Pockets Of Sydney Where You Won’t Overpay
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Pockets Of Sydney Where You Won’t Overpay

Inner-city areas haven’t shared in the city’s booming price growth.

By Kirsten Craze
Mon, Dec 6, 2021 11:14amGrey Clock 5 min

While prices across greater Sydney soared by nearly 27% to Nov. 1 on average, according to PropTrack, several luxury suburbs have had a fraction of that growth—or even price declines, particularly for apartments.

Cameron Kusher, director of economic research at PropTrack, explained how some highly desirable postcodes have outperformed their neighbours.

“At a suburb level, price growth can sometimes seem to not make sense. Prices in a particular suburb may have boomed over a year, while a neighbouring suburb with similar attributes and properties may have seen very little price growth, or even falls,” Mr. Kushner said.

“We measure median prices based on what sells, so compositional changes in the properties that have transacted can play a role in whether price growth is strong or not so strong,” he added. Such compositional changes could mean smaller or larger homes, more or less acreage or whether prices are skewed by a major outlier transaction.

Slowest Moving House Markets

PropTrack calculated the lowest-growth Sydney suburb for luxury houses (with a median above $2 million) to be in Waverley, a small neighbourhood bordering famous Bondi Beach. It only experienced a 0.19% rise during the year to reach a median of just under $3 million. In Artarmon, about five miles north of the Harbour Bridge, the median luxury-home price increased by just 2.75% to $3.08 million. The exclusive neighborhood of Longueville, a leafy waterfront location also north of the harbour, saw values rise 5.24% to a median of $4.53 million.

While the common thread among suburbs with the strongest house-price growth had been their proximity to water, or exceptional water views, the slower performers were more diverse, Mr. Kushner said.

“The lower-growth areas are a bit more varied; some are waterfront while some aren’t. In the coastal areas, you may find more waterfront homes were sold a year ago, whereas this year it’s properties further away from water (and therefore cheaper) that are selling,” he said.

Apartment Markets With Room to Grow

As with most major global cities, Sydney’s apartment market took a price hit at the height of the pandemic as homeowners, renters and investors stepped away from high-density living.

The PropTrack data highlighting the lowest annual changes in the luxury-apartment market (with a median above $1 million) showed that Northbridge on Sydney’s Lower North Shore experienced a 14.17% price decline to $1.21 million, highly desirable Rose Bay in the exclusive Eastern Suburbs saw a 9% drop in luxury condos to a median of $1.38 million; and the central business district had a 2.78% decrease to A$1.05 million.

“For units, overall price growth in Sydney has lagged behind the growth seen for houses,” Mr. Kusher said, adding that areas with low price growth typically had an abundance of condo inventory.

“Many of them are also inner city, which is likely to be a contributing factor,” he continued. “The suburbs with the strongest growth are typically waterfront and have a lower overall supply of units, which are generally lower density than those found in the inner city. This is likely a major factor driving demand and price growth in these markets.”

Why Some Markets Lagged Behind—Until Now

Reece Coleman, head buyer’s broker at Maker Advisory, said the slower performing Sydney markets had been in a slumber due to the pandemic but looked set to wake up.

“For two years, Australia had some of the toughest border controls in the world,” he said.

“Between 40% to 60% of buyers of our luxury developments around the city, particularly near the harbour, are foreign buyers. Without them buying, prices have been affected,” he said.

That means that even within Sydney’s overheated housing market, there may be a moment of opportunity now for luxury-condo buyers in inner-city areas before international travel picks up again.

Mr. Coleman added that Sydney’s North Shore markets were missing two clear buyer types.

“Traditionally there are a significant number of overseas residents moving here to educate their children at the exclusive schools up in North Shore such as Roseville College, Ravenswood and Knox Grammar. While the borders were closed the families haven’t come,” he said, adding that the North Shore housing market is also fueled by people relocating for work.

“It’s the home of the middle-class executive; the CFOs, CMOs and COOs. But they haven’t been relocating in the last two years either. Expats have been coming back, but we’re not getting those executives transferring from the U.S. or from Europe,” he said.

“So our property market has definitely been affected by our tough border stance.”

Now Australia has reopened borders for some international travel, including citizens and permanent residents, Mr. Coleman said it is only a matter of time before the “sleeper” markets awaken.

“We think January is going to be busy with families returning to Sydney, which will drive up these suburbs. We’re already seeing more inquiries from Hong Kong and Malaysia, from people looking to locate and get their children in local schools,” he said. The relocation for many expat and foreign buyers is carefully timed to fit in with Sydney’s school year which begins in late January.

A Return to Sydney’s Inner City

Adrian Wilson, director of inner Sydney agency Ayre Real Estate, said the inner city was about to go through a renaissance.

“There absolutely was a trend for a while where global cities were far less buoyant than they normally were. But I’m standing in my city office looking out the window and there are people everywhere, which is great,” he said.

“There’s definitely good value for buyers or investors who are willing to consider stock that isn’t necessarily in favour at the moment because of lower rental yields. Buyers with a medium- or long-term view could find some great opportunities around $1 million to $1.5 million in that Central to City South location, because that part of the market hasn’t performed as strongly as others,” Mr Wilson said.

He added that micro markets which experienced “marginally negative” price movement were those with a large investor ownership prior to the pandemic.

“The level of investor interest obviously dissipated during Covid. In some cases city rents fell by as much as 30% immediately after the first wave. But rents are now starting to stabilize, and many of those reductions have crept back up toward where they were before,” he said.

The only way is up for savvy buyers, according to Mr. Coleman, who is now buying several “pied-a-terre” apartments in Sydney for clients that fled the city during the pandemic.

“Sydney’s growth isn’t over. It’s an amazing time to buy in the inner-city areas, they represent amazing value,” Mr. Coleman said. “Sydneysiders migrated out during Covid, but now those areas are coming back to life. We’re literally days away from foreign visitors and international students returning. If the rents go up, then prices will go up.”

 

Reprinted by permission of Mansion Global. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: December 3, 2021.



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Philip Lowe’s comments come amid property industry concerns about pressures on mortgage holders and rising rents

By KANEBRIDGE NEWS
Wed, Jun 7, 2023 2 min

Leaders in Australia’s property industry are calling on the RBA to hit the pause button on further interest rate rises following yesterday’s announcement to raise the cash rate to 4.1 percent.

CEO of the REINSW, Tim McKibbin, said it was time to let the 12 interest rate rises since May last year take effect.

“The REINSW would like to see the RBA hit pause and allow the 12 rate rises to date work their way through the economy. Property prices have rebounded because of supply and demand. I think that will continue with the rate rise,” said Mr McKibbin.  

The Real Estate Institute of Australia  today released its Housing Affordability Report for the March 2023 quarter which showed that in NSW, the proportion of family income required to meet the average loan repayments has risen to 55 percent, up from 44.5 percent a year ago.

Chief economist at Ray White, Nerida Conisbee, said while this latest increase would probably not push Australia into a recession, it had major implications for the housing market and the needs of ordinary Australians.

“As more countries head into recession, at this point, it does look like the RBA’s “narrow path” will get us through while taming inflation,” she said. 

“In the meantime however, it is creating a headache for renters, buyers and new housing supply that is going to take many years to resolve. 

“And every interest rate rise is extending that pain.”

In a speech to guests at Morgan Stanley’s Australia Summit released today, Governor Philip Lowe addressed the RBA board’s ‘narrow path’ approach, navigating continued economic growth while pushing inflation from its current level of 6.8 percent down to a more acceptable level of 2 to 3 percent.

“It is still possible to navigate this path and our ambition is to do so,” Mr Lowe said. “But it is a narrow path and likely to be a bumpy one, with risks on both sides.”

However, he said the alternative is persistent high inflation, which would do the national economy more damage in the longer term.

“If inflation stays high for too long, it will become ingrained in people’s expectations and high inflation will then be self-perpetuating,” he said. “As the historical experiences shows, the inevitable result of this would be even higher interest rates and, at some point, a larger increase in unemployment to get rid of the ingrained inflation. 

“The Board’s priority is to do what it can to avoid this.”

While acknowledging that another rate rise would adversely affect many households, Mr Lowe said it was unavoidable if inflation was to be tamed.

“It is certainly true that if the Board had not lifted interest rates as it has done, some households would have avoided, for a short period, the financial pressures that come with higher mortgage rates,” he said. 

“But this short-term gain would have been at a much higher medium-term cost. If we had not tightened monetary policy, the cost of living would be higher for longer. This would hurt all Australians and the functioning of our economy and would ultimately require even higher interest rates to bring inflation back down. 

“So, as difficult as it is, the rise in interest rates is necessary to bring inflation back to target in a reasonable timeframe.”

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