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Sydney Spring Review 2012


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Picture of Coastal poolDear Clients and Friends, 

With Spring concluded here is our update of conditions impacting those looking to buy in the Sydney market. In this edition we cover:

Please call us if you need help sourcing a suitable property or negotiating the best deal to take advantage of the current favourable conditions. We specialise in uncovering silent listings many weeks before they hit the market and would be happy to be on the look out for you.

Best wishes,
Edward and Hannah Flitcroft
www.chalkroad.com.au


 

Spring never sprung picSpring never sprung

Five years ago, Spring was characterised by frenzied competition (usually in an auction environment) as an endless stream of new listings came on to the market. Buyers would eagerly await their next edition of the Wentworth Courier, Mosman/Manly Daily or North Shore Times to see what trophy homes graced their pages. Vendors and their agents timed their campaigns to perfection, with momentum building nicely through September and October coming to a climax just as Christmas holidays commenced.  

 

Moving forward to 2012, how things have changed. The timing of this year’s Spring campaigns occurred much later as agents struggled to convince vendors to actually list their home. The ‘bulge’ of the local papers used to be so great it left an indent on the front lawn. This Spring it has been far less apparent, partly owing to the rise of online marketing but mainly due to a marked absence of good quality stock

 

This lack of high calibre properties reaching the market publicly has been a feature for most of the year. Buyers have been left with limited choice to the extent that many gave up and disengaged a few weeks ago. Somewhat disheartened, they have retreated from the action hopeful that better properties will be on offer at the start of 2013. 

 

However for those of us still digging around, there have been some great opportunities as the volume of willing buyers has diminished significantly. Some very good properties have sold in recent weeks to buyers who have had little or NO competition standing in their way. The only challenge has been getting vendors to reduce the figure at which they will actually sell........and increasingly they are

 

These conditions made things very tough for sales agents over the past six weeks. Some of the larger auction room evenings have been horrid affairs, and on one night we witnessed seven different properties not attract a single bid from the floor. Despite what the published weekly auction clearance rates may infer, our observations are the majority of homes listed for auction campaigns are NOT being sold under the hammer - their results are either not being reported at the time, or are being sold in the days after being passed in, often at a reasonable discount against the reserve. 

 

A salient observation this Spring has been how little need there has been for many buyers to move from the value they ascribed to a property as opposed to having it dictated by the sales agents or other competitors. It should be noted that good agents are still able to achieve solid results on select properties and this will definitely continue over the coming months. However, in a broad sense, these are great conditions in which to be buying and we like many others plan to take advantage of things for our clients throughout the Christmas and New Year holiday period and into 2013.
 

 

Where to from here?  Chalk Road's View

Spring has been devoid of any real momentum across a variety of price points and geographical pockets. Yet a number of properties have achieved strong outcomes illustrating buyers will still compete for something that ticks all their boxes. We profile an interesting selection of results later in this newsletter to illustrate the patchiness and inconsistency of the current market. Looking back on the past few months, some of our observations and predictions are these:                                                            Surry Hills Apartment Picture
  1. Agents are moving more unsold stock than this time last year. There will be less dead wood hanging around as we commence 2013. However the number of new properties (especially homes) signed up to kick off Q1 is not overly strong at this stage.
  2. Conditions have been extremely favourable for those upsizers who have already sold. 
  3. Any legitimate offer tabled on a signed contract has gone a very long way toward securing a property in this market. 
  4. We continue to see a shift in preference towards apartment-style living over houses. Over 900 apartments have been sold in the new Central Park development on the massive CUB Brewery site on Broadway. Other sizeable apartment developments in Bondi, Darlinghurst and have struck a chord with buyers. 
  5. Lend Lease recently lodged plans with the NSW Government for its first phase of the Barangaroo South project (for 159 apartments out of a final number close to 700). 
  6. Apartments in Bondi, Bronte, Manly, and Surry Hills have all been good performers this Spring. Pyrmont one bedders have performed exceptionally well with strong competition also fuelled by tight supply. 
  7. For families requiring a more traditional home, added work demands and travel times are seeing many willing to sacrifice landsize for greater proximity to the CBD (eg Lane Cove/Willoughy/Cammeray preferred to Killara/Gordon/Pymble).
  8. There has been a late rush to list properties for auction prior to Christmas with extra mid-week auction nights scheduled as late as December 19 and December 20. We have noted a sharp burst of urgency from buyers and sellers over the past 7 days.

 

Eastern Suburbs Activity

Buyers of homes between $2m - $6m have been able to pick their targets and move in aggressively. The volume of quality homes on offer has been less than expected but buyers have still been able to make astute purchases. Four recent sales in high calibre Vaucluse locations and three in Bellevue Hill represented great outcomes for the purchasers. 4 Ginahgulla Road (pictured below) sold at auction three weeks ago for $6.1m, having been purchased for $7.24m as recently as September 2010. A number of properties have sold at the lower end (or even below), the agent’s initial appraisals. 

Ginahgulla Rd Picture

However, to counter the perception that any house can be purchased cheaply without shrewd negotiation, stronger outcomes were achieved for two cliff top homes in Vaucluse ($3.275m) and Dover Heights ($3.8m), a four bed Federation home on Darley Road, Randwick North ($2.925m) and a larger five bedroom home in Dick Street, Randwick ($3.2m+).

Getting your hands on good quality 2 bedroom units through much of the eastern suburbs has proven difficult since October - however we expect things will improve with fresh listings in February. There is a steady stream of ‘new’ investors competing with owner-occupiers for these properties, especially as the number of Self Managed Super Funds increase. Overall, units have held up quite well this Spring, with the number of buyers noticeably larger than for the majority of homes.

The Paddington/Woollahra precinct has been a mixed bag. Often viewed as a barometer for much of the Sydney market, the volume of annual Paddington listings is down 10% on recent years. With a relatively homogenous property style across the suburb (ie mainly terraces), it is one suburb where median price movement has more relevance than most and it has endured a 10%-12% drop on last year’s prices - with the $2.0m+ market being a major contributor. Some of the area’s inconsistency can be found in:

  • the recent sale of a quality Windsor Street home for 15% less than was being sought 12 months ago
  • the 15% premium achieved for 40 Hopetoun Street and a 30% bonus for the owners for 7 Cambridge Lane which sold at auction for $1.801m with close to 20 registered parties, eight of whom bid
  • the continued ‘non-sale’ of three properties worth a combined $14m which have been on the market for an aggregate of 800 days  

 

Top End Apartments

There has been little movement in the luxury harbourfront apartment market ($4.5m - $8m) over the past 10 weeks apart from a Billyard Ave, Elizabeth Bay penthouse which sold last week for $4.7m (but we believe this was an internal transaction between joint owners) and the $4.5m sale of a Penthouse in nearby 'Kincoppal'. A selection of Darling Point (Loftus Road) and Point Piper (Woseley/Wunulla Road) offerings still remain on the market after many months. However, the last 5 weeks have seen a number of sales occur in Walsh Bay at lower price points ($1.3m - $2.8m), mainly to existing residents already living within the precinct.

 

Selected North Shore Activity

Agents working Naremburn, Crows Nest, Neutral Bay, Cremorne and Cammeray are bemoaning the lack of good quality 2 and 3 bed semis to sell. Competition for those better quality ones reaching the market has been very good, however buyers are more circumspect any needing work, or in busier locations.  

Apartments in these same suburbs whether they be 1 or 2 bedders have been trading quite briskly if priced appropriately. As one agent shared with us, “it is one category of property where you don’t need to start with a low price guide in order to get buyers engaged”. 

Burran Ave pictureThe market in Mosman/Cremorne for family homes in the high $1m - mid $3m price bracket continues to be patchy, with only the better quality homes finding buyers at the desired levels. Buyers up to $2.5m are especially cautious and it is taking a long time to match buyers and sellers - that said, deals are being concluded but definitely in favour of the purchaser. Stock volumes remain low and it requires a degree of proactivity to uncover additional options for review. We noticed a brief flurry of activity on two 5 bedroom homes in Raglan Street during September (selling for $3.55m and $3.675m respectively) but this did not herald any ongoing lift in conditions. However, the sale of 15 Burran Avenue (pictured above) early last week for more than $9m can be expected to deliver a little more confidence into the market.

Willoughby continued its appeal to young families and has performed strongly off similar stock levels to last year. However some buyers are feeling it is now starting to look expensive compared to neighbouring suburbs which have endured relative drops in value over the past year.

Further up the north shore in Roseville and Lindfield, the number of options for buyers have been greater this Spring and prices held up more strongly. This is not necessarily due to a greater volume of high sales results; rather there have been fewer low or distressed sales results. The profile of many Roseville/Lindfield vendors sees them have greater equity in their homes and they have simply been able to bunker down rather than (having to) accept the lower prices being offered by prospective purchasers

 

Selected Inner West Activity

After enduring a slight correction last year, a number of locations in the inner west have rebounded with comparative strength - albeit buyers do remain price sensitive. Two and three bed terraces in Leichhardt and Annandale between $900k - $1.1m are performing strongly, however the level of competition tapers off for homes priced between $1.2m - $1.5m where some decent value can be found. Newtown terraces and semis continue to sell readily in this market and represent good targets for many investors. However, some agents feel a late influx of new properties hitting the market for mid-late December auctions has taken the edge off things a little.

Drummoyne and Russell Lea were both very light on in terms of stock levels as Spring commenced, but the last few weeks saw more homes reach the market. That said, the volume of choice has not been great with buyers happy to sit on the sidelines and wait for something suitable to appear.  The sale of 6 Thompson Street, Drummoyne for $2.53m at auction last weekend represented the highest sale on the Bay Run side of the suburb in the past 12 months. 

 

Northern Beaches

whale beach rd pictureTaking a glimpse at the far northern beaches (Palm, Whale, Avalon, Bilgola, Newport), properties at levels between $1m - $2m are turning over, but a lack of traction at higher levels remains apparent. Prices of many properties are down a further 5% from last year. Whereas many properties were sitting dormant last year with no interaction between buyers and sellers, agents are at least starting to receive offers which is enabling negotiations to actually commence. The majority of sales are taking place to domestic buyers; with the $AUD remaining at its lofty levels, there has not been too much participation from ex-pats in recent times.

There had been a very quick and strong sale for a six bedroom house located at the northern end of Whale Beach around the $13m mark in October (pictured above) and 278 Whale Beach Road finally sold last Monday - albeit after 11 months on the market.  




Recent Sales of Note: 

12 Kings Rd, Vaucluse picture

12 Kings Road, Vaucluse

$3.675m on 5 November 
659 sqm
4 bed, 2 bath, 1 car, pool

Older style house which many buyers viewed as a 'knock down'. Strong result, with the buyer paying at least $400k above the competition.
101 Raglan St, Mosman Picture

101 Raglan St, Mosman

$3.675m on 22 Sept 
1005 sqm
5 bed, 3 bath, 2 car, pool

Very well renovated period home which was always destined to sell well. Experienced large numbers at all its open inspections. 
28 Little Comber Picture

28 Little Comber St, Paddington

$1.55m on 14 Sept 
117 sqm
2 bed, 2 bath, 1 car

Architect designed three-level corner terrace featuring high quality design and finishes. Originally passed in at auction before selling 2 weeks later.
120 North Steyne Picture

8/120 North Steyne, Manly

$3.950m on 31 March 
170 sqm plus balconies
3 bed, 3 bath, 3 car

Two level Penthouse right on Manly Beach in 'La Corniche'. Internal lift between upper and lower floors.


Belgrave St Picture

2/35 Belgrave St, Bronte

Sold $715k on 23 Nov
70 sqm plus balcony 
2 bed, 1 bath
Strong result against agent's initial price guide of "above $650k".  Apartment presented well, but rear deck faced south. 
9 Carlisle St, Rose Bay picture

9 Carlisle Street, Rose Bay

Passed in at $2.7m
698 sqm
4 bed, 4 bath, 2 car

Passed in on Thursday night for $2.7m with just one registered bidder - might sell in the coming days! Owners paid $3.010m in 2009.
112 West St, Crows Nest Picture

112 West St, 

Crows Nest

$1.275m on 29 Sept 
221 sqm
3 bed, 1 bath, 1 car

Recently updated semi which enjoyed a good return on the owner's $950k purchase price four years earlier.
7/5 Hutchinson St, Surry Hills Picture

7/5 Hutchinson St, Surry Hills

$750k on 27 Sept 
104 sqm incl balcony
2 bed, 2 bath, 1 car

Newly renovated apartment with two separate balconies. Nice return on investment for the owners who paid just $549k for in 2009.
22 Piper St Picture

22 Piper St, Annandale

$1.950m on 1 Dec 
359 sqm
4 bed, 3 bath, 1 car

Traditional Federation facade which hid a modern and contemporary renovation. Sold prior to auction, having been purchased for $1.59m in 2008.
5 Landers Rd picture

5 Landers Rd, Lane Cove

$1.570m on 24 Nov
618sqm
 
4 beds, 2 bath, 2 parking
Record sale for the street. Final result held back due to large numbers of apartment blocks on other side of the road.
2 Stafford St, Double Bay picture

2 Stafford Street, Double Bay

$4.510m on 23 March
556 sqm
5 bed, 4 bath, 2 car, pool

Historical home located adjacent to the sand of Double Bay's beach. Owners had paid $5.65m in June 2010. 
 
2 Upper Minimbah Rd Picture

2 Upper Minimbah Rd, Northbridge

$3.075m on 15 Nov 
736 sqm
5 bed, 3 bath, 2 car

Large family home located in a well-regarded street. North facing with views across Sailors Bay. 
 
50 Sloane St, Summer Hill Picture

50 Sloane St, Summer Hill

$1.1m on 27 Nov 
500 sqm
4 bed, 1 bath

Double fronted Federation home. Failed to sell at auction, evenutally selling for $30k less than hoped for a few weeks later.
 
 
33 Ralston Rd, Palm Beach Picture

33 Ralston Road, Palm Beach

$2.0m on 8 Nov 
1350 sqm
3 bed, 3 bath, 2 car

Older style home which needed a lot of work.  It was on large land with fantastic elevated views up the coast past Barrenjoey Lighthouse.
 
44 Northcote Ave Picture

44 Northcote Ave, Killara

$4.225m on 27 Oct 
2,742 sqm
5 bed, 4 bath, 3 car, 
pool, tennis court
Initially listed via another agent with $7m+ expectations in Dec 11. New campaign commenced with a $5.5m price guide before selling at auction. 
stats picture


Sydney & National Snapshot - Facts and Figures

  • RP Data-Rismark’s Home Value Index (which is used as one of the RBA's housing indicators) indicates Sydney dwelling values increased 0.6% over the past quarter, leaving a 1.3% improvement over the past 12 months.
  • Weekend auction clearance rates sat close to 60% at the start of Spring, rising to 67% on September 22. An absence of active buyers in recent weeks resulted in falls to 58% and 54%. A late flurry on the weekend saw the figure back over 60%, however there were many 'unreported' results.
  • One leading auction house experienced a 27% increase in the volume of November auctions over the previous month. During this month interestingly, their average number of registered bidders on each property reduced from 3 to 1.7.
  • According to SQM Research the number of November Sydney listings was up 7.7% on last month but down 9% on this time last year.
  • Average time on market for November Sydney properties is 41 days which is down from 45 days last year.
  • Vendor discounting for November was 6.1%, which remains consistent with this time last year.
  • Sydney gross rental yields for houses are at 4.2% (down) with units at 4.9% (flat).
  • RP Data figures estimate 11.1% of all house and apartment sales in Sydney were above the $1m mark in the 12 months up to August.
  • ABS figures indicate the number of dwellings approved for construction in NSW rose 3.2%.

 

Who's right and who's wrong?

Sydney’s size and diversity will always throw up scenarios providing fodder for those spruiking a “return to health” for the local real estate scene and those telling a more cautionary tale. No single statement can summarise the entire local market and certainly not on the basis of a few auction results held on one particular Saturday afternoon. Yet these headlines from the past month alone must leave many people scratching their heads. 

“It’s Cheaper to Buy Than Rent” - November 6 

“Buyer Confidence stubbornly low despite rate cuts” - November 6

“No Buying Surge after new first home grants” - November 7 

“Aussies still prepared to splash out on real estate” - November 15 

“Bronte poised to lead revival of prestige property” - November 18

“Property Price Drops Bring Back the Buyers” - November 19

“Developers see signs of cautious optimism” - November 24

“Cashed up Foreigners swoop on Sydney property” - November 26

“Big Hopes for top end of market in 2013” - November 30

“Only way is up for property prices, according to housing data” - December 3

“Auctions looking up as rates go down” - December 4

"Homes loans slump suggesting further rate cuts needed" - December 10

"Last Blast of the Year Marks Strong Sales" - December 10


Confused? 
Picture of stylish garage doors


Now you see it…

Now for something Fun. We often find the problem with buying a terrace with a parking spot is that once you park in it you spend your life staring at your car. This terrace has found a stylish and contemporary solution to the age old eyesore.

Christmas Card from Chalk Road

A very Happy Christmas to you and your families and may 2013 be a very healthy and rewarding one for you.

Picture of Chalk Road website


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.
applauding picture


The games we see…

 

Each week we attend and participate in many auctions across Sydney. The majority are professionally run and well-executed with fairness and transparency being commonplace. However, sometimes when the stakes get higher (or the situation becomes more desperate), certain auctions ram home the reality that a sales agents’ sole obligation is to the VENDOR, and not the punter who rocks up with a cheque book in the hope of buying.  

An auction we attended earlier this Spring highlighted the extent to which some agents and will go to secure a sale. It also illustrated how costly it can be for a bidder to turn up without a thorough understanding of how the auction process works. 

The property in question had already endured a number of unsuccessful campaigns so for this final fling, it was imperative a successful outcome was achieved. Leading up to auction day, the signs had been positive and suggested a competitive environment with three parties expected to register. However, in the hours before the auction, two parties pulled out having purchased other properties - leaving just a single registered bidder. This information was something only the agent and auctioneer knew as proceedings got underway.

The registered bidder was a mother accompanied by her university-aged daughter. As the auctioneer called for opening bids, there was a long period of silence from those thirty people gathered around the auctioneer. This was not surprising given there was only one registered bidder. However, this family having done their homework was eventually confident enough to open with an offer of $2.6m. It was an offer quite some way below the guide the agent had been communicating to the market - but it was something. So the auctioneer accepted the offer to get things underway.

Cammeray Federation Front PictureRealising the challenge of just one bidder, a large shortfall on the vendor’s reserve and the fact the auction was being played out in the “Last Chance Saloon”, the experience of the agent and the auctioneer kicked in to overdrive. Immediately, one of the agent’s colleagues joined in proceeding and began a walk around the garden engaging in secret dialogue with other friendly faces in the audience - all designed to create the impression of there being other interested parties in attendance. 

The main sales agent then focused in on our mother and daughter trying to get them to increase their offer against themselves, whilst periodically leaving them to do the rounds of the friendly faces in the audience. The daughter however had seen these tactics before and held firm. She reassured her mother they would not bid against themselves under any circumstances - or so they thought!

The charade went on for a good seven minutes as the agents kept the pressure on the bidders, spoke to the vendors, cuddled up to the ‘friendly crowd’. By this stage, there should have been enough strange behaviour on show to assure the bidders that they were the only ticket holders to this big show. But the agents kept going with their merry dance around the audience, pulling some people aside, whispering in other’s ears and grilling the friendly family to increase their offer.

But eventually the agent needed to pull the Get Out of Gaol card from his pocket. He walked up to the auctioneer and over a discussion that appeared to resemble actors practicing their lines on each other, he hatched his strategy. I could see it coming.............the rest of neighbours and even the Mr Whippy truck driver could see something was on its way. Surely the friendly family could too.  

What followed next was textbook work from an agent whose SOLE obligation on that day, was to get the best price for his vendor. He rushed back to the bidding family and engaged them in a heated and passionate discussion - somehow encouraging them to turn slightly away from the auctioneer. The family's prior focus had lapsed for a second. Their discussion with the agent become more animated - “No we won’t increase our offer. We don’t need to. We are the highest bidder. No one else has bid”.

And whilst all this was going on, the auctioneer slipped in the Vendor Bid. The one Vendor Bid they are entitled to place and a Vendor Bid which had been correctly announced to the crowd - but possibly only noticed by the 5% of the audience who were not entranced by the commotion going on in the corner of the garden with the mother and daughter.

Suddenly, the auctioneer had stopped mentioning the $2.6m figure, and all the mother and daughter could hear coming from his mouth was a new figure of $3.0m. How had this happened? Where had it come from? Who placed this bid? 

These were questions that could have and should have been asked - if only they had someone else with them who could have informed them what had taken place. But suddenly they were surrounded by a group of sales agents imploring them to bid for fear of losing the property. The mood was frenetic, things were moving at a million miles an hour. And now the auctioneer was calling “The bid is at the front. Once, twice, for the third and final time..............”

How rapidly the circumstances had changed - two minutes prior the daughter was in full control of the situation, noting exactly what was going on around her. Keeping tabs on every movement. But somewhere, somehow, someone else had seemingly raised their offer to $3m - a level at which the property was seemingly about to be sold. 

Despite her confident promise to her mother they would never bid against themselves, things had changed. If she didn’t act now, she thought, the house would be lost to a person elsewhere in the crowd. So with fear etched on her face she pleaded with her mum for one more bid so this other party did not ‘steal’ the house from them. “Another $50k” was her panicked call to auctioneer. 

With a grin on his face, a new call went out from the auctioneer - “Three million and fifty thousand..........going once, twice, three times - Sold”. The sale agents came up and mobbed them with excitement - but rather than expressing great joy, the new owners' faces were filled with utter bemusement.


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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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