QUARTER 3 | 2011

NORTHERN NSW MARKET OVERVIEW

Overview The Northern New South Wales (NSW) Region spans 90 kilometres along the coastline, offering a combination of national parks and golden NSW. The area is located between 742 kilometres to 828 kilometres north of Sydney and 110 kilometres to 191 kilometres south of Brisbane. It is typified by quiet beachside communities with undeveloped landscapes, representing a haven for holiday makers and retirees. Recently, improvements to the accessibility of this region has made it possible for residents to utilise the ever expanding employment nodes of the Gold Coast and Coolangatta, but still retain the quieter beachside living that the northern beach towns offer. Access to the region is made possible by the Pacific Motorway, running parallel to the coastline. Ballina offers a domestic airport, while the international airport of Coolangatta is only a short drive north of the region. Although this region appeals to wide demographic in pursuit of the alluring coastal lifestyle, the diversity and unique qualities within this market necessitates an analysis of four key precincts. These precincts are the Tweed Coast, Ocean Shores Area, Byron Bay Area and the Ballina and Lennox Head Area. The suburbs comprising these regions are listed below.  Within the Northern NSW property market sales activity and price has fallen from the Tweed Coast: Banora Point, Bogangar, Cabarita Beach, incentivised peak at the end of 2009. Casuarina, Chinderah, Fingal Head, Hastings Point,  The conclusion of the First Home Buyers Kingscliff, Pottsville, Tweed Heads, Tweed Heads South. Boost, growing cost of living and rising interest rates has seen confidence slide, Ocean Shores Area: Billinudgel, Brunswick Heads, New leading to more conservative spending from Brighton, Ocean Shores, South Golden Beach. households consolidating debts.  It is anticipated that this market will remain Byron Bay Area: Byron Bay, Skinners Shoot, Suffolk flat over the short term as the market Park. approaches the bottom of its cycle, however, diminishing capital values and the favourable Ballina and Lennox Head Area: Ballina, East Ballina, position held by purchasers in the market Lennox Head, Skennars Head, South Ballina, West place will see the market begin to turn. Ballina.

Prepared by PRDnationwide Research. Source: PDS. For further details contact: Josh Brown, Research Analyst, Ph: (07) 3026 3357 or Email: [email protected] or visit our website at www.prdnationwide.com.au/research. PRDnationwide does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by us. We have no belief one way or the other in relation to the accuracy of such information, figures and projections. PRDnationwide will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information that you rely upon that is contained in the material. Prepared by PRDnationwide Research © All medians and volumes are calculated by PRDnationwide Research. Use with written permission only. All other responsibilities disclaimed. © 2011 QUARTER 3 | 2011

NORTHERN NSW MARKET OVERVIEW

Northern NSW House Sales Cycle Northern NSW Market 1,400 $600,000 Number of sales Median Within the Northern NSW property market sales activity

1,200 $500,000 has fallen from the incentivised peak at the end of 2009.

1,000 During this period the market saw sales propped up by $400,000 record low interest rates and the First Home Buyers Boost 800 which was subsequently withdrawn at the end of 2009. $300,000

600 The conclusion of the increased grant, growing cost of

Number of sales of Number Median sale price saleMedian $200,000 living and rising interest rates has seen confidence slide, 400 leading to more conservative spending from households

$100,000 200 consolidating debts. This has had a strong effect on sales volumes translating into modest price falls for the Northern 0 $0 NSW market. Although not reflected in the house sales

cycle graph, sales from the March 2011 half year have

2001 SEP 2001 SEP 2007 SEP 2008 2002SEP 2003SEP 2004SEP 2005SEP 2006SEP 2009SEP 2010SEP

2001 MAR 2001 MAR 2002 MAR 2007 MAR 2008 MAR 2009 2003 MAR 2003 MAR 2004 MAR 2005 MAR 2006 MAR 2010 MAR 2011 Half year period Graph Prepared by PRDnationwide Research, Source: PDS continued to be weak as speculation about the state of the global economy and the movement of interest rates has Northern NSW Unit Sales Cycle subdued demand. It is anticipated that this market will 1,400 $450,000 Number of sales Median remain flat over the short term as the market approaches $400,000 1,200 the bottom of its cycle, however, diminishing capital values $350,000 and the favourable position held by purchasers in the 1,000 $300,000 market place will see the market begin to turn. It is unlikely

800 $250,000 that growth will mimic the unsustainable level experienced prior to the 2007 market peak with a moderate growth rate $200,000

600 Number of sales of Number

Median sale price saleMedian a more probable scenario. $150,000 400

$100,000 Over the six months to March 2011, real estate

200 transactions in the Northern NSW market have fallen $50,000 34.4% (492 sales) to register 937 house, unit and land

0 $0 sales. The majority of transactions were for units

2001 SEP 2001 SEP 2002 SEP 2003 SEP 2004 SEP 2005 SEP 2006 SEP 2007 SEP 2008 SEP 2009 SEP 2010

2002 MAR 2002 MAR 2003 MAR 2004 MAR 2005 MAR 2006 MAR 2007 MAR 2008 MAR 2009 MAR 2010 MAR 2011 2001 MAR 2001 accounting for 48.7% of sales, while houses accounted for Half year period Graph Prepared by PRDnationwide Research, Source: PDS a further 42.2%. The constitution of sales reflects the March 2011 Half Year Sales Breakdown prevalence of unit type properties in the area and also the 140 popularity of this property type in this coastal region. Over

120 the past 12 months, the unit market has proven to be the most robust with only a 29.5% drop in sales compared to 100 the 43% fall recorded in land sales and 37.4% drop in 80 Vacant Land house sales. Unit 60 House Sales Activity Sales Sales activity is at the lowest recorded levels since 1994. 40 Ultimately this has caused has vendors to revise their 20 expectations of price and make consolidations in order to

0 contract a sale. The house and unit markets have both recorded a 1.9% fall in median price over the past 12 months, which will vary among the different markets of the Northern NSW region. Suburb

Graph Prepared by PRDnationwide Research, Source: PDS QUARTER 3 | 2011

NORTHERN NSW MARKET OVERVIEW

Tweed Coast House Sales Cycle Tweed Coast Market 600 $600,000 Number of sales Median Similarly to the Northern NSW Region, the Tweed Coast

500 $500,000 market is in the midst of its most subdued period in a least a decade, characterised by record low sales volumes and 400 $400,000 falling median price. Over the six months to March 2011, real estate transactions in the Tweed Coast market have

300 $300,000 fallen 30.9% (256 sales) to register 570 house, unit and Number of sales of Number Median sale price saleMedian land sales. This market has recorded a smaller decline 200 $200,000 than that seen in the Northern NSW Area, indicating that

100 $100,000 demand is holding up better than other markets, most likely as a result of the appeal of the region. The majority 0 $0 of transactions comprised unit sales which accounted for

55.1% of total sales for the period, while houses

2003 SEP 2003 SEP 2005 SEP 2006 SEP 2008 2001SEP 2002SEP 2004SEP 2007SEP 2009SEP 2010SEP

2002 MAR 2002 MAR 2005 MAR 2007 MAR 2010 2001 MAR 2001 MAR 2003 MAR 2004 MAR 2006 MAR 2008 MAR 2009 MAR 2011 Half year period Graph Prepared by PRDnationwide Research, Source: PDS accounted for a further 37.5%. This reflects the dominance of the unit market in this region. Over the past Tweed Coast Unit Sales Cycle 12 months, the unit market has again recorded the 900 $450,000 Number of sales Median slowest fall in sales with a 24.5% drop as compared to the 800 $400,000 54.3% drop recorded in land sales and 32.7% drop in 700 $350,000 house sales.

600 $300,000 As buyers remain dormant in the market, there has been a 500 $250,000 weakening in the value of property in the region. The unit

400 $200,000 market has seen the strongest decrease in median price

Number of sales of Number Median sale price saleMedian 300 $150,000 over the 12 months to March 2011, with a 5.8% decline to

200 $100,000 record a final median price of $365,000. The house

100 $50,000 market has recorded a fall of 2% to register a median price of $365,000. Although all property types have 0 $0

experienced falling values as a result of the Global

2002 SEP 2002 SEP 2004 SEP 2006 SEP 2008 SEP 2010 2001SEP 2003SEP 2005SEP 2007SEP 2009SEP

2008 MAR 2008 MAR 2010 2002 MAR 2002 MAR 2003 MAR 2004 MAR 2005 MAR 2006 MAR 2007 MAR 2009 MAR 2011 2001 MAR 2001 Financial Crisis (GFC), long term growth over the past five Half year period Graph Prepared by PRDnationwide Research, Source: PDS years from the March 2006 period still remains positive. March 2011 Half Year Price Points Over this period houses have recorded 4.1% growth per 350 annum, while units recorded 2.7% per annum.

300 In terms of the price point distributions over the 12 months to March 2011, the majority of houses sold within the 250 At least $800,000 $400,000 to $599,999 price bracket accounting for 57% of $700,000 to $799,999 200 $600,000 to $699,999 total house sales. The unit market has seen the bulk of its $500,000 to $599,999 $400,000 to $499,999 transactions occur within the $200,000 to $399,999 price 150 $300,000 to $399,999 point at 52.5% of sales. Similarly, land has seen 59.5% of Sales Activity Sales $200,000 to $299,999 Less than $200,000 sales transact within the $200,000 to $399,999 price point. 100

50

0 House Unit Land Property Type Graph Prepared by PRDnationwide Research, Source: PDS QUARTER 3 | 2011

NORTHERN NSW MARKET OVERVIEW

Ocean Shores Area House Sales Cycle Ocean Shores Area Market 180 $600,000 Number of sales Median The Ocean Shores market represents the most 160 $500,000 undeveloped area in the Northern NSW Region. As such, 140 this market has a smaller portion of units than the other 120 $400,000 more developed regions and holds a stronger potential to 100 become more established in the future providing strong $300,000

80 returns for long term purchasers. It can be expected that

Number of sales of Number Median sale price saleMedian 60 $200,000 the Ocean Shores market is also approaching the bottom of its property cycle with record low sales volumes and 40 $100,000 declining values. As the market stabilises it is anticipated 20 that sales volumes will strengthen at a moderate pace

0 $0 preceding price growth. Over the six months to March

2002 SEP 2002 SEP 2007 SEP 2009 2003SEP 2004SEP 2005SEP 2006SEP 2008SEP 2010SEP

2001SEP 2011, total property transactions in the Ocean Shores

2003 MAR 2003 MAR 2005 MAR 2007 MAR 2009 2001 MAR 2001 MAR 2002 MAR 2004 MAR 2006 MAR 2008 MAR 2010 MAR 2011 Half year period Graph Prepared by PRDnationwide Research, Source: PDS market have fallen 51.9% (69 sales) to register 64 house, unit and land sales. The vast majority of sales were Ocean Shores Area Unit Sales Cycle houses which accounted for 71.9% of total sales for the 35 Number of sales $450,000 Median period, while units accounted for a further 21.9%. $400,000 30

$350,000 Property values in the Ocean Shores market has been 25 more resilient than other markets in the region. However, $300,000 this could be partial explanation for the stronger softenings 20 $250,000 in sales with vendors reluctant to make concessions on $200,000

15 price to achieve a sale. The unit market has seen the

Number of sales of Number Median sale price saleMedian $150,000 strongest decrease in median price over the 12 months to 10 $100,000 March 2011, with a 2.6% decline to record a median price

5 $50,000 of $394,500. The house market has recorded a marginal drop of 0.6% to register a median price of $481,895. 0 $0

Following the GFC there has been a fall in values for all

2001 SEP 2001 SEP 2002 SEP 2003 SEP 2004 SEP 2005 2006SEP 2007SEP 2008SEP 2009SEP 2010SEP

2002 MAR 2002 MAR 2003 MAR 2004 MAR 2005 MAR 2006 MAR 2007 MAR 2008 MAR 2009 MAR 2010 MAR 2011 2001 MAR 2001 property types, although long term growth over the past Half year period Graph Prepared by PRDnationwide Research, Source: PDS five years from March 2006 highlights the returns March 2011 Half Year Price Points achieved prior to 2008. Over the past five years houses 50 have recorded 3.0% growth per annum while unit have

45 recorded 7.3% per annum. 40 In terms of the price point distributions over the 12 months

35 At least $700,000 to March 2011, the majority of houses sold within the $600,000 to $699,999 30 $500,000 to $599,999 $400,000 to $499,999 price bracket accounting for 47.8% $400,000 to $499,999 25 $300,000 to $399,999 of total house sales. The unit market has seen the bulk of $200,000 to $299,999 its transactions occur within the $300,000 to $499,999 Sales Activity Sales 20 $100,000 to $199,999 price point at 78.6% of sales, while the land market saw 15 75.0% of sales transact under the $300,000 price point. 10

5

0 House Unit Land Property Type

Graph Prepared by PRDnationwide Research, Source: PDS QUARTER 3 | 2011

NORTHERN NSW MARKET OVERVIEW

Byron Bay Area House Sales Cycle Byron Bay Area Market 160 $900,000 Number of sales Median The Byron Bay market has followed a similar trend to the $800,000 140 greater Northern NSW market, with a recovery period $700,000 120 facilitated by the Government stimulus throughout the

$600,000 100 second half of 2009. This was followed by a significant $500,000 drop in transactions as the First Home Owners Boost was 80 $400,000 withdrawn, interest rates started increasing and cost of

60

Number of sales of Number Median sale price saleMedian $300,000 living was rising. This has affected falling prices as fewer

40 buyers mean that vendors must become more competitive $200,000 when selling. However, with such low sale volumes and 20 $100,000 price corrections, it is perceived that the market is 0 $0 approaching the bottom of its cycle which will lead to

improving sales activity and median price. Over the six

2002 SEP 2002 SEP 2007 SEP 2009 2001SEP 2003SEP 2004SEP 2005SEP 2006SEP 2008SEP 2010SEP

2003 MAR 2003 MAR 2005 MAR 2007 MAR 2009 2001 MAR 2001 MAR 2002 MAR 2004 MAR 2006 MAR 2008 MAR 2010 MAR 2011 Half year period Graph Prepared by PRDnationwide Research, Source: PDS months to March 2011, property transactions in the Ocean Shores market have totalled 100 house, unit and land Byron Bay Area Unit Sales Cycle sales. This equates to a decrease of 46% (84 sales) from 160 $600,000 Number of sales Median the corresponding period in 2010. The majority of sales 140 $500,000 were houses which accounted for 53% of total sales for

120 the period, while units accounted for a further 42%.

$400,000 100 Over the six months to March 2011 property values in the

80 $300,000 Byron Bay Area have begun to slide as buyer confidence recedes and vendors are forced to revise their

60

Number of sales of Number Median sale price saleMedian $200,000 expectations of price. Despite this, the unit market has still 40 recorded a 12 month growth in median price of 3.4% per $100,000 20 annum to reach a median price of $512,000, making it the most exclusive market in the Northern NSW Region. On 0 $0

the other hand Byron Bay Area houses have registered a

2006 SEP 2006 SEP 2007 SEP 2008 2001SEP 2002SEP 2003SEP 2004SEP 2005SEP 2009SEP 2010SEP

2001 MAR 2001 MAR 2007 MAR 2008 2003 MAR 2003 MAR 2004 MAR 2005 MAR 2006 MAR 2009 MAR 2010 MAR 2011 2002 MAR 2002 softening of 0.7%, culminating to a median price of Half year period Graph Prepared by PRDnationwide Research, Source: PDS $670,000. This was also the highest median price for a March 2011 Half Year Price Points house market in the Northern NSW Region. 60 In terms of the price point distributions over the 12 months to March 2011, the majority of houses sold for at least 50 $800,000 accounting for 32.1% of total house sales. This

40 At least $800,000 was followed by the $600,000 to $699,999 price point $700,000 to $799,999 $600,000 to $699,999 which saw a further 30.2% of house sales. The unit $500,000 to $599,999 30 $400,000 to $499,999 market has seen the bulk of its transactions occur within $300,000 to $399,999 the $300,000 to $699,999 price point at 81% of sales, Sales Activity Sales $200,000 to $299,999 20 Less than $200,000 while the land market saw an even distribution of sales.

10

0 House Unit Land Property Type Graph Prepared by PRDnationwide Research, Source: PDS QUARTER 3 | 2011

NORTHERN NSW MARKET OVERVIEW

Ballina & Lennox Head Area House Sales Cycle Ballina & Lennox Head Area Market 300 $600,000 Number of sales Median The Ballina and Lennox Head Area market has

250 $500,000 progressively softened since recording a peak in activity during the six months to March 2002 where 628 property 200 $400,000 sales were recorded. This drop in transactions has predominately occurred in the housing market which has

150 $300,000 hit its lowest volumes of transactions on record from 1994.

Number of sales of Number Median sale price saleMedian 100 $200,000 The unit market has enjoyed a sturdier platform, however this still has recorded its lowest sales since the March

50 $100,000 1997 half year period. This presents an opportunity to purchasers to capitalise on the buyer favourable

0 $0 conditions with historically low interest rates and proof that

2003 SEP 2003 SEP 2005 SEP 2006 SEP 2008 2002SEP 2004SEP 2007SEP 2009SEP 2010SEP

2001SEP the market, despite recording its lowest level of

2002 MAR 2002 MAR 2005 MAR 2007 MAR 2010 2001 MAR 2001 MAR 2003 MAR 2004 MAR 2006 MAR 2008 MAR 2009 MAR 2011 Half year period Graph Prepared by PRDnationwide Research, Source: PDS transactions, has held its value well. The primary catalyst for this low volume of sales being recorded is a lack of Ballina & Lennox Head Area Unit Sales Cycle buyer confidence, arising from the growing cost of living 350 $450,000 Number of sales Median and debt, with seven consecutive increases to the cash $400,000 300 rate since October 2009. $350,000 250 Over the six months to March 2011 property values in the $300,000 Ballina and Lennox Head Area have started to dip as 200 $250,000 buyers exiting the market prompts less competition, $200,000

150 leading to a slowing in price. The house market has

Number of sales of Number Median sale price saleMedian $150,000 recorded a 12 month decline of 6.8% in median price 100 $100,000 equating to a final median of $517,500. Unit values

50 $50,000 however have been more robust registering a 2.1% increase in median price culminating to a median price 0 $0

peak of $413,500. These median prices are the second

2006 SEP 2006 SEP 2007 SEP 2008 2001SEP 2002SEP 2003SEP 2004SEP 2005SEP 2009SEP 2010SEP

2001 MAR 2001 MAR 2007 MAR 2008 2003 MAR 2003 MAR 2004 MAR 2005 MAR 2006 MAR 2009 MAR 2010 MAR 2011 2002 MAR 2002 strongest recorded in the Northern NSW market. Half year period Graph Prepared by PRDnationwide Research, Source: PDS In terms of the price point distributions over the 12 months March 2011 Half Year Price Points to March 2011, the distribution of house sales was 100 comparatively even signifying a diversity of stock within 90 the market. The most active price bracket was $500,000 80 to $599,999 which saw 23.2% of house sales. This was

70 At least $800,000 followed by the more affordable $400,000 to $499,999 $700,000 to $799,999 60 $600,000 to $699,999 price point which saw a further 18.3% of house $500,000 to $599,999 50 $400,000 to $499,999 transactions. The bulk of unit transactions were absorbed $300,000 to $399,999 between the $300,000 to $499,999 price point with 62.8% Sales Activity Sales 40 $200,000 to $299,999 Less than $200,000 of total unit sales. The land market saw 65.7% of sales 30 transact within $200,000 to $399,999. 20

10

0 House Unit Land Property Type Graph Prepared by PRDnationwide Research, Source: PDS