Terrigal NSW Property Investment

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## 2. Market Overview - Median house price: $1,625,000 - Median unit price: $1,280,098 - 1‑year price growth: ‑6.3 % (price correction) - 5‑year CAGR: 10.0 % / yr (strong long‑term trend) - 3‑year growth forecast: 12.2 % (expected acceleration) - Days on market: *data not provided*

Signal: The recent 6.3 % dip gives buyers a price‑discount entry point, while the 10 % 5‑yr CAGR and 12.2 % 3‑yr forecast suggest sellers can expect price appreciation to resume soon. The market is currently tilted slightly in favour of buyers looking for value, but the forward‑looking growth outlook favours sellers who can hold for the next 2–3 years.

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## 3. Rental Market - Median weekly rent: $895 / wk - Gross rental yield: 2.9 % - Vacancy rate: *data not provided* - Demand rating: *data not provided*

Implication: A 2.9 % yield is modest for a capital‑growth suburb. Investors should view rental income as a secondary benefit to capital appreciation. If vacancy remains low (as is typical for coastal Terrigal), the cash‑flow profile improves; however, the low yield makes the investment sensitive to interest‑rate changes.

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

Conclusion: With no STR data supplied, we cannot quantify the STR upside. Given the modest long‑term yield, investors should compare any STR projections they can source against the 2.9 % LTR yield before deciding which strategy is superior.

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

Interpretation: The strong 5‑yr CAGR and 12.2 % 3‑yr forecast imply underlying demand drivers—likely tourism, lifestyle appeal, and regional infrastructure—but specific projects cannot be cited from the supplied data.

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## 6. Bull Case Assume the 3‑year forecast of 12.2 % materialises and rental demand stays stable.

*Capital gain on a house:* $1,825,000 – $1,625,000 = $200,000 (≈ 12.3 % total gain over three years). If an investor purchases at the median price and holds for three years, the upside could be roughly $200k in capital plus continued rental cash flow.

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## 7. Risks | Risk | Quantified Element | Impact | |------|--------------------|--------| | Price correction | 1‑yr growth ‑6.3 % | Short‑term capital loss if sold within 12 months. | | Yield sensitivity | Gross yield 2.9 % | Low buffer against rising interest rates; cash‑flow may turn negative if rates climb >2 % above current loan cost. | | Vacancy uncertainty | Vacancy rate not provided | If vacancy spikes above 5 %, rental income could fall sharply, further eroding the thin yield. | | Supply pipeline | No data on new dwellings | A surge in new builds could increase competition and dampen price growth. | | Economic/ tourism shock | No single‑employer data, but Terrigal relies heavily on tourism | A downturn in visitor numbers could reduce both short‑term and long‑term demand. |

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## 8. The Play - Entry range: Target purchases around the current medians – $1.6 m–$1.7 m for houses and $1.25 m–$1.35 m for units. - Minimum yield to target: Aim for ≥ 3.0 % gross yield (slightly above the current 2.9 % to provide a safety margin). - Watch signals: 1. Quarterly price movement – a reversal from the –6.3 % dip to positive growth. 2. Interest‑rate trajectory – any rise that pushes mortgage costs above the 2.9 % yield. 3. Vacancy data releases – a rise above 5 % would flag cash‑flow pressure. 4. New development approvals – a large pipeline could temper price expectations. - Recommended strategy: 1. Buy and hold for 3–5 years to capture the forecast 12.2 % growth. 2. Prioritise properties with strong rental histories or the ability to convert to short‑term rentals (if STR data later supports higher returns). 3. Use a modest loan‑to‑value (≤ 70 %) to keep debt service below the 2.9 % yield, preserving cash flow if rates rise.

*Bottom line:* Terrigal’s long‑term growth fundamentals (10 % 5‑yr CAGR, 12.2 % 3‑yr forecast) outweigh the current modest yield and short‑term price dip, making it a Buy for investors focused on capital appreciation with a secondary rental income stream.