The month in review: Sydney
By Herron Todd White
The Sydney property market is still in a growth phase and shows no signs of stopping in the short term with strong demand and limited supply. Recent government initiatives announced to release more stock are welcome news but will not help those looking for a property this weekend.
From a Sydney metropolitan point of view, finding properties for $500,000 or less is becoming more and more of a challenge each year. Traditionally seen as the entry level for many first home buyers it is also an affordable price point for the mum and dad investor looking at capitalising on equity in the family home. With an average increase of over 15% in property prices over the past twelve months and access for many to cheap money with interest rates at record lows, it is no wonder that finding properties under this price point is becoming difficult.
We have taken the topic to the team and asked a number of valuers active in different sections of the market what they would do personally with the price limit.
Within the inner Sydney suburbs, a studio unit is close to becoming the only option. Areas such as Potts Point and Darlinghurst still have studios available but you are purchasing a studio with a living area of between 15 and 30 square metres (to put that into perspective, a typical double garage is 36 square metres). Given the minimum size requirements of many lenders, this market is not available to everyone and generally restricts owner occupier interest. Predominantly we see investor activity in this part of the market with the typical tenant on short six month leases as they explore options and take advantage of the café lifestyle of the area. Once you get above $500,000 in these areas you can secure a small one bedroom unit which has broader market and tenant appeal and may have been under this threshold this time last year.
We also see a sprinkling of studio and very small one bedroom units in the inner west suburbs. There is restricted stock of this property type in these areas and we typically don’t see the same capital growth. This is mainly due to the uniqueness of these properties and that they are not necessarily appealing to the everyday purchaser. In saying that, rental returns seem to be comparably high and again investor interest is the most likely for this property type.
A recent example would be a fully renovated, one bedroom unit in an 1890 converted building in Potts Point that agents advise sold for $462,500 in June.
The southern suburb of Kirrawee still represents good value at the $500,000 price point. Older style, circa 1970s style, 2-bedroom units are available under and around $500,000. Kirrawee is only one train stop from the hub of Sutherland, five stops from Cronulla and positioned adjacent to the Princes Highway. It has a small retail strip as well as an industrial presence but the suburb mainly consists of houses. Units are situated within close proximity of the train station and shops. The suburb also has a well regarded public high school, Kirrawee High. Kirrawee is also earmarked for development in the near future with the anticipated Brick Pit site which has been approved for some 700 residential units along with retail space.
At $500,000 options are not generally available in the traditional blue ribbon suburbs of the lower north shore or northern beaches. Further out in adjoining suburbs opportunities are there and can be typically found in older 1960s or 1970s 1-bedroom, 1-bathroom units. Some locations to investigate include Meadowbank, Dee Why, Hornsby or Lane Cove (very just). These areas have recent sales for mid to high $400,000s and there is opportunity for capital growth with renovations and upgrades. They are generally more affordable given the overall size of the property to start with. All have good transport links and are popular with both tenants and owneroccupiers.
The lower northern Sydney suburbs such as Milsons Point could provide opportunities for company title properties at this price point however caution needs to be exercised with both arranging finance (some lenders have restrictions) and also with the by-laws of the parent company that owns the land. When buying company title property you are buying shares in the company that owns the parcel and the right to occupy the space that the shares relate to. Some restrictions can include no tenants until ownership for greater than three years, so always check the fine print first.
SOUTH WEST SYDNEY
The south west Sydney property market still offers a variety of opportunities to enter the market for under $500,000 for potential purchasers who are looking to either buy a home or unit for investment or to accommodate their family.
Units: Fairfield Council: The sub $500,000 class is predominantly made up of 2000s and older style 2-bedroom units. As an example a 1970s built, 2-bedroom, 1-bathroom unit on Hamilton Road sold for $390,000 in May.
Liverpool Council: The sub $500,000 class is predominantly made up of 2000s and older style 2-bedroom units. A major regional centre with renowned hospital and other services, central Liverpool is a strong market. A 2000s built, 2-bedroom, 1-bathroom unit on Bathurst Street sold for $430,500 in April.
Dwellings: Suburbs such as Ashcroft, Busby, Miller and Cartwright are within the Liverpool LGA. For sub $500,000 you can still purchase a standard circa 1950s or 1960s single level dwelling with 3-bedrooms and 1-bathroom on a 500 to 600 square metre parcel. Capital appreciation with renovations would follow.
As an example, a 1960s built, single level, 3-bedroom, 1-bathroom clad dwelling on 510 square metres with an upgraded kitchen and bathroom sold in Ashcroft for $450,000 in April 2015.
Further south the regional centre of Campbelltown includes Eschol Park, Glenfield and Ingleburn. With improvements to the road and rail networks within the region and the employment centres along the M7 motorway and the proposed Badgerys Creek redevelopment, the 55 kilometre distance to the CBD is no longer the same deterrent. For sub $500,000 you can still purchase a conventional style, single level, 1970s or 1980s 3- or 4-bedroom home on 550 to 650 square metres . A typical example is a 1980s built, single level, 3-bedroom, 2-bathroom brick dwelling on 537 square metres with a dated kitchen and bathroom which sold in Ingleburn for $495,000 in April 2015.
CENTRAL WESTERN SYDNEY
Parramatta has been redefined in recent years and options at $500,000 are limited as are options in the immediate adjoining areas with typical new release, multi-unit developments commencing at $700,000 plus for a 2-bedroom, 2-bathroom property. Dwellings are certainly out of reach with new record highs over $1 million being broken constantly in 2015.
This alone shows the popularity of the metropolitan area’s second city with the commercial zone and transport interchange major attractions for those living in the area.
There are opportunities to purchase within the Central West LGA’s of Parramatta, Holroyd and Auburn but is typically a circa 1960s to early 1980s, 2-bedroom, 1- bathroom unit within a walk up complex predominantly priced in the $450,000 to $500,000 range. These units all range between 60 and 75 square metres with single car space. Suburbs such as Harris Park, Granville, Rosehill, North Parramatta, Merrylands and Lidcombe are worth investigating. Being typically located within close proximity of transport, shops and schools gives them broad market appeal to owners and tenants.
Some examples would include the following:
A 1960s, newly renovated 1-bedroom, 1-bathroom unit in Granville at $350,000 in May.
Dated, 2-bedroom, 1-bathroom unit in North Parramatta in a two storey 1970s block at $435,000 in April.
A 1970s, two level building in Harris Park with some updates offering 2-bedrooms and 1-bathroom sold for $461,000 in April.