Narooma NSW Property Investment

## 1. Investment Verdict Hold – the 3.5% gross rental yield is the key figure that underpins the recommendation. It signals modest cash‑flow potential while the market still corrects from a 7.6% price dip over the past 12 months.

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## 2. Market Overview - Median house price: $851,161 - Median unit price: $536,225 - 1‑yr price growth: ‑7.6% (price correction) - 5‑yr CAGR: 11.1% per annum (long‑term upside) - 3‑yr growth forecast: 13.5% (expected rebound) - Days on market: *Data not provided*

Signal: Sellers are feeling pressure after the recent 7.6% decline, while buyers can negotiate better terms. The strong 5‑yr CAGR and 13.5% 3‑yr forecast suggest the market is likely to recover, favouring investors who can hold through the dip.

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## 3. Rental Market - Median weekly rent: $580 / wk - Gross rental yield: 3.5% - Vacancy rate: *Data not provided* - Demand rating: *Data not provided*

Interpretation: A 3.5% yield is modest but stable, indicating that rental income can cover a portion of financing costs but will not generate high cash flow. Without vacancy data we cannot gauge the tightness of the market, but the yield suggests a balanced supply‑demand environment.

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## 4. Short‑Term Rental Opportunity - STR nightly rate: *Data not provided* - STR occupancy: *Data not provided* - Estimated annual STR revenue: *Data not provided*

Conclusion: Because no STR metrics are supplied, we cannot quantify the short‑term rental upside. With a solid long‑term yield of 3.5%, LTR remains the safer default until STR data becomes available.

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## 5. Infrastructure & Growth Drivers - Known projects / transport / employment base: *Data not provided*

Impact: The absence of specific infrastructure or employment information limits our ability to identify external demand drivers. The 5‑yr CAGR of 11.1% implies that underlying factors (e.g., lifestyle appeal, tourism) are already supporting growth, but we cannot point to concrete projects.

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## 6. Bull Case If the 3‑yr growth forecast of 13.5% materialises and the 5‑yr CAGR of 11.1% continues:

• House price upside: $851,161 × 1.135 ≈ $966,419 (≈ $115k gain)
• Unit price upside: $536,225 × 1.135 ≈ $608,610 (≈ $72k gain)

Assuming rent stays at $580 / wk, the gross yield would improve to roughly 4.0% on the higher price, enhancing cash‑flow prospects.

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## 7. Risks | Risk | Quantified Concern | |------|--------------------| | Price correction | 1‑yr decline of ‑7.6% could continue if market sentiment worsens. | | Yield sensitivity | Gross yield of 3.5% leaves little margin if interest rates rise above current loan costs. | | Vacancy uncertainty | No vacancy data – a rise above 5% would erode cash flow. | | Supply pipeline | No data on new builds; an unexpected influx could push yields lower. | | Employment concentration | No employment data – reliance on tourism or a single employer could amplify downturns. |

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## 8. The Play - Entry range: Target houses around $851,000 and units around $536,000. Look for discounts that bring the price below the 1‑yr decline level (≈ $785,000 for houses). - Minimum yield target: ≥ 3.5% gross (ideally 4%+ after any price discount). - Watch signals: 1. Confirmation of the 13.5% 3‑yr growth forecast in quarterly price reports. 2. Emerging vacancy data – a sustained vacancy < 5% supports the hold case. 3. Any announced infrastructure or tourism projects that could lift demand. - Recommended strategy: Acquire a property at a price that improves the gross yield above 3.5%, hold for 3–5 years to capture the projected 13.5% price rebound, and monitor rental market data to decide whether to pivot to short‑term rentals if occupancy and nightly rates become favourable.