House prices to soar next decade
THE adage that real estate doubles in value every decade is set to push the median price for a house in Coffs Harbour to more than $700,000 by 2020.
That’s according to Australian Property Monitors (APM) which is forecasting local property values will grow by around eight per cent a year over the next 10 years.
According to APM, the median price for a Coffs Harbour house last year was $320,000.
In 2000 the median price was $138,000 and in 2005 it was $302,000. By 2020 it is predicted to be $706,000.
But while the long-term outlook is strong, APM forecasts that annual growth is expected to be only be a miserly one per cent over the next five years.
That is not a view shared by the sales principal from The Edge, Tim Bynon, who believes the projections are overly conservative.
“We’re finding prices for entry level and investment properties are up by five to 10 per cent over the past year already,” Mr Bynon said.
“We are starting to see more interest in mid range properties around the $500,000 mark which should translate into good growth prospects,” he said.
According to APM, Sawtell will continue to be a property hot spot with median house prices exceeding $1 million in 10 years time.
In Bellingen the median house price is predicted to be $877,508 in 2020.
In Toormina, the median price is forecast to be $692,000 and in Nambucca Heads it should be $590,820.
While the projections suggest the family home will continue to be a good nest egg, the problem of affordability is set to become an even bigger issue for first home buyers.
Mortgage broker Warren Sanger, from the Regional Finance Network, said while people already in the market will be able to trade up, newcomers and investors won’t find it so easy to get a foothold.
Mr Sanger said based on a 10 per cent deposit and no other financial commitments, a couple currently needs a combined income of at least $60,000 to buy a house at the median price of $320,000.
“At a median price of $706,000 and presuming no kids, no debt and a similar interest rate, a couple will need an income of around $121,000 in 2020,” Mr Sanger said.
“If they have a credit card debt of $500, they have to earn substantially more.
“It remains to be seen if wages grow to that level in that time but what worries me most will be the need for first home buyers to save around $70,000 just to have a 10 per cent deposit.”