Ballina, Byron real estate in short supply due to floods, Covid

Over the past year, Ballina has soared above Sydney in terms of rental and property price growth. But new factors like the floods and interest rates could have a surprise effect.

North Coast real estate could soon see increased pressures as a result of flooding and interest rate rises, an industry expert predicts.

In the Ballina local government area the median price of a property has increased by 27 per cent over the past 12 months, above the 21 per cent seen in Greater Sydney, according to REA Group.

Rent growth has also been stronger, up 15 per cent in Ballina versus two per cent in Greater Sydney.

This and the changing face of real estate were all up for discussion when REINSW and its CEO met up with industry representatives and businesses in Ballina on Thursday.

CEO Tim McKibbin said a lot of the property increase could be attributed to the Covid sea-change which saw Sydney residents move north and work from home.

In Byron, growth went up by 37 per cent in 2020, higher than any other place in NSW, making it “incredibly difficult” to get in on the housing market or cope with inflated rental costs, Mr McKibben said.

However, floods and an interest rate hike of 0.5 per cent look set to make life even harder for prospective first home buyers.

“There is a defined amount of property for people to purchase. If there have been properties now not habitable - and won’t be, going forward - those properties are coming out of the pool that are available for purchase and rent,” Mr McKibben said.

“You’ve got the perfect storm, you’ve got increased demand and reduced supply.

“It puts pressure on prices and what is going to be really interesting to watch is what impact the increase in interest rates is going to have in the regional areas.”

Cody Holmes was just one homeowner whose West Ballina house was affected by the March 2022 floods. Picture: NCA NewsWire / Danielle Smith

Mr McKibben said Sydney had already seen an “instantaneous cooling” of the market due to the Reserve Bank announcement, but was unsure how regional NSW would take the blow.

“I think the regional markets are somewhat independent of the Sydney market, there are now different drivers in this market,” he said.

“Will the interest rate increases slow the demand?

“I think the answer will be yes, but to what extent.”

Streamline DAs, cut taxes

There is no clear cut answer on how to fix our region’s growing housing crisis, but Mr McKibben, said some of the solution relied on streamlined development applications within local governments.

“It is quite common for councils to take a long long time to process develop applications, and so that is a huge delay in getting property on the market,” he said.

Another kink in the supply chain for housing was the taxes put on property transactions from local, state and federal governments, Mr McKibben said.

“When we talk about affordability, I find it a completely disingenuous conversation and representation,” he said.

“The reason I say that is because all three levels of government inflate the price of property the consumer pays for new property by 40 per cent or more.

“You buy a million dollar property, wrapped up in that million dollar property is 400,000 dollars of tax and charges levied across all three levels of government.

“When they have conversations and say I’m worried about affordability, well to me, reducing that 40 per cent would be really valuable.”