September Market Outlook
CoreLogic National housing Update September 2017
housing supply under $400,000 dries up
What’s the outlook for the cash rate?
First home buyers waiting for legislation to pass
Adelaide September 2017
Brisbane September 2017
Cairns September 2017
Canberra September 2017
Darwin September 2017
Gold Coast September 2017
Melbourne September 2017
Newcastle September 2017
Perth September 2017
Regional NSW September 2017
Regional NT September 2017
Regional QLD September 2017
Regional SA September 2017
Regional VIC September 2017
South West WA September 2017
Sydney September 2017
Tasmania September 2017
Wollongong September 2017
CoreLogic NSW housing Update September 2017
CoreLogic QLD housing Update September 2017
CoreLogic SA housing Update September 2017
CoreLogic VIC housing Update September 2017
CoreLogic WA housing Update September 2017
Starting off modestly vs. buying a more expensive property
5 ways to save your mortgage deposit faster
Understanding low doc loans for the self-employed
Sydney September 2017
The month in review: Sydney
By Herron Todd White
Home buyers or owner occupiers are currently the most active buyers across Sydney after a number of recent policies were implemented aimed at reducing the number of new investor loans from lenders. The New South Wales State Government recently implemented a package for first home buyers which abolishes stamp duty on home purchases up to $650,000 with reduced stamp duty due on home purchases up to $800,000. A $10,000 grant for purchase of new homes up to $600,000 is also in place for first home buyers. With the median Sydney house price well in excess of these thresholds, many home buyers are considering different types of homes to the traditional detached home with a large backyard.
Whilst investors look towards both capital growth and rental returns in their property purchasing decisions, home owners are increasingly being drawn towards low maintenance living within close proximity of schools, public transport and other services.
In western Sydney, home buyers have been particularly active in the past few years with strong growth recorded across the wider market. The popularity of certain property types highlights the changing face of western Sydney housing. This is more prevalent in the new estates with smaller block sizes being released, more semi-detached housing and highrise residential developments being built in areas not traditionally known for high density living.
Jordan Springs is a new suburb in the Penrith LGA with a recent release providing two storey, 3-bedroom, 2-bathroom semi-detached dwellings with a single garage on 170 square metres of land for around $680,000. Traditionally, areas further away from Sydney’s CBD offered larger landholdings; today these pocket sized blocks are becoming more common in western Sydney as housing densities increase and developers, along with local 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, if at all. This is mostly due to surging values now making developments like these more feasible. Penrith has a number of unit complexes but no large scale development has occurred for a number of years, whilst Blacktown provides a number of low to medium rise unit complexes but only in recent times has genuine high rise development occurred. An example of this is the Lord Sheffield Circuit development in Penrith, located in the new Thornton precinct, which is providing new 1-bedroom units for circa $450,000. In Blacktown an under construction 20 storey development at 29-31 Second Avenue is offering 1-bedroom units from around $470,000.
South-western Sydney is appealing to a range of home buyers, particularly more price sensitive buyers such as first and second home buyers. In addition to providing an entry point to the Sydney property market, there are also options for buyers upsizing to more substantial property or down sizing from larger acreage style property in the region. Land values have increased substantially over recent years, which is reflective of the broader Sydney property market and also due to the proximity of the future Badgerys Creek Airport precinct and expanding western Sydney area.
Home buyers are mainly attracted to newer localities and estates in areas linked with good access to services and amenities, public transport and major roadways. Newer housing estates are predominantly found along growth corridors, particularly along Camden Valley Way which travels from Edmondson Park through to Camden, a stretch of approximately 20 kilometres. Other popular new estates among home buyers include Elizabeth Hills and Middleton Grange which are situated adjacent to the M7 motorway and will also benefit from good access to the future Badgerys Creek Airport precinct. Many of these suburbs are part of a master plan which include shopping centres, parks and community facilities, all of which are imperative for attracting the home buyer.
These new precincts are attractive to the broader home buyer market given the range of housing options and price points that appeal predominantly to first and second home buyers, but also offer options to established property owners looking to spend over $1 million.
An example of a typical entry point is 36 Rosella Circuit, Gregory Hills, which sold for $702,000 in March 2017. The property was a modern 4-bedroom, 2-bathroom, single level residence with 2-car garage on a 380 square metre lot.
An alternative option many home buyers are increasingly moving towards is secondary purpose built self-contained accommodation, whether that be for children, older aged parents, or to rent to provide additional income. Some project builders are also incorporating attached selfcontained accommodation options into some of their designs, reflecting just how popular this type of accommodation is becoming. 4B Flume Street, Leppington, which sold for $1,100,000 in April 2017, comprised a large two storey residence with a detached 2-bedroom granny flat to the rear.
Like other parts of Sydney, investor demand has declined in recent months while home owners are generally remaining active in the market.
First home buyers generally budget up to $1,000,000, which in this part of Sydney generally restricts property options to units, villas and townhouses. There are a number of new unit developments in the Sutherland Shire which are attractive for first home buyers including those at Woolooware Bay and the South Village development currently under construction at Kirrawee. For the latter, 1-bedroom units are selling off the plan for between $600,000 and $700,000, and 2-bedroom units for between $680,000 and $900,000.
Upsizers and families require a budget of $1 million up to $3 million in more popular beachside and riverside suburbs. Duplex properties are becoming increasingly attractive, allowing a more affordable option of a good sized modern home on a smaller low maintenance block of land. A sale at 32B Carabella Road, Caringbah, which sold for $1.562 million in August 2017, comprised a new two storey semidetached duplex with 4-bedrooms, 2-bathrooms and 1-car garage on a 280 square metre lot.
Empty nesters and downsizers are increasingly looking at large modern apartments in premium locations, which provide a low maintenance lifestyle close to cafes, restaurants and shopping facilities. In many cases, these buyers are looking to spend as much as, or more than, the sale proceeds from their large family home. Cronulla has become a popular location for empty nesters and retirees with a number of modern boutique complexes being constructed in recent years. A large modern garden apartment, opposite the beach, sold in June 2017 for $2.76 million The apartment, at 4/29-31 Prince Street, comprised 3-bedrooms, 2-bathrooms, double basement car space and a large wraparound yard area providing beach and ocean views.
With tighter restrictions recently imposed on the investor market, it is expected that first and second home buyers will continue to become more prominent over the coming months. Upsizers seem to be dominating the market in this area at present, especially in the higher value brackets. Downsizers are also active, realising the value of their home in the current market and purchasing in low density, high quality unit developments.
First time buyers have generally been priced out of the dwelling market in recent years with units becoming a more popular option for this market segment. With entry level Torrens titled dwellings in the inner west now typically in the $1.2 million to $1.4 million range, many first time buyers have found these properties to be increasingly out of reach. A property at 200 Addison Road, Marrickville recently sold in August for $1,355,000, comprising a detached single level Federation dwelling with 2-bedrooms, 1-bathroom and positioned on a 259 square metre block of land.
The Bosco development in the inner west suburb of Five Dock is a medium-scale, high quality development of 152 units which have been purchased by a mix of investors, first time buyers and also downsizers with no buyer appearing to have a dominant share. The mix of 1-, 2- and 3-bedroom units meant that there were options available for the different buyer profiles. The 3-bedroom units for example proved popular with the downsizers who still wanted a sense of space, but had decided on a more low-maintenance style of living. Several resales of 2-bedroom units through a local agent in this complex have ranged between $925,000 and $1.05 million. The selling agent has noted significant local interest for these units from owner-occupiers.
Whilst the property market in general appears to have cooled slightly during the winter period, the $2 million to $5 million bracket appears to be performing strongly. Demand at this price range remains high for both dwellings and units with buyers ready to utilise strong capital growth obtained from existing property portfolios. A recent sale of a 3-bedroom unit in the popular Darling Island Road complex in Pyrmont was hotly contested with the agent advising a high level of interest and strong demand, resulting in a sale price of $4.39 million.
With such strong market growth over recent years, younger generations are starting to accept the fact that they may not be able to afford to buy a home in Sydney close to the CBD or coast. They must either succumb to renting in the area or re-locate to be able to find properties selling within their budget. Relocating may involve moving to suburbs with better affordability within Sydney or relocating to another city or interstate to obtain home ownership and a more affordable lifestyle. A more recent strategy, known as rentvesting, appears to be becoming a more popular choice, where buyers look to regional and interstate property markets to purchase an investment property whilst continuing to rent in an area where they want to live but can’t afford to buy.
The home buyer is the most active buyer in the market at present. With increased incentives for first home buyers and tighter restrictions around investor lending, owner occupier demand is expected to remain strong over the coming months. The great Australian dream of home ownership still appears to be that of many, however the type of home that represents continues to evolve. From new housing estates comprising smaller blocks of land to duplex and granny flat construction in existing areas to boutique and larger scale unit developments, there are many options now available to the home buyer to meet their changing needs and budgets. With housing affordability in Sydney becoming an increasing issue, the next generation will have to continue to look to new alternatives such as rentvesting as their first step into property ownership.
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.