Pockets Of Sydney Where You Won’t Overpay
Inner-city areas haven’t shared in the city’s booming price growth.
Inner-city areas haven’t shared in the city’s booming price growth.
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.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Gail and Ron Fink’s property in Jupiter Inlet Colony sustained major damage during an unusually windy day. ‘The whole backyard is shot. All the landscaping is gone.’
Gail and Ron Fink weren’t home the day the ocean swallowed their backyard.
The Florida couple, who are in their 70s, were a few miles away on Feb. 6—an unusually blustery day in the Sunshine State—as waves pounded their beachfront property in Jupiter Inlet Colony, sweeping sand, dirt and trees out to sea. When it was all over, the Finks’ newly-built, roughly 10,000-square-foot home was intact; so too was their free-form swimming pool, improbably balanced on exposed concrete-and-steel pilings.
“That’s what saved the whole thing,” said Ron, founder of an air- and-water purification company. “The pilings are holding up the house and pool.”
Drone footage and pictures from local photographers and the Finks’ builder show the severity of the destruction, which left their pool suspended in the air, with pipes protruding from the earth. Town officials said erosion claimed 7 to 10 feet of sand and created steep drop-offs in front of about half-dozen homes, including one belonging to Kid Rock , the rapper-turned-country rocker, who paid $3.2 million for the property in 2012. Conair heiress Babe Rizzuto also sustained damage to her property down the street, which she bought for $6.3 million in 2015 and currently has listed for $22.5 million, according to Zillow. Neither responded to requests for comment.
But the Finks house, located just past the end of a granite revetment wall—a kind of sea wall—bore the brunt of the heavy wind and waves.
“The whole backyard is shot. All the landscaping is gone,” said Ron. Also gone are fully matured Palm trees and an ipe-wood deck. “It’s out floating in the ocean someplace.” Ron is self-insured and the repair work will be quite expensive. undefined
A New Jersey native, Ron is an engineer by training who worked at nuclear-testing sites in California and Nevada before moving to Florida in the 1980s. He is the founder of RGF Environmental Group, which makes air- water-and food-purification systems.
For almost 40 years, the Finks—who have three adult children and eight grandchildren—have lived in Admirals Cove, a gated community in Jupiter about 5 miles from their new house. They paid $180,000 for the Admirals Cove lot in 1987 and built a roughly 6,000-square-foot house, Ron said. The Finks also own homes in the Cayman Islands and Bahamas.
Ron said they began looking for property in Jupiter Inlet Cove years ago. “It’s a neat place, just a closed little colony right on the ocean, low key and quiet,” he said.
About 20 miles north of Palm Beach, Jupiter Inlet Colony is at the southern tip of Jupiter Island. The town, founded around 1959, has approximately 240 homes and is surrounded on three sides by water—the Atlantic Ocean, Jupiter Inlet and the Intracoastal Waterway. Long a destination for wealthy homeowners, homes in Jupiter Inlet Colony tend to trade for between $2 million and $5 million, although one sold for $18.6 million in January, according to real-estate brokerage Redfin. Last year, a home on the Intracoastal sold for $21.4 million, a record for the town.
In 2020, the Finks paid $4.9 million for a vacant beachfront lot and subsequently built a coastal-style house with a copper-and shake-style roof, covered loggia, pool and outdoor fire pit. “You know, it’s kind of a dream home,” Ron said. “We have built quite a few homes, but this is the end of the line for us, hopefully the last one.”
He said the property originally belonged to the singer Perry Como, one of the town’s first residents. A prior owner demolished Como’s house, and when the Finks bought it, there were concrete-and-steel pilings sticking out of the ground.
Ron Fink said he never removed about 60 pilings, he simply added roughly 30 more. “Now I’m glad I did,” he said. (Pilings are based on the design of a house, so Ron retained some pilings that he didn’t necessarily need.)
John Melhorn of design-build firm Thomas Melhorn, which built the house, said the Finks were a final review away from obtaining a certificate of occupancy when the backyard was destroyed. “They were right there at the goal line,” he said.
Melhorn said the erosion began in late October amid unusually high winds and ocean swell. During the first week of February, sand beneath a row of sea grapes that stabilized the dunes between the house and ocean began to wash away. By the evening of Feb. 6, the plantings disappeared. The yard was gone by the next morning.
Melhorn said a pre-existing, low wall between the ocean and house—described as a cinder-block retaining wall on land surveys—also washed away, as did a walkway and steps to the beach. But he said the 2-foot-high wall was less of a retaining wall and more like a curb between the street and sidewalk. In this case, a prior owner used it to hold sea grapes back from encroaching on the property. The Finks replaced the wall with decorative stone, now lost to the ocean. An outdoor fire pit is still there, cantilevered over the ocean. “We tried to pull as many things out as we saw the erosion coming, but we lost a lot,” Melhorn said.
In Florida, erosion is increasing because of more frequent, more severe storms and sea-level rise, said Cheryl Hapke, a research professor at the University of South Florida and the chair of the Florida Coastal Mapping Program. But she said it isn’t just hurricane-level storms that cause major damage. “One thing I have found about barrier islands [like Jupiter Inlet Colony] is that sometimes a series of smaller events can have as big an impact as a major hurricane,” she said. “But people get caught off guard. It’s something they don’t think of.”
In Jupiter Inlet Colony, longtime residents said this month’s erosion is the worst the area has seen in years, possibly ever.
Mayor Ed Hocevar, who has lived there for 17 years, said it has been a particularly cool and challenging winter with an abnormal number of Nor’easters. On Feb. 6, local news channels warned of high winds, with gusts between 40 and 50 miles an hour. (There were also reports of an earthquake off the coast that week, causing high waves.)
Since the 1980s, Jupiter Inlet Colony has had a granite rock revetment wall that extends from the northern end of the community past 11 oceanfront homes. “But we’ve got 28 homes along the beachfront, so it isn’t complete,” Hocevar said. “Where the wall ended is where the significant damage occurred.” Hocevar said he doesn’t know why the wall wasn’t completed, although local lore is that homeowners building the wall ran out of money.
Last week, the town hired a local mining company to bring in 7,000 tons of sand to replace what washed away. Hocevar said it would cost about $500,000, which will come out of the town’s reserve fund. Long term, he said, extending the revetment wall isn’t a strong possibility.
Hapke, the coastal geology expert, said that in recent decades, sea walls and hardened structures have fallen out of favor as scientists discovered they are detrimental to the environment around them. “Storm water wants to flow, so it will redirect water to the area without a sea wall,” she said, adding that the most ideal long-term solution is to move homes away from the coastline.
Hocevar, 67, who has been mayor of Jupiter Inlet Colony for about a month, said the town is working closely with the Department of Environmental Protection on its response. He said the DEP’s recommendation, should erosion like this occur again, is to bring in more sand. Hocevar emphasised that the community is rallying together. “Think about it as a fortress and your wall has been breached,” he said. “You want to protect your neighbourhood and that’s what we’re trying to do here.”
Holly Meyer Lucas of Compass, who represented the seller when the Finks purchased their property, said Jupiter Inlet Colony is a “special little enclave” where sales exploded during Covid. “Listings sell after a day or sell off-market,” she said.
Lucas said the consensus among local real-estate agents is that property values will hold, despite the erosion. “I think this is a really rare, weird, fluky event,” she said. “I’ve sold everywhere up and down the coast and I’ve never heard of anything like this.”
Babe Rizzuto, whose house is two doors down from the Finks, listed her house for $24.5 million in December 2023 and cut the price to $22.5 million on Feb. 6, according to Zillow.
“She’s going to continue to sell,” said Milla Russo of Illustrated Properties, who is marketing the property with her husband, Andrew Russo. “Even though the timing isn’t great, it is what it is.”
Russo said there has been erosion in the past, and during hurricanes residents of Jupiter Inlet Colony are the first in the area to evacuate. But in general, people are not preoccupied with the weather. “Maybe because we live here, when the hurricanes come, we all have hurricane parties. We go to people’s homes and we barbecue and grill. Of course we’re careful and we lock up and all that, but weather is weather,” she said. “We’ve never been terribly scared.”
(The Russos were also involved in selling the Fink property. However, in 2020 the closing agent on the deal, Florida-based Eavenson, Fraser & Lunsford, PLLC, sued Milla Russo and Illustrated Properties as part of a commission dispute. The seller, Michael Cantor’s Range Road Developers, was named as a defendant and cross-plaintiff in the suit, in which a judge ruled in favor of Eavenson, court records show. Milla Russo declined to comment on the suit. Eavenson declined to comment beyond the judge’s findings and Cantor did not respond to requests for comment.)
Ron was also matter-of-fact about the state of beachfront living. Bring a life jacket, he jokingly told a photographer who inquired last week about taking his picture.
However, the Finks are facing weeks of costly repairs. Although the town is bringing in sand to replace the decimated beachfront, the couple is self-insured and will be on the hook for the cost of rebuilding. Several major home insurers have pulled out of Florida, and Ron said insurance on the house would have cost $100,000 a year. Now, he estimated they could face about $1 million worth of repair work. “We gotta eat it,” he said.
The couple, who was supposed to move into the house this month, has put those plans on hold—for now. An engineer recently inspected the property and deemed the house safe, Ron said. “We’re doing wallpaper today,” he said. “We can put it back together again.” The patio and pool area, meanwhile, are roped off while the area underneath is backfilled with sand.
Ron said being near the ocean makes it worthwhile. “I just love the ocean, we both do. It’s important to us,” he said. “It isn’t easy to look at, but I’ve been through a lot worse.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’