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Spring Newsletter 2013


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Dear Clients and Friends, 
Picture of Birriga Rd

As Spring gets underway, here is our update on the conditions impacting those looking to buy in the Sydney market. In this edition we cover:

  • A warm winter indeed
  • What a difference a year makes
  • The Insider's view on apartments, semis, terraces, family homes, the upper end and coastal action
  • Interesting sales from the past three months
  • Sydney Uni Rugby into the Grand Final

Please call us if you need help finding a suitable property, if you have found one and need some help negotiating it, or if you just want some trustworthy advice in navigating the Sydney real estate scene.  

Best wishes,
Edward and Hannah Flitcroft
www.chalkroad.com.au
+61 414 569 604



A warm winter indeed

2 Kellys Ave Longueville picture

Sydney experienced a strong winter real estate market and the expectations for Spring are positive. Compared with 12 months ago the difference could not be more stark. At that time there was little depth to the competition on most properties irrespective of the price point. While the term “shooting fish in a barrel” might not have been entirely accurate, any reasonable offer on a contract, when negotiated effectively, normally went close to securing your ideal property.

The past three months have witnessed some frenetic behaviour from buyers, albeit the activity has primarily been on properties under $1.5m. We are regularly seeing apartments selling within days throughout the inner city (esp. Surry Hills, Redfern, Waterloo, Alexandria), and the same has been happening with semis or smaller houses on the lower north shore. McGrath’s leading agent in the Naremburn, Crows Nest area has more than doubled his 2012 performance with over 70 sales recorded within an average of 15 days on market. 

Other agents are achieving good outcomes for vendors by sharing new listings with database clients on the Friday without any photos or floor plans. They then show the property to 20-30 people on a Saturday afternoon, before one or two of them come back later that day with an offer “too good to refuse”...................which to our way of judgement is often difficult to justify! 

There has almost been an element of panic setting in to the minds of less experienced buyers, fearful that prices may run away from them, thinking they are going to ‘miss out’ and being caught up in the sensational headlines talking of a new property boom. The market is improving but many people can’t look beyond what is immediately in front of them when legitimate alternatives lie just around the corner - literally!

9 Glen Ave Randwick picture

There are four key drivers to this current market: increased consumer confidence, conducive monetary policy settings (i.e. lower interest rates), a significant increase in investors entering the market and a shortage of suitable stock on offer. It is this final point we have been reinforcing to clients as a reason not to panic nor compete at some of the inflated prices being paid. One of the most respected sales agents from the middle/upper North Shore who specialises in homes in the $2m - $5m sector told us their office is 40% down on listings from this time last year - with most agents elsewhere suggesting figures around the 25% mark.

However it is neither practical nor wise to retreat completely from the market in the hope things will slow down, therefore we have been looking for and finding opportunities where we can avoid the frenzy and not need to compete directly with other buyers. In a market such as this, there is a big advantage in identifying properties where you can engage directly with vendors or their agents with little or no distraction from potential rivals. In cases where we have needed to compete at auction, we make sure our upper limit is well-researched beforehand and adhered to rigorously at the event itself. 

This Spring will be a real test of a buyer’s ability to steer clear of the hype, uncover the best properties well in advance and negotiate decisively before market demand has a chance to take hold. When this can't be achieved, it is important to have the discipline and peace of mind to simply walk away from a property when it no longer represents fair value. It also helps to have knowledge of other upcoming opportunities that represent more prudent buying. 

 

What a difference a year makes

Table 2013 vs 2012


 

The Insider's View

The previous 10 months have seen an endless stream of commentators, journalists, potential vendors and sales agents use the Federal Election as the fall-guy for many theories about the performance of the Sydney market. With the election finally behind us, it will be interesting to see whether they were right. 

Every year in which a Federal Election is held, stories abound that huge numbers of owners are holding off listing their homes until the election is completed. While the volume of listings will improve over the coming months, we are not expecting a massive surge in new stock. Sales agents have spent months trying unsuccessfully to convert owners into ‘sellers’ but there remains a large group across Sydney still not committed to a decision. Accordingly, we expect stock levels will remain tight in comparison to demand over the coming weeks. Even if the floodgates were to open, we will be in for a very late Spring selling season, well into November and early December.

Many sales agents have suggested potential vendors are starting to become a little greedy - and this could backfire on some. Despite the ideal winter real estate conditions for vendors (strong demand/low supply), these people held out from listing in the expectation a Coalition victory would inject greater confidence into the community - thus translating into better sales outcomes. There is little doubt that the residential sector will be buoyed by the election result, however we feel things will settle down to more gradual growth levels. The likely increase in supply will dissipate any likelihood of bumper returns and disappoint some vendors. There will be an initial scramble for better quality properties when they hit the market (given the volume of buyers is strong) but talk of ‘boom’ conditions is not to which we subscribe.

 

Apartment market

Putting the election aside, we expect demand for quality one and two bedder apartments within the inner ring and selected coastal suburbs will continue through until the end of the calendar year. Maroubra, Manly, Redfern, Newtown have all been quite strong in recent months. Double Bay especially has really sprung to life over the past 8 weeks as locals see the Kiaora Lane development progressing rapidly, combined with the positive news of the Intercontinental Hotel Group’s plans to reopen the old Ritz Carlton. 

Sulman Penthouse picture

Self Managed Super Fund investors have been very active in the apartment market this year making it tough for aspiring young owner occupiers. However the strong growth in apartment prices is not being matched by rental increases; this dimunition of rental yields may help redress the balance a little for owner-occupiers, but not by much. Many of these investors have a competitive advantage over owner-occupiers in the sub-$800k mark; they are usually cash buyers, do not need pre-approval for finance and have the capacity to pay a premium for any property they take a shine to. While many investors are quite rigorous in their analysis of a property, there are a number of them less assiduous who are hell-bent on adding apartments to their portfolio with far less focus on the final $20k - $40k in price that should or should not be paid.

At the upper end of the Sydney apartment market, the past two weeks have seen reports filter through of the sale of the Sulman Penthouse (pictured right) within Hyde Park’s The Residence for $17m whilst the two-level Penthouse within Barangaroo South sold for $10.5m. These results complement the strong prices generated down at Bondi’s Pacific development along with the sale of the remaining Penthouse space at 10 Wylde Street, Potts Point where two apartments were sold at $6m each.

 

Semis and Terraces

For a good 18 months now, the supply of two and three bedroom semis across the eastern suburbs and lower north shore has been critically low. There has been a constant posse of buyers running into each other repeatedly at the small number of options reaching the market. It would be no exaggeration to say what was a $1.2m property at the beginning of the year is now $1.35m. Buyers are having to make compromises (parking v no parking, north-facing rear v south-facing rear) to keep their 'semi-dream' alive in these locations. As a result, the migration to the inner west in suburbs such as Balmain, Lilyfield, Annandale and Summer Hill from disgruntled young couples continues. Upon arrival, they are finding comparable properties selling for $100k - $200k less with far fewer compromises. Not only that, the locals are very welcoming and the coffee is often better! 

48 Cambridge St picture

The Paddington terrace market is progressing briskly - averaging a sale a day, for the past two to three months. Agents are getting very large numbers through their listings and buyers are not afraid to make prior offers so to avoid missing out. Unlike the apartment market, these prior offers not excessive or inflated, but just enough to secure the vendor’s attention. As always, the $2m mark remains a mental hurdle for many buyers, although a healthy auction in recent days saw 48 Cambridge Street without parking (pictured left) sell for $2.026m.

 

Family homes

One of the most cautious segments over the past 12-18 months has been upgrading-families in the $2.0m - $3.5m bracket. We are now starting to see some improved depth to buyer numbers for homes in this middle market. One factor contributing to this is more people are now willing to purchase a property in this price bracket PRIOR to selling their own home. 12 months ago, such a move would have been fraught with extreme danger, but people now have greater confidence that their existing property will be able to find a buyer. 

124 Raglan St picture

Last week saw the sale of 124 Raglan Street, Mosman (pictured right) prior to auction for $2.9m to a local family. Over 75 parties viewed the property, with four legitimate contenders for the home. A five bedroom house in Cambridge Avenue, Vaucluse sold at a competitive auction in excess of $3.1m which was above the agent’s expectations, while six registered bidders pushed a classic Federation home in Roseville Avenue, Roseville on more than 1000m2 up to $2.965m which left the owners very happy with the result.  

 

The upper end

In the past fortnight, we have seen two houses in Vaucluse sell at public auction for $6.3m (pictured below) and $8.5m and another in Drumalbyn Road, Bellevue Hill move for $5.4m. Buyers of Chinese descent (both local and offshore) are playing an increasingly prominent role in such sales. In addition to the recent sale of ‘Addenbrooke’ in Bellevue Hill for a rumoured $30m, there are two other significant Eastern Suburbs sales close to completion which will enhance the perception of the market’s return to stronger health. 

18 Village High Rd picture

In the past three weeks, Hunters Hill has witnessed three waterfront sales between $5.0m-$5.2m and another non-waterfront at 2 Werambie Street sell for close to $6.5m. Whilst these sales are not necessarily strong results against expectations, the difference to 8 months ago is there are now 2-3 legitimate contenders for such properties as opposed to just the one.

At the start of this month, Mosman had upwards of 15 homes on the market above $5m and their performance will be watched closely by keen observers. It is a pocket of Sydney where we believe better value can still be found when compared to its premium competitors on the eastern side of the bridge. One of the most recent sales in this price bracket was 48a Bay Street, Mosman for $5.61m which took 326 days and five different sales agents before finding a buyer. Initial expectations had been above $5.8m given the owners paid $5.520m in 2006.

 

Coastal action

There has been some evidence that the depreciating $AUD has lead to increased activity from offshore buyers in places such as Palm Beach, Whale Beach, Boomerang/Blueys Beach in recent months - but it is selective rather than a broad trend. For those keen on a beach property, we believe conditions still favour those on the buying side of the equation (especially on the South Coast) and there are always more properties on offer than publicly advertised.
At the high end of the market, there have been four sales above $7m at Sydney's northern-most beaches in the past ten weeks, two of which were to expats based offshore. Overall the market is not necessarily showing any price, gains but the difference now is there are more buyers who are active and willing to make prior offers. Agents would like to get their hands on more stock in the $1.5m - $3m bracket given the increased number of enquiries they are fielding. Of course there are still examples of properties selling at a loss, with last week's sale of 339 Whale Beach Road (highlighted later in this report) being just one. 

 

                                              

Recent Sales of Note: 


Chelmsford Ave picture

31 Chelmsford Ave, Willoughby

$1.933m on 24 Aug
741 sqm
5 bed, 3 bath, 2 car, pool

Very strong result which even caught the sales agent by surprise. He had been expecting an outcome $150k - $200k less than the final figure. 
5 Arthur St Picture

5 Arthur St, Balmain

$1.560m on 21 March 
226 sqm
4 bed, 2 bath, 1 car

North-facing freestanding cottage located one block from the Darling Street shops. It had a large (and for Balmain) rare lawn garden out the back. Owners paid $1.310m in late 2009.  
19 Scales Pde Picture

19 Scales Pde, Balgowlah Heights

$2.228m on 17 Aug 
450 sqm
5 bed, 2 bath, 2 car, pool

Contemporary home which attracted 9 registered bidders to its auction and sold for $200k above reserve. Property had been rented out in recent years for $1,900 per week.
6/14 Henrietta St Picture

6/14 Henrietta St, Double Bay

$890k on 24 Aug 
80 sqm internally
2 bed, 1 bath, 1 car

Outrageous result given a more renovated apartment two floors below sold for $761k in April. Agents were swamped with interest and brought forward the auction three weeks earlier than originally planned.        
69 Latimer Rd Picture

69 Latimer Rd, Bellevue Hill

$3.080m on 9 July
814 sqm  
5 bed, 4 bath, 2 car, pool
Took 73 days to find a buyer, having failed to sell during its original auction campaign in May. The final result represented less than 0.8% pa return over its purchase price of $2.875m in 2004. 
60 Roseville picture

60 Roseville Ave, Roseville

$2.965m on 31 Aug
1,011 sqm
4 bed, 2 bath, 1 car

Updated Federation home which ticked many of the boxes including a perfect North aspect. Six registered bidders made for a strong auction on the day.
1/165 Denison Rd Picture

1/165 Denison Rd, Dulwich Hill

$900k on 23 Feb 
101sqm internally plus courtyard
3 bed, 2 bath, 2 car

Three year old townhouse which sold prior to auction. Owners paid $895k for it brand new in 2010. Current rent is $750/week representing a 4.3% gross rental yield.  
339 Whale Beach Rd Picture

339 Whale Beach Rd, Palm Beach

Mid-$4m's on 2 Sept 
580 sqm
3 bed, 3 bath, 4 car, pool

Split level home which maximised its perfect north east aspect towards Barrenjoey Lighthouse. Hit the market back in early May. Previous owners paid $5.190m in 2009.
3/9 Bona Vista Ave picture

3/9 Bona Vista Ave, Maroubra

$685k on 2 Aug
66 sqm internally
 
2 beds, 1 bath, 1 parking
Reasonably solid, if unspectacular 1970's apartment not far from the northern end of Maroubra Beach. Sold prior to auction for $20k above expectations on a gross rental yield of 4.7%.
11/75 Macleay St Picture

11/75 Macleay St, Potts Point

$3.6m on 16 July 
210 sqm internally 
3 bed, 3 bath, 2 car

Striking dual level Penthouse in the heart of Potts Point with an extra 75m2 of outdoor terrace space. Apartment had an internal makeover since being purchased for $3m just two years prior. 
378 Moore Park Rd picture

378 Moore Park Rd, Paddington

$1.951m on 20 Aug
223 sqm
4 bed, 3 bath

6m-wide terrace which sold strongly at auction. Lack of parking was a concern for some, however it represented a good return for the owners who had paid $1.520m in 2010.  
21 Kentville Ave Picture

21 Kentville Ave, Annandale

$1.110m on 6 July
185 sqm
2 bed, 1 bath, 1 car

Smart freestanding house at the northern end of Annandale with views of the CBD. Since rented out by the new owners at $850/week representing a 4% gross rental yield.  
107 Shadforth St Picture

107 Shadforth St, Mosman

$3.725m on 26 June 
1056 sqm
5 bed, 4 bath, 1 car, pool

Period home (c 1888) on a large block near Mosman village; great mix of 'character & contemporary'. Owners paid $3.010m back in 2008 before undertaking further work.
Ashburner Ave Picture

14/37-39 Ashburner St, Manly

$635k on 13 July
69 sqm internally
2 bed, 1 bath

Renovated first floor Art Deco apartment just 50m from Manly beach. Strong 5.4% gross rental yield proving you don't need parking for a good investment property!
58 Wentworth Rd Picture

58 Wentworth Rd, Vaucluse

$14.0m on 7 June 
739 sqm
5 bed, 5 bath, 2 car, pool
Burley Katon Halliday designed waterfront over three levels with views across Vaucluse Bay. Property sold for $12m in 2006, with the most recent vendors paying $15m in March 2010.
Kitchen Picture


Past Newsletters Archive

We have an archive of our past newsletters which you are welcome to read.  If you would like to read them click here.

 

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Find Out More About Us

Contact us or go to our website to read more about our services and what Chalk Road can do to help you find your ideal home or investment property.
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We are word of mouth

Chalk Road is reknowned for its discretion and relies on word of mouth for much of its business. Please forward this newsletter onto any friends, family or colleagues whom you think may be interested in Chalk Road's services.

 

Syd Uni picture

Sydney Uni make the Grand Final!

Earlier this year we shared news of our sponsorship of Sydney Uni Rugby Club in its 150th year. It has been a great privilege to be associated with the Club and they have delivered high standards of excellence, both on and off the field. Following a great weekend of results, Uni will be contesting the Grand Final in First, Second, Third and Fourth Grades, whilst two of the three Colts teams secured their Premierships on Saturday. One interesting statistic arising from the weekend was NSW Waratahs team member Tom Carter playing his 150th First Grade Game, at the same time passing our new PM - The Hon Tony Abbott’s feat of 174 matches across all grades for the Club!

During the year we were able to take a number of our clients to watch Uni’s home games. One such guest was Paul Patrick who is the News Director at Channel Ten: “Ed and Chalk Road came highly recommended to me by one of my colleagues for whom he had purchased a home in Woollahra. Ed uncovered an array of great homes for our family throughout the inner west before he landed our dream home overlooking the Bay Run in Drummoyne. Following his work for us, I had no hesitation in referring him to one of our friends for whom he recently purchased a fantastic apartment in Darling Point”.
 

Pic of Daniel Patrick's teamOriginally hailing from Auckland, little did Paul and his family know at the time of the strong rugby pedigree of the famous Drummoyne Dirty Reds Rugby Club................nor where that might lead. However just a few months down the track, Paul and his wife Steph were bursting with pride when their young son Daniel and his team mates from the Drummoyne U8‘s were selected to play in the curtain raiser at the Wallabies v British & Irish Lions fixture at ANZ Stadium. Sign them up for Uni in 2024 we reckon!!


 
The information contained in this newsletter should not be construed as investment advice. All parties are encouraged to seek independent guidance from their accountant or financial advisor.

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