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Central Coast: From Weekend Getaway to Sought-after Residence Location for Sydneysiders
Just above a 1-hour drive and less than a 2-hour train ride from Sydney, Central Coast is not only one of the most popular weekend getaway destinations for Sydneysiders but also more and more of a relatively affordable option for home buyers and investors.
In the past two years, Central Coast’s house prices declined from their COVID peak and have not fully recovered yet. Will the recovery pick up speed in the rest of 2024 and 2025? Join us today to explore Central Coast’s current property market conditions and outlook!
As of Oct 2024, Central Coast’s House Market Pressure is balanced.
Among the six metrics InvestorKit uses to measure market performance, Central Coast scores the highest (5) in incoming supply, high (4) in rental pressure, average (3) in price pressure, and low (2) in affordability, growth cycle, and rental yield.
Demographic & Economic Trends
Central Coast’s population growth has been slowing down in the few years before the pandemic as internal and overseas migration have both been declining. Between the two subregions, Wyong has performed better in net internal migration (mostly positive over the years) than Gosford (primarily negative), as shown in the chart below. The difference could be due to Wyong’s relative living affordability.
Population growth improved significantly last year thanks to surging overseas migration and improving internal migration. While this improvement could give the property market a boost in the coming few years, it won’t be significant or sustainable if this improving trend doesn’t continue.
The local economy seems to remain strong. The unemployment rate is now 3%. While it has increased slightly compared to early 2024, it’s still at its lowest level in over a decade. At the same time, the number of job vacancies is still higher than the pre-pandemic average.
Both indicators show that Central Coast’s job market is at the most active position in more than a decade, providing a healthy economic foundation for the property market.
Sales Market Trends
House prices have been increasing gradually in Gosford and Wyong since late 2023, with Gosford achieving 8.4% and Wyong recording 5.8% annual growth.
The recovery is accompanied by a -12.7% decrease in sale days on market (DoM). The DoM has stabilised at just below 60 days in both subregions.
The reason DoM is not continuing the decline and prices are not recovering as fast could be affordability. With median prices of $1m+ and $800k+, Gosford and Wyong are 44% and 35% overvalued, respectively, which is quite discouraging for local home buyers. In the meantime, high prices have led to low yields, making houses less attractive to investors as well. We’ll discuss yields in Chart 9.
The inventory level in Central Coast seems to have reached a balanced status — it has been hovering around 3 over the past year or so. While interest rates stay high and affordability remains a major concern for buyers, the inventory level might stay at this balanced level in the coming months.
While the market pressure isn’t particularly high, Central Coast doesn’t suffer from oversupply issues. New house building approvals over the past 15 months only represent less than 1% of its total house stock, meaning that once housing demand recovers, market pressure will increase fast as supply is limited.
Central Coast’s house prices have increased by 130%+ in the past ten years, much higher than the long-term average and the average of large regional cities. Central Coast’s performance in the past five years was also slightly higher than the long-term average, but lower than large regional cities’ average (chart above). The “overshoot” in the past decade has contributed to the Central Coast’s poor affordability and will probably prevent the region from another price surge in the short to medium term.
Rental Market Trends
Rental vacancy rates in the Central Coast area have declined from close to 1% to under 0.5% over the past year. Gosford’s rental price has been increasing in the past quarter in response to the tightening market, while Wyong’s rental prices remain stagnant. Further rental increases are expected if vacancy rates stay low.
With below 4% rental yields, Central Coast’s houses are not as attractive to investors. This is especially true in Gosford, where house rental yields are just a bit higher than 3%. As rents in Gosford rise steadily faster than sale prices, rental yields have been gradually improving; However, Wyong’s rental yield has been declining due to its rental stagnancy.
Over the past decade, the rental prices of the two subregions have grown by 67% and 51%, respectively, with Gosford slightly higher than the average growth rate of the top-populated regional cities, Wyong, lower. We expect Wyong’s rental growth to catch up, given the low vacancy rates in this region.
In the next 6-12 months…
Central Coast’s property market is currently under balanced pressure. While supply seems tight relative to demand (indicated by the healthy inventory of 3), affordability is limiting housing demand recovery. We expect Central Coast to continue growing moderately in the coming 6 months until interest rate cuts (expected to happen in 2025) improve affordability and boost demand. That being said, we do not see the Central Coast market experiencing a price surge anytime soon due to its extremely high last-10y growth.
Central Coast is the 5th regional city we examine in this Market Pressure Review Blog Series. Stay tuned for more cities to follow! InvestorKit is a data-driven buyers’ agency that chooses purchasing locations through a sophisticated market pressure analysis system. This methodology has enabled our clients to achieve growth higher than the average and expedite their investment journey. Interested in learning more about InvestorKit’s research and services? Talk to us today by clicking here and requesting your 15-min FREE discovery call!