new births, which do not contribute to required housing. Therefore, with a few smaller subdivisions, Dapto will see considerable rental vacancies. Employment is a contributing factor as to why people are not moving to Dapto," Mr Hunter told Smart Property Investment, indicating that he prefers to invest elsewhere.