With reports that property prices in some coastal towns bounced back faster than in Sydney last Spring, but have started to plateau, savvy investors may be looking at making that sea change they have been promising themselves sooner rather than later.
Property values across the Central Coast and Shellharbour local government areas rebounded almost 10 per cent from their low in early 2023, reports property analyst CoreLogic, reflecting stronger price growth than Sydney in recent months.
But figures are inconsistent and according to this report in the AFR, many “seachange” properties have seen significant drops in prices over the past two years. Add the possibility that interest rates may stop rising and could even fall and you could find bargains in coastal towns, before prices start to kick up again.
A lot of the new homes available for sale are apartments and that brings a whole new set of considerations for potential purchasers in any regional area. Just ask anyone who has gone out for dinner at 8pm in a small country town, only to find the restaurants and pub kitchens closed. They do things differently out there.
For a start, short-term holiday rentals are much more likely to be active on your doorstep in in NSW country or, especially, the coast.
In Greater Sydney there is a maximum limit of 180 nights a year so, for at least half the time your city neighbours are more likely to be long-term tenants than rambunctious families or rampaging party animals who’ve never heard of by-laws and wouldn’t care if they had.
There is no such limit elsewhere, apart from Byron Bay, Ballina, and around the Clarence Valley and Muswellbrook areas. However, strata schemes anywhere in NSW can pass by-laws forbidding short-term holiday lets, which is worth remembering if you are planning to Airbnb your property when you’re not there.
If your target block bans them, you have Buckley’s chance of changing the by-laws. It only takes 25 per cent of dissenting owners to stymie changes.
On the other hand, if you didn’t want to be near holiday lets, you’d face the same obstacles in any block that has a quarter of properties on short-term rentals.
If you do invest in a regional strata property expect to find that the professionals, and your new neighbours – many of whom might not have lived in strata before – could have a different idea of how things should work. In short, you might find a very different culture from what you are used to in cities or larger towns.
For instance, in the investment property that we bought on the South Coast, the strata managers announced at the first strata committee meeting that they usually did all the work and only consulted the committee every three to six months to bring us up to speed.
I got the strong feeling that this was par for the course in that area, but this may not work for you, especially if you’ve been actively involved in a strata scheme in the city.
Strata law is the same across the state and owners should tell strata managers what to do – not the other way round. However, that can be confronting for newbies who just want a responsible entity to run things so they don’t have to worry about them.
Finally, be aware of the tax implications of financing your holiday retreat by listing it on Airbnb while you’re not using it. The tax office will look at its availability, or lack thereof when you are there, and expect you to reduce any claimed offsets accordingly.
In regional strata, it seems, two things are unavoidable – Airbnb and taxes.
This article previously appeared in the Australian Financial Review.