Geographically, Morisset district has distinct advantages. The town is located near Australia’s biggest salt-water lake, Lake Macquarie. It is a short distance away from the Wattagan Mountains and just half-an-hour’s drive to some of the most pristine beaches in the state.

The town also enjoys a fully serviced railway station and it is situated just one kilometre from a direct freeway interchange. During non-peak hour times, you can drive to the northern suburbs of Sydney within 45 minutes and to Newcastle in just over half

an hour.

According to Graeme Hooper, economic development manager for the Lake Macquarie Council, Morisset is recognised as an emerging economic centre for the Lower Hunter region. It has been identified as one of the three key hot spots in terms of population growth and commercial development because of its accessibility to the commercial districts of Sydney, Newcastle, the Central Coast and Hunter Valley.

This hot spot status has made Morisset and the surrounding suburbs of Bonnells Bay, Cooranbong and Morisset Park very attractive targets for astute property developers.

The master plan

A billion-dollar housing boom is set to occur in this quaint little district of about 20,000 people. According to Hooper, at least 8,000 new housing allocations are planned for Morisset district over the next few years in anticipation of a huge jump in population growth in the area. The council expects population to more than double to 50,000 over the next decade.

Some of the big projects already under way include the re-zoning of the inner core of Morisset to allow for $360m in medium density housing. The new development, which is owned by the Koompahtoo Group, is scoped for about 1,800 new houses.

The picturesque Morisset Peninsula will also undergo significant housing expansion. The council has approved a re-zoning plan for a $90m housing subdivision in the sought-after Bonnells Bay area by Johnson Property Group. This project will supply 200 new houses. The property developer is also behind another $90m subdivision on the St John of God site at Morisset Park, which is expected to create 200 new homes.

Cooranbong, a neighbouring suburb, is also set for a massive transformation. The town’s airport, which is owned by the Seventh Day Adventist Church, has been approved for redevelopment. The third project handled by Johnson Property Group is expected to yield about 2,500 new houses. Another re-zoning process, which is expected to generate around 300 new dwellings, is also underway in the outskirts of this predominantly Seventh Day Adventist town.

Commercial development

The industrial and commercial sector is also getting a substantial upgrade. Already, big retailers like Coles and Woolworths have staked their claim in the town centre in anticipation of the looming economic boom.

“The amount of retail spaces in Morisset is going to double over the next couple of years. With Coles and Woolworths coming into town, there will be additional business shops as a part of the redevelopment,” says Hooper. Another re-zoning process of around 65 hectares of industrial land, just off the freeway towards Morisset, is in progress, according to Hooper.

The council has also approved a $7m shopping centre extension in Bonnells Bay to allow for a fully serviced supermarket and a large medical centre.

Residential vs commercial

Like many areas around NSW, the property market in Morisset went through a dizzying high five years ago. As the property market softens across the state, property prices around the area have also dropped significantly. According to PropertyValue, a subsidiary of Baycorp Advantage, house capital growth in Morisset and surrounding suburbs has fallen between 8% and 20% over the last 12 months, which has given rise to more attractive and affordable property prices.

With prices as low as $95,000 for a basic block of land, first homebuyers have been snapping up bargains around the area, says Debbie Worthington, owner and manager of Mortgage Choice in Morisset. “There has been a huge pick up in mortgages in the last five years. I have had my biggest four months ever. Our loans are mostly owner-occupied first homebuyers and a smaller portion are investors,” she says.

As house prices fall to a more realistic level, this is an opportune time for investors to grab a slice of the next big thing, according to Ben Lawson, proprietor of Raine and Horne Morisset. “Property prices have certainly dropped in our area. You are much better off buying now than you were two years ago,” he says.

Residential properties

According to David Wood, sales manager at Ray White Morisset, you can pick up a three-bedroom brick house, with single garage and two bathrooms in a 500m² block of land, walking distance to town for $240,000. “You can easily rent this place for $250 a week. For me that is really good value and well below replacement cost, if I were to sell and buy again. Anything around Morisset town would always be easy to rent and the rental right through the area is very good,” he says.

Another suburb worth considering if you are looking for good, steady rental yield, is the nearby suburb of Cooranbong where a large college and a sprawling Sanitarium factory ensure a solid demand for accommodation.

“If you want a place where you can just buy it, put some tenants in and forget about it, you can get brand new houses at Cooranbong for about $300,000. This will give you a very good rental return of about $300 per week. You get good appreciation from the home, it’s a solid negatively geared investment for people with high income who want to gear a bit of their tax,” says Lawson.

Even the cliquey Bonnells Bay offers good value for money. For investors wanting to maximise capital gains, waterfront property is where you want to park your money, in Lawson’s opinion. “You can still buy absolute waterfront properties for $575,000 in Bonnells Bay, that’s a three-bedroom, cute little holiday house and north-facing. To me that’s fantastic investment, something you buy and lock away for 10 or 15 years and watch it grow,” he says.

In fact, even non-waterfront properties are worth considering in Bonnells Bay. It is the only suburb in this area that bucked the overall slowdown in house prices. While the rest of the surrounding areas languished over the past year, house capital growth climbed 4% in this suburb. PropertyValue is forecasting capital growth of 16% over the next 12 months, and while the median house price in Bonnells Bay is currently at around $387,000, the valuers say this is expected to jump to $742,000 in five years’ time.

The outlook for the other suburbs that make up the postcode 2264 is also promising. PropertyValue is predicting a solid capital growth of 7–17% in the next 12 months.

Commercial and industrial properties

If you’re looking for higher return on your investment, Wood says you may want to consider commercial and industrial properties. “Unlike residential property where it will be negatively geared, when you buy an industrial or commercial property and put a tenant there, it will have positive cash flow. Rents for commercial properties in this area range from $90 to $100 per square metre. This translates to a rental return of up to 9%.”

However, these properties can be cyclical and the downtime can be longer compared to residential properties. “A lot of people feel uncomfortable with commercial and industrial investment because the lead time is a lot longer and the property could sit there for six months before you get a tenant. Some people can’t afford that for an investment. “However, the investment return is a lot higher in percentage terms. There has been very good capital growth in that area. A block of land sold at $70,000 in 1998 is now worth $320,000. This is the type of growth that has taken place in the last eight years and you will see a continued upswing in value over the next couple of years,” predicts Wood.

The industrial area of Morisset currently features a weekend Mega Market, Power Barn, Mitre 10 and a host of other businesses. “Nine months ago we had about 45 properties around the market, now we’re down to about 10. Fewer stocks are coming into the market due to higher building cost,” says Wood.

Raine and Horne’s Ben Lawson also remains highly optimistic about the town’s economic prospects as he continues to invest his own money in Morisset district properties. “Many people have invested a lot of money in this area because of its geographical location. We’re a short hop away from Hornsby, we have a good lifestyle and it’s a good area to live in,” he says.

Case study: David Simpson and Collene Shields

David Simpson and his partner Collene Shields had been searching for another investment property to add to their two existing properties in the area when they came across a bargain in Cooranbong. For just $205,000, the couple were able to buy an 830m² block of land with three buildings already in it: a one-bedroom granny flat, a derelict two-bedroom house and a garage that is converted into office space.

“The granny flat, which is separate from the house, is in relatively good condition, but the house is not. Somebody started renovating it a few years ago and walked away from the property. The whole house has been neglected and has been empty for more than four years. Nobody wants it, but it provided us the opportunity to maximise the capital gain by doing a bit of work,” says David.

The property is quite close to Cooranbong’s Avondale College so David and Collene are turning the property into a little commune of three separate student dwellings. They worked out that they can get at least $500 per week in rent when the three structures are up and running.

“The biggest market here for rental property is the Avondale College, as many students require a place to live. We expect to rent the granny flat in the next two weeks, the house in the next month and the last one probably in the next three to four months,” says David.

Looking at it from an investor’s point of view, David believes that bargains like these still exist in the area. “There are opportunities out there. Because there are no capital gains at the moment, you have to find properties where there are opportunities to convert something that is perceived to be worth little, but is actually worth a lot more. However, notwithstanding the way the market is, this is a good place for investment. With all the planned development, the whole area is going to boom. The town is on the edge of a huge expansion.”