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 the COVID peak and have not fully recovered yet. Will the recovery pick up speed in the second half of 2024? Join us today to explore Central Coast’s current property market conditions and outlook!

As of August 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 (1-2) 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 be improving, too. The unemployment rate is now under 3%, the lowest 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 slowly in Gosford and Wyong since late 2023, with both achieving around 5% annual growth.

The recovery is accompanied by a -12% 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 45% and 36% 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 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, although 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 city 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 1.5% to under 1.0% 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%. In the coming months, rental yields could improve as rents increase faster than prices (based on the currently higher rental pressure than price pressure).

Over the past decade, the rental prices of the two subregions have grown by 56% and 49%, respectively, both lower than the average growth rate of the top-populated regional cities, allowing Central Coast space for further rental growth in the medium term.

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 limits housing demand’s recovery. Therefore, we expect Central Coast to continue growing slowly in the coming 6 months until interest rate drops (likely to happen in early 2025) boost demand and push market pressure up. That being said, we do not see Central Coast experiencing a price surge anytime soon due to its relatively weak population growth and worsening affordability.
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!