Is Lithgow a hard place to buy a house?
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A recent article through realestate.com.au suggested Lithgow to be one of the hardest suburbs to find a house to rent or buy nation-wide. The city was listed as number eight in the top 10.
The Lithgow Mercury sat down with LJ Hooker Lithgow principal Jamie Giokaris to get some clarity on the housing crisis affecting our community.
Mr Giokaris said it wasn't just because of people coming in from metropolitan areas investing in Lithgow's housing, but rather a combination of catalysts that have stopped the Lithgow market operating normally.
He said it was a number of factors from COVID lockdowns, combined with high employment rates and people wanting a tree change to a lack of vacant land.
COVID lockdown on potential sellers
Mr Giokaris said during lockdown and Winter, people decided it wasn't the right time to sell their house.
"Potential sellers sat back and waited to see what would happen but at the same time on the other side of the coin, our housing inquiry went through the roof," he said.
He said inquiries almost doubled with people looking to relocate out of the city and get into the investment market.
"People decided it was time to bite the bullet and buy their first home because of the rental shortage as well.
"It forced a lot of first time buyers hand to say it's time to buy a house, so all of these factors sort of collided," he said.
Mr Giokaris has been in the business for 29 years and said he went into Spring, 2021 without any stock level in the market.
"It's the lowest stock level I've ever seen in the market in Lithgow," he said.
He said it went from most normal marketplaces of having 150 to 200 listings in the market at any one time, to under 10 listings in the market for the last three months.
"Those listings are coming in and coming out. So there's still properties selling but obviously it's heavy competition so we're seeing auctions and best and final offer processes," he said.
Mr Giokaris said the median house prices have jumped during this lockdown phase from $340,000 to $400,000.
"The median now has a four in front of it, but in comparison to other areas it's lower than the median in Bathurst, Orange and Mudgee and other regional locations even further afield," he said.
"So it's still an affordability decision and for a lot of people it's a financial decision."
Lack of vacant land
The lack of vacant land at the top of the market has also added to housing pressure in Lithgow, Mr Giokaris said.
High income owners and aspirational buyers had nowhere to go in Lithgow especially in the last four months with a shortage of new residential land releases and no land for sale.
"Those people that own a $650 or $750,000 house that would otherwise say it's time to move on and buy a block of land, didn't do that, which means they didn't list their house for sale, which meant the person at the $350/$400,000 level that was going to buy their house had nothing to look at," he said.
"There's actually a massive bottleneck in terms of ability to move, there's no assurity at the other end of the transaction. You can't buy a better house than your $750,000 because it doesn't exist."
Recently residential lots were listed for sale at Marrangaroo through a private real estate. Land sizes range from 1000 m2+ (quarter acre) to 2000 m2+ (half acre) with an average price range from $520,000 to $650,000.
Mr Giokaris said the prices were significantly higher than what you would normally pay for a block of land in Lithgow, which would be around the $300,000 mark.
"I guess they're testing the market to see what market might exist for someone coming out of the city to buy what is a very desirable location," he said.
"So they may well be responsible for changing up the market forever if it succeeds. If it doesn't, then obviously the market will speak in terms of whether they're prepared to jump or not and what other land might come in the market."
He said the average size block of land in Lithgow has gone up around $70/$80,000 in the last 12 months and land supply had been below a very increased demand.
Fortunately Lithgow is expected to see another stage of Hillcrest Estate released and there is land in the pipeline for South Bowenfels.
"There's a quite a bit of DA approved land coming to the market, so there's going to be that supply which will help meet the demand that's there," Mr Giokaris said.
Rental vacancy
From October 2020 to October 2021 the Lithgow housing market saw a 20 per cent increase in prices. Almost during all of that time, the rental vacancy rate was at less than two per cent and more recently has been at zero per cent vacancy.
Mr Giokaris said short term rentals in particular were very scarce.
"The motels, Airbnb, the service departments... all that type of workers, contractors style accommodation, hotels - they're all at 100 per cent occupancy," he said.
He said rentals had jumped from a minimum of around $200/220 a week up towards $300 a week.
"The rents have jumped somewhere around $60 to $80 a week, especially during COVID," he said.
Mr Giokaris said during the pandemic, people who brought stability to the rental market, weren't able to move postcodes as a consequence of lockdown.
"We were doing somewhere around 30 lettings a week leading up to COVID and then during COVID and post lockdown we're back to seeing far less vacancy and only doing 10 lettings a month as opposed to 30," he said.
"That's due to a lack of people obviously vacating and moving, there's a lot of different factors but I guess a lot of economic and a lot of social and then COVID thrown in there, it has really impacted a lot of people."
With lack of rental vacancy and increased prices, Mr Giokaris said people who were on fixed incomes such as pensioners and particularly single people have been locked out of the market in terms of affordability.
"Rentals have jumped from a minimum of around $200/220 a week up towards $300 a week, that's a lot out of a pension every week even with rental assistance and one and two bedroom apartments are fully leased," he said.
"There's no one developing any new sort of affordable housing models in our area and regionally. There's hardly any affordable housing being constructed."
Investing in Lithgow and the tree change
Mr Giokaris said it was a generalisation to say people were moving out of the city in droves.
"They're not really. A lot of people have the concept in their mind but whether they actually transact, is the key of course," he said.
But he said there was still plenty of city investment in the Lithgow area.
"And that is simply because the return is excellent, the rental returns are high, the rental risk to the investor is very low because the market is sitting at 100 per cent occupancy," he said.
"And they're at the point where they could afford to buy a couple of homes for the same price. They could buy two freestanding homes here for the cost of an apartment in the city."
He said the tree change was still desirable with a trend of people still moving west and looking at a long term housing option and affordability.
"There are a lot of people wanting to buy rural property for when they retire, so areas like Hartley have seen an influx of that sort of buyer and then further west towards Mudgee, Capertee, Running Stream and Portland.
"And in terms of affordability, a young couple can buy a house here for $400/500,000 rather than one point something," he said.
Mr Giokaris said there had also been an increase in trends of people moving out of the city with the ability to work from home.
He said the combination of these different market dynamics were the reasons behind the lack of occupancy in the buying and rental market.
"Our window displays are full of solds, there's still turnover but it's very slow," he said.
"We're probably 60 per cent down in terms of numbers of listings, compared to what any other sort of normal marketplace would have."
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