NSW Newcastle 2019

I just had a look on RP data at some of the larger suburbs with generally a higher turnover.
Newcastle doesn’t seem to be as down with listings as Sydney, but -17% in Merewether has surprised me.

 

Hi all,

Long time lurker - first time posting a question.
I am looking a bit outside of Newcastle, areas like Beresfield, Lochinvar, Cessnock and ideally would look something to renovate and live in it while big enough to build a granny flat and rent it out and sell after 3-5 years. I am familiar with Cessnock area and can see prices going down or properties collecting dust and cockroaches for more than 4 months on the market but any advice/feedback is appreciated.
Beresfield is small but in between Newcastle and Maitland with less than 20mins drive while Lochinvar is small and 20mins close to Maitland i only saw 2 rental properties which does worry me a bit.
We are looking at around 300-350k and something as an investment/growth in near future.

Any insights are appreciated.

 

If you are going to buy in an area that the locals call "the middle of no-where", because it is cheap and all you can afford, then you will not reach your stated goal of "growth in the near future".

To get growth, you have to buy where sales and rental demand is high, where people with decent to high incomes want to be. These people can afford the higher rents and sales prices when you come to sell in the future.

My recommendation would be to either - save more money to get a good deposit together, get a higher paying job, or an additional job / business as a side hustle, to boost your income. Then you can afford to buy in good growth areas.

 

Thanks for the advice, appreciate it!

The deposit we have is 350k and going to the bank could afford us to buy something around 900k with a 6 digit salary after tax for me only. I am considering a loan but i'd like to start small and while i agree locals call it "b#m f..k no where" (pardon me)., i do see few houses that got flipped made 100k in 6 months which while crazy it is true thus was hoping to see if anyone has any feedback.
Thanks!

 

People on PC always knock Cessnock ( excuse the pun )
I was looking to buy here at one stage, I dont think its all doom and gloom at all.
Have friends who's property went up 100k in the last 3 years with no work done to it, they bought it for a great price. Vacancy rate is 2%, very low. Also like the fact that the blocks are nice and big with plenty of options for granny flat to create dual income. I dont think Cessnock is the worst idea unlike what most on here will say

 

You need to look closer at this for the actual numbers.
That $100K profit is soon diminished by:
1. stamp duty on purchase
2. reno
3. holding costs
4, selling agent commissions
5. CGT

All of this could turn that $100K gross profit into a loss or break even or at best a small profit.

 

It would not be necessary to buy a $900K IP in Newie to buy into a good CG area. But $650-750K gives you plenty of good options with a house on land, or for a smaller spend would get you into an older (proven history for build) unit in a good CG area.

 

Can now see homes in Mayfield going for the mid-to-high 500s (not renos and not on main roads) which should do well long-term, though this is more of a side point as it's not really Edd's focus/strategy. I don't know what to think of older units in Newcastle- much has been made of the oversupply of new units coming online but their prices will be considerable so older units in good areas probably won't do so badly in terms of yield (younger tenants still wanting to be close to Darby st, CBD, beaches etc but not in the CBD).

 

@Edd - suggest you call Alan Fox (@Propertunity) for direct discussion he has been helping investors in your patch for a LONG time. (yes I just commented on your age Alan...

 

@George Smiley thanks for the input and you are right. As i got older, i moved away from CBD and beaches even though we could afford it.
@Propertunity thanks for the input as well, i agree about the numbers that it's not 100k profit but a bit less after all other costs. Still 50-60k in 6 months for an area like Cessnock is ok i think.
@Cmelderis spot on especially on the low vacancy rate - every weekend i inspect properties for sale and for rent and about 20 people sometimes turn out to rent a property while buyers are a handful only.
@BuyersAgent thanks, i'll consider it.

 

Thanks @Edd Just because an area didnt/doesnt go gang busters with growth does not mean it is not a good area to invest in. It depends on the persons strategy and/or risk appetite. Looking at the trend over the past 10 years in Cessnock it has consistent steady growth and the initial outlay is small.

 

Thanks, bit surprised by 10-12% down in last 12 months, seems Newcastle is catching up quickly to Sydney in terms of prices declines.

Spring will be very interesting as to whether prices stop falling with all the extra stock.

 

Merewether is a large and very strangely shaped suburb, with a big range of prices. All that would need to happen is for the top end to hold off on listing to have the median drop.

Cheers,
inertia

 

Corrected for you

 

16 Dulling Street Waratah NSW 2298 16 Dulling Street Waratah NSW 2298 - House for Rent #427077958 - realestate.com.au

First open tomorrow. Hopefully pick up some good tenants!

 

first up, wow! looks nice! what is your intended market for that?

Cheers,
Inertia

 

Thanks @inertia! I think the house appeals to a broad range of people. That was my intention when looking. Could be a family, couple that works at the hospital or an elder person that wants a place with low maintenance.

 

Those ceiling fans are giving me a headache!!

 

Yes not sure the previous owners logic...

Had a great open today had aprox 10 groups and 7 are putting in applications.