Buying on the NSW coast

By Alex May

When it comes to coastal real estate investment success, the recipe is easy.

Take one small town – preferably less than 400 houses – surround it with national park, ensure there is only one road in, and make sure the rif raf stay away by banning developments such as pubs and clubs.
In NSW, some of the most expensive beach properties are found in Pearl Beach, where a beachfront sold in December last year for $4.8million and the 2004 median house price was $950,000.
Houses in Pearl Beach are worth at least double those in the surrounding towns of Patonga and Umina, with the cheapest Pearl Beach cottages starting in the low $700,000s.
Landmark White NSW research manager Vanessa Rader says consistently high property prices are achieved in places that have what the experts call “limited supply”.
“The places that hold the highest values are those where the demand cannot be met by the supply available,” she says.
Pearl Beach is a small hamlet made up of just 440 houses, which is bordered by the water and national park and has only one restaurant and definitely no pubs. There is no further subdivision allowed.
PRDnationwide Ettalong Beach agent Stuart Gan says Pearl Beach’s high values tick along regardless of what the rest of the property market is doing because there is simply not enough houses available.
“I call it the boiling pot – the pot simply can’t expand so the market bubbles and boils away and gets really heated,” he says.
“Every time we get a beachfront, it exceeds the reserve by 30 or 40 per cent because people just don’t care about price when they have waited three years to get the property they want.”

THE HYAMS BEACH EXAMPLE

Most coastal areas in NSW have had falls in prices – just as the Sydney market has – and are many agents are trying to sell the flood of property that hit the market after the state government issued land tax bills on holiday homes.
Gan admits there is more property on the market in Pearl Beach now than there has been for years but refuses to concede there is any softness to the market in the exclusive town.
Hyams Beach on Jervis Bay has been rapidly catching up as Pearl Beach’s southern counterpart; it too is surrounded by national park and has just 200 houses with no further subdivision allowed.
And while Hyams has had some price softness compared to early 2004, properties cost at least twice as much to buy in Hyams as in the neighbouring towns of Vincentia and Huskisson.
Oz Combined Realty Huskisson agent Jan Murrihy says Hyams Beach comes alive in summer when the who’s who of Sydney descends – Kerry Packer, actor Miranda Otto have been spotted holidaying and INXS’s John Farris has bought in the exclusive town.
From 2000 to early 2004, it seemed there was no stopping massive price rises in the town, with Hyams Beach Real Estate principal Chris Alison saying prices went from starting at around $300,000 in 2000 to now starting at $700,000 with a record price of $1.8 million.
There are so few properties available in Hyams Beach that Home Price Guide cannot come up with a median house price for the area, or a long term price growth figure as it requires at least 10 house sales a year to obtain a statistic.
There are two beachfront properties in Hyams Beach on the market today, both with asking prices in the mid to high $2million range.
Ray White Jervis Bay principal Pamela Smith says she has a Pearl Beach owner wanting to buy in Hyams because of its similarity to the small central coast hamlet.
“It’s a small secluded place that’s really becomes a who’s who place in the holiday season,” she says.

OTHER LOW-SUPPLY SPOTS

So where else in NSW do these exclusive, small beachside towns exist?
In swanky Byron Bay, local agent Ed Silk says it is the prestigious locality of Wategos with only 86 houses that continues to break price records.
“It’s surrounded by national park and ocean and has a perfect northerly aspect,” he says.
A beachfront property has apparently just been sold in Wategos for a price that exceeds the 2003 residential record of $3.9 million, and a guesthouse with subdivision potential has sold for more than $5 million.
But there are more affordable beachside locations close to Sydney that have restricted supply.
On the Killcare peninsula on the Central Coast, there is MacMasters Beach and Killcare, which are both surrounded by national park and have no more room to expand.
Araluen Coastal Properties principal Kerrie Ryan says MacMasters Beach is the smallest beach town, with 700 houses including around 20 beachfront properties.
“There is nothing in MacMasters except a fruit shop – you have to walk over the hill to go to a restaurant or anything,” she says.
“But that’s what people like about it. They want to be able to get away from it all and feel like they aren’t in the city.”
Ryan says the record price in MacMasters was for a beachfront property that sold for $2.5million in 2003, but a house back from the beach can start in the $500,000s.
“I know Hyams used to be a lot cheaper than this area, but I think prices down south have caught up with here,” she says.
Ryan says summer rentals fetch up to $8500 a week in MacMasters during peak holiday season, when the Porsches and BMWs from the city descend on the small beachside town.
Then there is the heritage town of Catherine Hill Bay near Newcastle. It has less than 100 old weatherboard cottages in walking distance to an unspoilt surf beach. There is only one loop road in and out of the small town, and no shops.
Creer Property agent Stephen Cromarty says the town has a conservation order which restricts new development, so there are very few large houses.
“It’s mostly old, weatherboard cottages which incidentally you couldn’t give away 10 years ago,” he says.
“You could have bought there for $200,000 back in the 1990s but now you wouldn’t find a property for under $700,000.”
On the south coast, there are plenty of small towns and hamlets surrounded by national park or state forest, but very few have a range of beachfront property on offer.
Raine & Horne Mollymook-Milton principal Gary Dale says the south coast is more underdeveloped than the north, and has larger chunks of national park and waterfront reserve.
“You just don’t get the same amounts of beachfront down here as you do in the north – I think there are only 30 houses in all of Mollymook with beachfront access,” he says.
The coastal strip between Bulli and Stanwell Park on the south coast has some small beachside towns, however there is virtually no direct beachfront property due to the escarpment.
Raine & Horne Austinmer prinicipal John McGuinness says Wombarra and Scarborough are the two smallest villages, with about 800 houses between them.
“You won’t find a house for less than $600,000 around here, and probably a bit more in Wombarra,” he says.
“But you are very limited in terms of new land, because the escarpment means a lot of the area is slip area which can’t be built on.”

HOUSE PRICES

Town 2004 median house price 1998 median house price

• Pearl Beach $950,000 $313,750
• Patonga SNR SNR
• Umina $380,000 $167,000
• Hyams Beach SNR SNR
• Huskisson SNR $405,000
• Vincentia SNR $436,250
• Catherine Hill Bay SNR SNR
• Byron Bay $618,000 $226,000