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The north-eastern NSW city of Armidale, one of Australia's leading educational centres, has a population around 25,000, a district population of 38,000. The city's economy is driven by education, supported by the New England grazing industry.
Reflecting its long history as an administrative and educational centre, Armidale has a solid Victorian architectural core including many buildings originally built as town houses by wealthy regional squatters. This includes a number of buildings by Horbury Hunt, one of Australia's leading architects.
This Victorian core is surrounded by buildings in different styles from Federation through to Australian Modern reflecting the different stages in the city's development.
The city's tree lined streets reflect a conscious community beautification policy supported by a water supply capable of supplying four times the city's current population without water restrictions even in times of severe drought.
Historical Overview of Armidale Real Estate Market
Prior to 2001, the value of Armidale homes grew at a steady rate of around 5 per cent per annum. While a lower rate of price increase than Sydney, this lower growth was more than offset by higher rental returns. The combination of steady growth with high rental incomes made Armidale a very attractive investment proposition.
From 2001 our investor friends in Sydney and the coast suddenly discovered Armidale leading to faster price growth. As a consequence, lower price houses (less than $100,000) disappeared with the median house price increasing rapidly to $180,000 in 2004. Over 2004, a year in which Sydney recorded zero growth, Armidale experienced 14 per cent growth in house prices.
Structure of Armidale Residential Marketplace
Armidale's role as an educational and administrative centre means that the city has a substantial transient population. No less than 37 per cent of homes are rented, creating a substantial rental market place to underpin investment properties.
If we look at the structure of Armidale properties we find:
There are very substantial variations across all categories. Houses range from small weatherboard or fibro cottages cottages to substantial Victorian mansions to large modern homes. Flats or apartments range from small student flats to large modern townhouses.
This range is reflected in prices and rents.
House prices range from older style 1920s 3 bedroom cottages at $149,000 (sometimes less for smaller places) through to $350,000 for larger brick homes to $1.2 million for a prestigious Victorian mansion.
This price range is reflected in rentals ranging from $150 to over $400 per week. Some of the best gross rental returns are found in older houses targeting the student market place.
Units or flats range from the low hundreds through $185,000 for a modern 2 bedroom strata unit to $400,000 plus for a brand new apartment. Rents vary from $100 to $120 per week for a small one bedroom unit to $140 to $200 for a modern two bedroom unit to $200-$300 for a three bedroom unit. Some of the older weatherboard flats are still yielding 10-12 per cent gross.
Unlike Sydney where the sheer size of the place means that housing options in area tend to be limited, Armidale's compact structure means that a wide variety of investment options are included in a compact area.
This makes it easier to evaluate options. However, it is still important to seek advice from a local agent and look at the specific location of properties.
Other Real Estate Options
Since the 1980s prices for residential blocks has increased from around $25,000 for a quarter acre block to $85,000 to $125,000.
During that same period, Armidale's CBD has grown significantly. This is continuing, with a new Woolworths and Big W ($49 million) planned to commence shortly plus an upgrade ($79 million) of the K Mart Plaza in the centre of the CBD.
Generally, investors are looking for a 10 per cent gross return in the commercial area. Strata title shops have been popular over the last 5-10 years as most investors are attracted to manageable smaller scale investments.
Rentals for office space range from $150 to $200 per square metre. General retail space ranges from $250 to $450 per square metre, shopping centre space is around $550 per square metre.
Industrial land is available, with an average price around $120,000 for 1000 square metres.
Authorship
This analysis was prepared by Peter Hutchinson, Hutchinson & Harlow Real Estate Armidale, in August 2005 and is copyright Peter Hutchinson. However, it can be quoted or reproduced with due acknowledgment.
For further information contact Peter at psh@hhrealestate com.au