Sydney

The Smartline Report – October Edition

The month in review: Sydney

By Herron Todd White
October 2016

After several years of strong growth in all segments, residential property in Sydney is currently experiencing a mixture of activity throughout the various pricing brackets.

Overall auction clearance rates were at 80.7% for the week ending 4 September 2016, slightly up on the previous week of 78.5%. While the clearance rate is up compared to the 12 months prior (73.1%) total auction numbers are down more than 30% from 1,075 to 720 (Source: Corelogic).

The total number of listings as at 4 September 2016 is 19,303, which is interestingly 1.3% up on the 12 months prior, however new listings at 6,522 are down 21.2% in this traditionally strong spring listing season (Source: Corelogic).

Private treaty median price for houses in Sydney currently sits at $860,000 and for units at $690,000 (Source: Corelogic), however the most popular price points understandably vary widely between regions. The eastern suburbs for example suggests that those paying in the $1.5 million to $2.5 million range will get a 2- to 4-bedroom semi or will pay $800,000 to $1.25 million for a 2- to 3-bedroom apartment.

Generally speaking the inner west will set you back from $1.2 million to $2 million for a dwelling with 2- to 4-bedrooms or $500,000 to $800,000 for an apartment with 1- or 2-bedrooms.

In the southern regions you will typically be looking at an older style house with 3- to 4-bedrooms in the most popular price bracket of $1 million to $1.5 million or a 2- to 3-bedroom unit in the range of $600,000 to $800,000.

These price points are not only the most popular due to being considered entry level for their respective areas and property types but simply due to the sheer volume of these styles of property. However it is not necessarily these most favoured price points in terms of transaction numbers that generate the most buyer enquiry and competition.

While not always generating the same amount of volume, it appears that the $2 to $3 million price bracket for houses and $1.5 to $3 million for apartments are in high demand currently across these Sydney metropolitan areas. While not necessarily accounting for the most in terms of transaction numbers, demand is currently
outstripping supply leading to continually strong sales results in these price brackets.

In the eastern suburbs a 3-bedroom terrace home at 3 Tasman Street, Bondi recently sold for $2.32 million. On the border of Tamarama, the renovated two level home with no parking sold after the first inspection.

Other examples are a semi-detached 4-bedroom dwelling on approximately 250 square metres with modern interiors and a deep garden in neighbouring Bronte at 20 Evans Street which achieved $2.67 million; and the ever popular Paddington delivered a strong result at 16 Dudley Street with an attached 2-bedroom, 1-bathroom terrace home on 115 square metres which sold at auction for $1.95 million.

Numerous examples also exist in the inner west suburb of Strathfield. Popular for its central location and proximity to schools and transport links, large modern homes on an average 600 square metre parcel now achieve in excess of $3 million. The recent offering of an architect designed 5-bedroom residence at 45  Highgate Street resulted in an auction result of $3.07 million.

Homes on larger parcels are extremely sought after for their development potential or for the opportunity to build the dream home on an oversized lot. At 39 Broughton Road an original 4-bedroom full brick residence sitting on 929 square metres with a north east facing rear yard sold via private treaty for $2.42 million.

Prominent Sutherland Shire agent John Schwarzer from Highland Property Agents has been experiencing the highest volumes of enquiry from buyers in the $2 to $3 million bracket looking for larger modern houses and oversized apartments with an average of between 35 and 45 buyer inspections per property each week. Buyers looking at large modern houses tend to be in their mid-30s to mid- 40s, while the down sizer market dominates the apartment market in this price bracket.

A recent example is a re-sale of a new apartment in the Breeze complex in Cronulla. 120 buyers inspected
the brand new 3-bedroom, 2-bathroom apartment on level 4 and boasting ocean glimpses which sold prior
to auction for $2.54 million.

At the opposite end of the spectrum off the plan apartment sales appear to have been affected by recent changes to the way foreign investors can finance their purchases. Local investors have also left the Sydney scene chasing more attractive returns and stronger prospects for capital appreciation in other states.

With many first time buyers priced out of the market over the past few years, the combination of investors
leaving the market and an abundance of new unit projects already underway and even more with approval, may re-open the door of opportunity to get into the Sydney market.

The south western Sydney property market has been very active in the past 12 to 24 months, most notably the developing new estates. While we have seen prices within each estate vary, the most active segment of these markets has been modern dwellings between $650,000 and $800,000. This sector of the market is characterised by established dwellings comprising of 3- to 4-bedroom homes with 2-bathrooms and a good level of fit-out.

Gregory Hills
Sold June: $689,000
4-bedroom, 2-bathroom home on 400 square metres
On the market for 39 days
Example (Source: RP Data)

Oran Park
Sold September: $740,000
4-bedroom, 2-bathroom home on 489 square metres
On the market for 49 days
Example (Source: RP Data)

The reason that this sector of the market is so active is affordability when compared to the greater Sydney market. Local agents have reported high competition between interested sub-groups which include first home buyers, upgraders and investors, combined with record low interest rates and developers controlling the level of supply of new stock.

On the opposite end of the spectrum are properties in the $1 million plus price bracket in this region. While sales indicate a gradual increase over the past 12 months, this sector of the market is typically not as active. This market is solely characterised by owner-occupiers looking for an executive style dwelling. Typically there is far less supply of these styles of homes as owners are buying these for a long term life style choice, however when they do become available, agents are able to move this stock on fairly quickly.

In the northern suburbs of Sydney a lack of quality stock has seen prices continue to improve. Although not at
the rates seen in previous years the $2 million to $4 million market continues to strengthen. The proximity to
transport, high quality schools and leafy well regarded suburbs are the large attractions for upsizing families.
Properties still achieving strong results have all the must have items ticked.

One price point or sector of the market that has slowed is the below average stock or dwellings with a variety
of issues, such as a busy road frontage, irregular shaped blocks or numerous building issues. These properties are not achieving the premiums they once enjoyed in the stronger market some 12 to 18 months ago when there was a level of panic in the market. This readjustment occurred in the later part of 2015 and early 2016 and some vendors of below average properties are still trying to push for strong prices resulting in a property sitting on the market for a long time and being discounted to meet the market. It appears the panic has well and truly disappeared from the market with buyers unwilling to pay overs for an inferior product.

The off the plan unit market in the north and west is also showing signs of struggle with many valuations unable to match the individual purchase price achieved in the stronger market of 2015. Examples
of this are in Parramatta, Wentworth Point and also on the north shore in St Leonards. Whilst these areas have a large proportion of units being built we have also experienced this across the wider Sydney market.

Prestige market
Prestige residential property in Sydney is generally considered to represent those properties greater than $3 million. Prestige homes are scattered throughout the greater Sydney metropolitan area, with the highest concentrations in the eastern suburbs and eastern beaches, inner city and inner east, inner west and the lower and upper north shores.

The prestige market as a whole is currently dominated by a lack of supply, which is most keenly felt in traditional blue ribbon prestige areas such as the eastern suburbs and lower north shore.

As a result, transaction numbers remain somewhat subdued, although strong buyer demand for this limited available stock level is translating into bullish prices being achieved in some instances.

With an overall strengthening in the prestige dwelling market combined with limited stock levels, the prestige apartment market has shown recent signs of strong price growth primarily driven by the empty nester buyers, who previously struggled to realise adequate selling prices as a flow on from the impact of the GFC.
While the prestige market is not stimulated as strongly by the impact of interest rate fluctuations, we do consider that savvy participants closely watch the performance of global and local markets and remain concerned about the under performing and fluctuating equities market and moderate performance of the local economy. Should stock levels increase, we consider that buoyant market conditions currently enjoyed in the prestige space may weaken.

www.smartline.com.au

Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2016. Australian Credit Licence Number 385325

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