Central Coast – What’s Happening in the Housing Market?

Located between Sydney and Newcastle, the Central Coast housing market is impacted by both cities and at the same time has much in common with regional NSW. While historically this region has been more affordable than Sydney, there has been strong price growth, tight vacancy rates, a loss of affordable housing supply and high demand from the significant number of low income households residents here.

Illawarra Region – What’s Happening in the Housing Market?Housing Market - Rental

Rents There have been strong increases in median rents for all dwelling types in all

bedroom categories in the Central Coast region for a decade, with prices steady over the 12 month period to June 2019. The graph below shows the increase in median rents for Gosford and Wyong from March 2008 to June 2017 and for Central Coast from September 2017 to June 2019.

www.facs.nsw.gov.au

At June 2019, median rents for houses in the Central Coast was $440 per week and for flats was $350 per week.

The two tables below show the change in median rents for houses and for flats between June 2008 in Gosford and Wyong and June 2019 in Central Coast.

Median Rent - HousesLocal Government Area June 2008 June 2019 change

% change

Gosford $300 $140 46.7Wyong $260 $180 69.2Central Coast $440

Median Rent - FlatsLocal Government Area June 2008 June 2019 change % changeGosford $230 $120 52.2Wyong $215 $135 62.8Central Coast $350

The table below shows the proportionate change in rents for all one, two, three and four or more bedroom dwellings in the Central Coast between September 2017 and June 2019. Note that rents have stabilised over this period and while they have not declined, there have not been significant increases either. Four bedroom dwellings experienced the largest increase in rents at 4.8%, followed by one bedroom on 3.7%.

Central CoastSeptembe

r 2017June 2019 change % change

One bed $270 $280 $10 3.7Two bed $350 $360 $10 2.9Three bed $430 $430 $0 0.0Four + bed $520 $545 $25 4.8

Note there were insufficient studio dwellings to ascertain the median rent.

Clearly rent growth was much stronger in the period between 2008 and 2017. Any decrease in rents would benefit renters and improve rental affordability.

www.facs.nsw.gov.au

Vacancy Rate A vacancy rate of 3% is understood to represent a balance between supply and

demand. According to REINSW data, vacancy rates were below 3% for the Central Coast for almost all the whole period from 2007 through to 2019. For some of that time the vacancy rate has been below 2% - indicating a chronic shortage. More recently, from 2018 to 2019 vacancy rates for the Central Coast have eased.

At September 2019 the vacancy rate in the Central Coast was 3.0%, in Sydney it was 2.9% and in Newcastle it was 1.2%.

Affordable Rental The graph below shows the change in the proportion of private rental

accommodation affordable to very low income households in Gosford/ Central Coast, Wyong/Central Coast, Sydney and Rest of NSW between 2001 and 2017.

The general trend across Sydney and NSW has been for a decline in the proportion of rental stock which is affordable for very low, low and moderate income earners. Although this region is more affordable than Sydney, the reduction in the proportion of rental housing that is affordable has been concerning.

While there has been a slight improvement in the proportion of affordable rental between 2015 and 2017, at September 2017 only 12.9% of new bonds lodged were affordable to very low income households, well below the Rest of NSW average of 23.1% but above the Greater Sydney average of 3.9%.

www.facs.nsw.gov.au

The proportion of rental affordable for low income households has also declined in the Central Coast, although again with some improvement since 2014. At September 2017, the proportion of new bonds lodged that were affordable to very low income households was 57.4%, a little above the Rest of NSW average of 54.1% and well above the Greater Sydney average of 23.1%.

The graph below charts the change in the proportion of private rental accommodation affordable to low income households in the Gosford/Central Coast, Wyong/Central Coast, Sydney and Rest of NSW from 2001 and 2017.

There is evidence that short term holiday rentals such as Airbnb are impacting the supply of housing, including long term rental and affordable housing in cities and coastal communities. The North Coast sub-region and Byron Shire in particular has experienced significant impacts, including loss of long term and affordable rental housing.

www.facs.nsw.gov.au

The University of Sydney Urban Housing Lab undertook a study and prepared a report for the Australian Coastal Councils on short term holiday rentals: “Planning responses to online short term holiday rental platforms” - Research Project for Australian Coastal Councils Association Inc. September 2018 by Nicole Gurran, Yuting Zhang, Pranita Shrestha, Catherine Gilbert.

The study found (p7) “that there has been a rapid growth in online holiday rental listings overall and in coastal Australia in particular. Since Airbnb was launched in Australia, the number of listings has risen to over 130,000 properties, amounting to around 0.2% of the housing stock nationwide. If holiday rentals are considered to be part of the rental housing stock (a smaller proportion of Australian homes), then Airbnb listings for whole homes represent around 3.5% of rental accommodation. In coastal communities, the rate is much higher. Across the communities in this study, between 0.3% (Moreton Bay) and 17.6 % (Byron) of the total housing stock is listed on Airbnb.”

Further (p7) “the majority of these listings are whole houses, and more than half appear to be frequently available holiday lets rather than permanent residences. Considered as part of the rental housing stock, these whole houses, frequently available, amount to 19.7% of the rental housing stock in Kiama…and 48.3% of the rental housing stock in Byron”. The report states that (p23) “Airbnb listings…is equivalent to around a fifth of the rental housing stock in Kiama (and) Shoalhaven…”

The Central Coast was not one of the 10 case study communities examined in the study. Nevertheless, there is anecdotal evidence of the impact of short term holiday listings in at least parts of the Central Coast, such as Terrigal. (An article in Domain January 18, 2018 “Asking rent prices for units on Central Coast jump 5.7% annually” notes that “There’s a rise of investors (on the Central Coast) using their leases for short-term rentals rather than long-term tenancies” and “short-term rental platforms such as Airbnb had made investors realise they could charge more rent in ‘lifestyle regions’ such as the Central Coast”.)

The rapid growth in on line listings and loss of affordable rental accommodation are likely connected, with tourist accommodation outcompeting longer term renting for locals, particularly in many coastal communities.

Rental Stress There are high levels of very low income households in rental stress in the

Central Coast (94%), above the average for the Rest of NSW (89%) and below the average for Greater Sydney (96%).

Central Coast (61%) also has higher levels of low income households in rental stress than the average of 58% for the Rest of NSW but lower than Greater Sydney (70%).

At the 2016 Census there were 11,371 very low and low income renters in housing stress across the Central Coast, increasing from 10,827 in 2011. This represents a 5% increase from 2011 to 2016.

The graph below shows the proportion of both very low and low income households in rental stress in the Illawarra LGAs and the Rest of NSW at the 2016 Census.

www.facs.nsw.gov.au

The table below shows the number and proportion of tenants in the Central Coast who are in the private rental market, are in receipt of Commonwealth Rent Assistance, and despite this additional income support, are in housing stress. The Central Coast has a higher proportion of CRA recipients in housing stress than the average for the Rest of NSW.

AreaTotal CRA

recipients 2016

CRA recipient

s in Housing Stress 2016

% CRA in Stress

Central Coast 27,280 11,098 40.7Rest of NSW 201,580 70,760 35.1

Loss of Affordable Housing Stock DCJ has calculated the number of new bonds lodged with the Rental Bond Board

that were affordable to low income earners in the Central Coast in 2006, 2010, 2013 and 2017. The Central Coast experienced a significant decline in affordable bonds lodged, and consequently loss of affordable housing between 2006 and 2017 – with 7,367 fewer affordable bonds lodged – representing a loss of 81.1% of affordable stock. This a significant loss, particularly given that historically the Central Coast has been more affordable, particularly in comparison with Sydney.

www.facs.nsw.gov.au

The table below shows the number of bonds lodged that were affordable to low income households (including very low income households) in 2006, 2010, 2013 and 2017 in the Central Coast.

No. of affordable rental properties for low income households

LGA 2006 2010 2013 2017

CENTRAL COAST 9,081 5,628 4,490 1,714

Housing Market - Purchase

Sales Price In the period from 2008 to 2017 median house and strata prices rose strongly.

However more recently, median house and strata prices have declined a little. The following graphs presenting the long term median sales price trend for

houses and for strata properties show that there has been a significant increase in the sales price of both since 2008 in the Central Coast up until 2017, after which prices have dropped.

www.facs.nsw.gov.au

At March 2019, the median sales price for houses in the Central Coast was $620,000, and the median sales price for strata properties was $490,000.

The two tables below give the change in median sales price for houses and strata properties between March 2009 and March 2019 for the Central Coast (Gosford / Central Coast and Wyong / Central Coast).

Median Sales Price - Houses

LGAMarch 2009

March 2019

change

% change

Gosford$375,0

00 $245,0

00 65.3

Wyong$308,0

00 $312,0

00101.

3

Central Coast $620,0

00

Median Sales Price - Units

LGAMarch 2009

March 2019

change

% change

Gosford$285,0

00 $205,0

00 71.9

Wyong$230,0

00 $260,0

00113.

0

www.facs.nsw.gov.au

Central Coast $490,0

00

Purchase Affordability In the Central Coast, purchase affordability for very low income earners has been

between 0% and 1% from 2011 to 2016, well below the level for the Rest of NSW, as the graph below demonstrates, though there has been a slight improvement in from 2016 onwards. Interest rates are currently at record low levels which has contributed to the recent improvement in affordability. This graph shows purchase affordability for very low income households in the Central Coast (Gosford and Wyong) and the Rest of NSW between 2001 and 2017.

At June 2017, 2.1% of properties in the Central Coast were theoretically affordable for purchase by very low income households, well below the low 9% average in the Rest of NSW. At June 2017, only 5.8% of stock was affordable for purchase by low income households, well below the average of 24.7% in the Rest of NSW. There has been a slight improvement in purchase affordability since 2016 in the Central Coast for very low income households.

The graph below shows the change in purchase affordability for very low income households in the Central Coast, compared to the Rest of NSW, between 2001 and 2017.

www.facs.nsw.gov.au

The graph below shows the change in purchase affordability for low income households in the Central Coast, compared to the Rest of NSW between 2001 and 2017.

www.facs.nsw.gov.au

Additional DataAdditional data on rents and sale prices, including both current and historical data, is available from the Rent and Sales Report on the Housing NSW website at:

http://www.housing.nsw.gov.au/About+Us/Reports+Plans+and+Papers/Rent+and+Sales+Reports/

More detailed housing data and tables used in this Snapshot are available from the Local Government Housing Kit Database on the Housing NSW website at:

http://www.housing.nsw.gov.au/Centre+For+Affordable+Housing/NSW+Local+Government+Housing+Kit/Local+Government+Housing+Kit+Database/

More information on vacancy rates is available from the Real Estate Institute of NSW website (see their media releases on vacancy rates):

https://www.reinsw.com.au/

www.facs.nsw.gov.au