Redhead NSW Property Investment

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## 2. Market Overview - Median house price: $1,873,624 - Median unit price: $749,416 - 1‑yr price growth: –1.4 % (price has slipped slightly over the past year) - 5‑yr CAGR: 10.8 % per year (strong long‑term upside) - 3‑yr growth forecast: 13.5 % per year (projected acceleration) - Days on market: *data not supplied*

Signal: - Sellers face a modest short‑term head‑wind because prices fell 1.4 % last year and buyer demand is not reflected in a rapid turnover (days‑on‑market figure missing). - Buyers can negotiate on price but should weigh the long‑term 10.8 % CAGR and the 13.5 % forecast when deciding whether to enter now or wait for a clearer price‑trend signal.

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## 3. Rental Market - Median weekly rent: $900 / wk - Gross rental yield: 2.5 % - Vacancy rate: *data not supplied* - Demand rating: *data not supplied*

What it means: - A 2.5 % gross yield is modest; investors need to ensure cash‑flow after financing costs. - Without a vacancy figure we cannot quantify rental risk, but the $900 weekly rent suggests a stable income stream for a well‑priced property.

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## 4. Short‑Term Rental (STR) Opportunity - STR nightly rate: *data not supplied* - STR occupancy: *data not supplied* - Estimated annual STR revenue: *cannot be calculated*

Conclusion: Because STR metrics are unavailable, we cannot model short‑term returns. With a known gross LTR yield of 2.5 %, the long‑term rental market currently offers the only quantifiable income path. Until STR data emerges, favour LTR.

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## 5. Infrastructure & Growth Drivers - Known projects, transport upgrades, major employers: *data not supplied*

Implication: Without specific infrastructure or employment data we cannot pinpoint a catalyst or constraint. The strong 5‑yr CAGR and 3‑yr forecast suggest underlying demand, but investors should monitor council releases and transport plans for future drivers.

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## 6. Bull Case Assume the 3‑yr growth forecast of 13.5 % per year materialises for houses:

\[ \text{Future median house price} = \$1,873,624 \times (1.135)^3 \approx \$2,483,000 \]

• Potential upside: ≈ $610,000 (about 32 % above today’s median).
• If the forecast holds, rental demand could tighten, pushing weekly rent above $900 and nudging the gross yield higher.

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## 7. Risks | Risk | Quantified element | Impact if realised | |------|-------------------|--------------------| | Vacancy risk | Vacancy rate not provided | Uncertainty around cash‑flow; a rise above 5 % could erode the 2.5 % yield. | | Rate‑sensitivity | Gross yield 2.5 % | A 1 % rise in mortgage rates would cut net yield to ~1.5 %, tightening cash‑flow. | | Supply pipeline | No data on new dwellings | If a large number of units enter the market, yields could fall further. | | Employment concentration | No data on major employers | Dependence on a single employer would amplify downside if that employer contracts. |

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## 8. The Play - Entry price range: - *Houses:* $1.80 M – $2.00 M (brackets the $1,873,624 median). - *Units:* $730 k – $770 k (around the $749,416 median).

• Minimum yield target: 3 % gross (above the current 2.5 % to provide a buffer for financing costs and potential vacancy).

• Watch signals:

• Recommended strategy:
• - Maintain a hold stance while the suburb delivers a solid 5‑yr CAGR (10.8 %).
• - Acquire only if you can negotiate a purchase price that lifts the gross yield to ≥ 3 % (e.g., a modest discount to the median).
• - Re‑evaluate quarterly against the watch signals; a significant price dip combined with stable rent could turn the position into a buy opportunity, whereas a sustained yield drop below 2 % would merit an avoid reassessment.