Sydney October 2017

The month in review: Sydney

By Herron Todd White
October 2017

Traditional housing styles in Sydney vary substantially depending on the era a neighbourhood was developed and where they are located in relation to the CBD and other major centres. In general, parcel sizes tend to increase as you move further away from the CBD and can vary from inner city parcels as small as 50 square metres to accommodate terrace housing through to large acreages on Sydney’s outskirts. The great Australian dream of having a house on a quarter acre block appears to be a thing of the past as land owners look to capitalise on the development potential these sites now have and purchasers continue to demand more affordable housing options.

As urban sprawl continues westward, we are able to look back at the housing styles and how they are shaping the future. Housing options such as dual key units and housing on lots of less than 300 square metres often associated with inner city living are now becoming popular in the outer suburbs of Sydney.

Sydney Inner Ring Property Review

This section of Sydney has always been known for more condensed housing options with high density living a requirement in the CBD and fringe suburbs. Despite this, housing options continue to evolve as home owners and developers look at new styles of accommodation.

There has been an increase in the number of dual key units being constructed, particularly in areas close to the CBD. The Central Park development in the suburb of Chippendale has a relatively high percentage of these dual key style units. The most prominent design in Central Park is a common entry door with foyer and then two separate areas with their own doors, usually known as Unit A and Unit B. Typically one of the units will comprise one bedroom, living and dining area, kitchen, bathroom and laundry while the other side of the unit typically comprises studio style accommodation with kitchen, bathroom and laundry. This unit design mainly attracts investors due to the premium yield that can be achieved, however it also poses an opportunity for small families wanting dual occupancy arrangements.

Studio style accommodation conjures up thoughts of shoebox units in the inner city where you are unable to swing a cat. Over recent years though, we have seen a change in the design of studio units and also an increase in the number being built. We no longer see studio units just in the in the inner city, but in city fringe suburbs such as Waterloo, Zetland, Rosebery and Mascot. Studio apartments in these areas are often called partitioned studios, having a separated bedroom area, although still partly open to the main living room. These units are typically larger than a traditional studio and provide a far more appealing product. Often these partitioned studios are built by the developer to conform with council or development requirements.

Although there has been a definite increase in high density unit style living in inner Sydney, it appears that families may still not be sold on the idea. A recent article in The Australian Business Review discussed one of Harry Triguboff’s rare mistakes when it came to 3-bedroom units. Triguboff increased the number of 3-bedroom units within his developments on the assumption that families would increasingly demand this style of living as houses became unaffordable in suburbs close to the city. It appears though that this predicted trend towards families living in unit style accommodation was not the reality, with this demographic preferring to move to a suburb further from the city where they could afford a house. The consequence has been that these 3-bedroom units have struggled to sell and when they have sold, haven’t achieved the expected sale prices. This trend may change in the future, but the majority of the market doesn’t seem to be quite ready for family unit living just yet.

sydney inner suburbs  Property Review oct 2017

surry hills  Property Review oct 2017

Warehouse conversions are still in full swing within the inner suburbs of Sydney. Although not considered to be a recent trend, this type of development is still proving popular with buyers. Moving away from your more traditional modern style complexes, warehouse conversions have the unique features buyers are looking for such as high ceilings, exposed beams, windows and in addition the feel of living somewhere that has some history. Inner suburbs such as Surry Hills, Darlinghurst and Redfern are popular suburbs for these types of redevelopments. A recent warehouse conversion development at 119 Kippax Street, Surry Hills is nearing completion with the majority of units selling off the plan in 2015. More recently 1-bedroom, 1-bathroom units with no parking have been selling for approximately $1.2 million.

 Property Review in Surry Hills

With limited land area in the inner suburbs of Sydney, self-contained studios above a detached garage are proving popular for use as additional accommodation for guests, a teenage retreat, rented out for extra income or an alternative to a granny flat. Suburbs such as Alexandria, Paddington, Queens Park and Bondi Junction have seen an increase of this type of product, with a number of properties in these locations having rear lane access.

Sydney Middle Ring Property Review

As the greater Sydney population continues to grow, the demand for people to be located closer to central city hubs has put an immense strain on the traditional Australian dream of buying a house with a back yard. Traditionally, the middle ring suburbs comprising areas such as St George, Sutherland Shire, Bankstown, Strathfield, Parramatta and Ryde have featured blocks of between 600 and 1,000 square metres, some even larger. The styles vary depending on when suburbs were developed from the early 1900s through to today. This results in a fusion of different designs and styles as seen below:

Designs and styles seem to have evolved more in the past ten to 15 years than ever before. In addition to new subdivisions, with parent parcel sizes sometimes averaging less than 600 square metres, people appear to be more and more accepting of close quarters living with duplex and unit developments springing up at an increasing rate.

Despite increasingly smaller of blocks of land, newer freestanding homes being constructed seem to be getting larger. When a new dwelling is constructed, 350 to 400 square metres of living area is not uncommon and these are often replacing houses built more than half a century ago which had enjoyed only 100 to 150 square metres of living area. Houses of this size can offer 5- to 7-bedrooms all with en suites, possibly suggesting that multi-generational living is on the rise. A large two storey 2013 built house in Hurstville at 62 Barnards Avenue which sold in September 2017 for $2.020 million had 6-bedrooms and 4-bathrooms, including a bedroom and bathroom on the ground floor, along with multiple living areas, a design suited to housing an extended family.

hurstville Property Review oct 2017

Similarly, granny flats are another example of multi-generational living with an ever increasing percentage of adults remaining at the family residence until such time as they are ready and able to venture out into mortgage land on their own.

Either way, indoor/outdoor living is an integral part of most designs with a focus on features such as outdoor kitchens, bars, speakers/media and heating and cooling options, often with very generous budgets.

Developers are currently active in central western Sydney, especially around Parramatta and Cumberland council areas. These developers, both small and large scale, are snapping up parcels of land that meet minimum planning requirements to build duplexes or amalgamating higher density zoned sites to make way for townhouse or unit developments along major transport hubs. Although the need for the traditional family to own their own home still and will continue to exist, the definition of home has expanded to include an array of designs: duplexes, triplexes, units, villas and townhouses; not only because they are more affordable options, but they are generally more centrally located to shops, amenities, schools and public transport.

In addition, the changing face of Parramatta is highlighted by the higher density complexes being constructed. We have seen the recent completion of Altitude by Meriton, which is currently the tallest residential tower to date for Parramatta topping out at 54 levels with 1-bedroom units starting from $592,000 without car parking and from $634,000 with a car space, clearly a sign of things to come for the area.

Sydney Outer Ring Property Review

The changing face of western Sydney housing is most prevalent in the new estates with smaller block sizes being released, more semi-detached housing and high rise residential developments being built in areas not traditionally known for high density living. We have also seen the rise of the granny flat for both owner-occupiers and investors.

Marsden Park is a new suburb in the Blacktown LGA with a recent release providing 3-bedroom, 2-bathroom house and land packages on 270 square metres of land for around $680,000. Traditionally, areas further away from Sydney’s CBD offered larger landholdings, but today these pocket sized blocks are becoming more common in western Sydney as housing densities increase and developers along with councils address affordability concerns by offering a product that appeals to entry level buyers.

We have also seen high density units and high rise developments being constructed in areas that have not seen this style of development for a number of years or ever. This is mostly due to surging values now making developments like these more feasible. Examples include Lord Sheffield Circuit in Penrith, located in the new Thornton precinct, providing new 1-bedroom units for circa $450,000 and in Blacktown an under construction 20 storey development at 29-31 Second Avenue offering 1-bedroom units from around $470,000.

Dual key units, often found close to the CBD, are now popping up in areas such as Liverpool where a 2-bedroom, 1-bathroom, plus studio and 1-bathroom unit at 420 Macquarie Street sold in July for $598,000.

Popular with investors in western Sydney is adding a granny flat to the rear yard. This not only adds value to their existing home but with the right set up is able to increase yield substantially with a dual income. The areas that appear to have a high proportion of granny flats are generally the outer rings of western Sydney. The comparatively lower initial entry point for the main dwelling, larger block sizes suitable for granny flats and consistent rental demand in the area make these locations popular. Currently rental yields are approximately 2.8% for dwellings in Sydney (source: CoreLogic). Our investigations indicate that house and granny flats have been selling at a yield of approximately 5% in recent times. In years gone by owners were achieving stronger returns, but due to strong capital growth in the area and relatively stable rentals in these areas, yields have compressed.

South-western Sydney has long been considered a cheaper option in comparison to locations closer to Sydney CBD. Given that this market is generally more affordable, buyers have typically expected a traditional detached family home on good sized land that benefits from a big back yard and plenty of space. However in recent years, on the back of continued growth and price increases in Sydney, we have seen these areas moving toward higher density style living arrangements that provide flexible floor plans and have the benefit of accommodating multi-living/inter-generational options or possibly an increased rental yield for an investor, or a mix of both – live in one, rent out the other.

While the general trend is moving towards higher density, smaller lots and dual living arrangements, there is still the more traditional market that demands larger family homes on a quarter acre block, through to the more substantial acreage lifestyle properties found further out in areas such as Ellis Lane and Kirkham situated within close proximity to Camden town centre.

Conclusion

Developers, planners and home owners will continue to push the boundaries for housing sizes and styles to meet changing lifestyles and to help alleviate housing affordability issues. What these recent housing trends highlight is the changing way society is living, with more people opting for low maintenance blocks or high density living within close proximity to services. Overall we expect to see continued density increases due to changing family demographics, improving infrastructure and growing population, particularly around western Sydney which is in close proximity to the second airport, motorways and Parramatta CBD.

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