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Winter 2012 Property Newsletter

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Dear Clients and Friends, 
Picture of 20 Nelson Rd, Lindfield

Before Spring arrives we wanted to provide an update of conditions impacting the Sydney market. Please call us if you would like any help in sourcing the right property or if you just need some trusted representation in the market. We regularly uncover 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


Sydney Snapshot - facts & figures
  • RP Data-Rismark’s Hedonic Home Value Index (which is used as one of the RBA's housing indicators) indicates Sydney dwelling values increased 1.7% in the first six months of 2012
  • However, this leaves a cumulative decline of close to 4% in overall values since the last significant peak in October 2010 
  • Units have outperformed houses in Sydney over the past 12 months, experiencing a 1% increase in that time whilst houses were down 2.7%
  • Auction clearance rates have hovered around 54% - 57% in recent weeks 
  • Sydney's volume of listings has increased 6.6% over the past year - but not necessarily in quality
  • Average time on market is 57 days which is down from 63 days last month
  • Vendor discounting on asking price is -6.6%, which remains consistent with the previous month 
  • Sydney gross rental yields for houses are at 4.4% with units at 4.9%

The Winter Blues

The early part of July marks the low period of the annual real estate cycle. School holidays, very little new stock, very few auctions and a reduction in the volume of weekend inspections characterise this period. Many sales agents took their own mid-season breather but are now hitting the footpath and sending their Blackberrys into meltdown as they line up new listings for Spring.

Picture of 502 Bronte Rd

The general consensus from those selling has been that conditions remain difficult. Agents are faced with a continued absence of buyer depth on the majority of properties (resulting in a lack of competition and little upward pressure on prices). They are also encountering a degree of intransigence from their own vendors who reject what in hindsight prove to be very fair and reasonable offers for their homes in the current market. 

From our side as property buyers we welcome this lack of competition whilst it lasts. Recent RBA cuts in interest rates have yet to make a discernible difference to buyer behaviour across the board, however there is a lag in the time it takes for such changes to make an impact. In the event there are future cuts in the cash rate this can be expected to generate added buyer interest at lower prices levels but it will not be uniform across the market. 

With the Australian dollar retaining its strength for the time being, local buyers are not facing the full brunt of competition from offshore contenders. That said, we are experiencing a gentle increase in the volume of expat activity due to domestic prices being so attractive in their own right. Should there be a softening of the domestic currency this will result in added competition as offshore buyers look for opportunities across their preferred property types (eg investment units, beach houses, premium dwellings).

It should be acknowledged that it is not a perfect world for those on the buyers’ bench; we would definitely welcome an increase in the calibre of stock for specific housing categories and locations. The absence of a forward-moving market has limited the number of homes on offer, especially the better quality ones. 

Whilst we aim to uncover the right property for our clients in as timely a manner as possible, we don’t compromise our work in the interests of time alone. We will never rush a decision to pursue a property unless we are completely convinced it is right for our client. To borrow a quote from the famous horse trainer JB Cummings, “Patience is the cheapest thing in my game and the thing most seldom used”. 

 

Chalk Road's view

Picture of 272 Trafalgar Lane, Annandale

As outlined in previous newsletters, Sydney has markets within markets. The headline statistics outlined above, whilst helpful, only paint part of the picture. It is important to have a thorough grasp of local conditions across multiple pockets of Sydney. This extends to having knowledge of the full array of stock available for choice (not just those meeting the public eye), along with knowing the results of ALL recently completed sales, not just those selectively fed through to the weekend newspapers.

As we commence the build-up to Spring, some of our key observations (and predictions) are these:

  • The volume of listings coming through for Spring are 'trickling' in rather than gushing in at the moment. This suggests a late Spring selling season similar to 2010 and 2011 with much of the action likely in October/November
  • The top end of the market will remain subdued but we expect selective targeting of properties from astute buyers. There is activity at the higher levels, but only once buyers perceive value. In the eastern suburbs alone, the past few weeks have seen a Victoria Road home in Bellevue Hill sell for $6.25m, two Woollahra sales in excess of $5m, a Point Piper waterfront trade for around $13.5m, one in Vaucluse sell for around $14m with another offering great harbour views sell for $6.25m. Two of these properties had been on the market for more than 300 days with their final outcomes being 30% less than their agents' original price expectations 
  • Priced appropriately, we believe luxury apartments will continue their relatively strong performance into the second half of the year
  • The majority of buyers in the middle of the market will remain cautious - it is this group who seems most attuned to and impacted by consumer confidence levels
  • When a quality property appears in this mid-range however, there are sufficient people willing to compete to ensure a strong price outcome
  • Homes up to $1.3m (especially semis and terraces) are selling well in the east and inner west, however the lower north shore remains short of suitable supply
  • The rental market at the middle and top end has taken a hit in recent weeks as the pending reduction in the Living Away from Home Allowance takes effect. This is seeing some investors readjust their focus to lower value apartments which offer higher yields
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Recent Sales of Interest

Picture of Mona Vale Hallway

 

Past Newsletter Archive

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

 
picture of 74 Goodhope St

74 Goodhope St, Paddington

$2.010m on 30 May 
197 sqm
3 bed, 2 bath, 1 car

Extremely strong result $200k above expectations with 5 active bidders. Both the winning bidder and under-bidder were parents looking to buy for their children. Property had failed to sell in recent years when marketed as a 4 bed home.
picture of 20 Mistral Ave

20 Mistral Ave, Mosman

$2.425m on 23 June
783 sqm
4 bed, 3 bath, 2 car, pool

c1915 period home sold prior to auction for a relatively inexpensive price for this well-regarded location. Provided harbour views along with a wine cellar, pool and triple garaging. A perceived weakness was its upstairs floorplan. 
picture of 39 Sunrise Rd

39 Sunrise Road, Palm Beach

Approx $2m on 15 June
1018 sqm
3 bed, 2 bath, 2 car

Original condition single-level beach home located four mins walk from the beach. Property had been on the market since Feb 2011, with an initial asking price of $3.5m through a different agent. 
 
 
picture of 3/20 St Neot Ave

3/20 St Neot Ave, Potts Point

$702,500 on 14 June
2 beds, 1 bath
 
Art Deco apartment within the renowned "Grantham" building. Modern kitchen and bathroom with dark stained floorboards. Property was being rented for $620 per week, having previously been bought by the owners for $424k in 2004. 
picture of 1/7 Aston Gdns

1/7 Aston Gardens, Bellevue Hill

$2.920m on 21 June
373 sqm internally
4 beds, 4.5 baths, 3 car

Dual level apartment which attracted strong interest at its recent auction, reinforcing the current demand for quality apartments. The owners had paid $2m for the apartment in 2005 prior to undertaking a significant renovation. 
picture of 8 Lea Ave

8 Lea Ave, Willoughby

$1.825m on 23 June
549 sqm
4 bed, 2 bath, 2 car

Attractive double brick home which sold for $100k more than its reserve at auction. There were six active bidders on the day. It had an open plan kitchen/living/dining at the south facing rear which lead to a terrace and large swimming pool. 
picture of 59 Surfers Pde

59 Surfers Parade, Freshwater

$1.350m on 23 June
419 sqm
4 bed, 1.5 bath, 1 car
:
Newly renovated house which sold in less than a week on market. Owners paid $1.025m in July 2007. A great mix of indoor/outdoor living, but the absence of a full second bathroom highlighted an area for further improvement.
picture of 33 Findlay Ave

33 Findlay Ave, Roseville

$1.710m on 1 June
669 sqm
4 bed, 3 bath, 2 car, plus pool

Character-filled 1903 Federation home on the western side of the Pacific Highway. Passed in at auction, however sold less than a week later. The final price was $50k less than the agent's indication.  
picture of 10 Kambala Rd

10 Kambala Road, Bellevue Hill

$4.605m on 19 June
837 sqm
4 bed, 4 bath, 2 car, pool

First hit the market in Feb 2011 with expectations close to $6m. Four different agents were engaged before eventually finding a buyer. Westerly views back towards the Harbour Bridge, however proximity to Bellevue Road was seen as a drawback.
picture of 64 Ritchard Ave

64 Ritchard Ave, Coogee

$2.1m on 11 July
436 sqm
4 bed, 2 bath, 2 car
 
Located in one of the suburb's best streets, this home sold prior to auction last week. The previous owners paid $1.802m in 2008, then added an enlarged area upstairs which increased the home from three bedrooms to four.  
picture of 32 Marshall St

32 Marshall Street, Surry Hills

$1.290m on 15 May
103 sqm
3 bed, 2.5 bath

Very intelligent renovation of an original terrace which removed a number of internal walls to create a modern contemporary home. Large master bedroom (>16m2) now has its own ensuite. Owners paid $900k for the property back in Oct 07. 
picture of 93 Bridge Rd

93 Bridge Road, Glebe

$910,000 on 21 June
120 sqm
3 bed, 2 bath, 1 car
 
Narrow terrace at just 4.1m however its floorplan maximised the sense of 'space' within. Property had been on the market in 2010 with hopes of $950k, but a change of agent and a lower price expectation eventually saw the property sell. 

What Price a Car Space?

Picture of Point Piper GarageLast week details emerged of a single car space in Point Piper being offered for sale at $120,000 - and only with a 99 year lease (pictured right). Whilst that might appear an exorbitantly high price, the agent selling the property told me he remains confident of securing something close to that figure. 

Depending upon their location, investors pay close attention to such opportunities when they arise. The addition of car space to a property not only adds to the rental value of a property, but it makes the property much easier to sell down the track while underpinning a stronger rate of capital growth compared to properties without parking. And for those looking to diversify the portfolio of their Self Managed Super Funds, spaces in CBD locations can deliver yields of 6% or more.  However it should be noted that single car spaces can be very hard to come by as they first need to be on their own separate title. 

Bearing all this in mind, we thought you might be interested to know what a single/standalone car park space can fetch in some of Sydney’s suburbs. 

Picture of Brighton Blvd Garage SoldBondi/Bondi Beach

In an area dominated by older style apartments and small semis, most properties do not possess a car space. The small number of recent sales reflect the scarcity of supply. The record price for the area was achieved in 2009 when a lock up garage at 104 Brighton Boulevarde sold for $240,000 (pictured left). Anything down near Ben Buckler or Lamrock Ave/Notts Ave could result in an outlay of $150k - $300k. As you move away from the beach back towards Penkivil Street you can expect prices to drop to $55k. 

Potts Point/Elizabeth Bay

Anyone who has visited this area knows how difficult it can be to find a car park. A simple security car space will set you back somewhere around $75k - $85k. However if you are seeking an enclosed lock up garage for added security or storage, you could expect to pay $100k. A leading agent told me of a sale he made nearly ten years ago for $190k, but as he acknowledged “all the moons aligned on that one”. 

Paddington

The majority of terrace houses in Paddington do not come with parking. Realistically, there are few opportunities to buy a standalone carspace in Paddington. However, we know of at least two examples in Sutherland Street and Underwood Street where home owners decided the most effective course of action was to buy a small studio apartment a few doors away (for $350k - $400k), rent it out, and then use the associated carspace for themselves. That approach actually makes taxis look cheap!

Picture of Two Car Garage CartoonUltimo/Pyrmont 

Different locations in this area value a car space differently.  There are single security spaces readily available for purchase in South Pyrmont (adjoining Ultimo) with prices ranging from $30k - $50k. As you move north towards the Jacksons Landing area, a single space unconnected to any unit will cost approximately $55k. In the better quality apartments of Sydney Wharf and Darling Island parking spaces have been known to trade for as much as $130k-$150k. 

Sydney CBD

Single spaces within CBD car parks (eg in Market Street) have sold in recent months for around $50,000. When it comes residential apartment towers, there are potential restrictions dependent upon Council laws as well as specific strata by-laws. However, a recent space on offer within The Mantra Apartments on Bond Street at $150k attracted an offer of $120k albeit the owner decided not to sell. In the high quality Observatory Towers, there were two registered sales of $150k and $180k. And topping things off, a rare car space became available in Building 3 of the Benelong Apartments at East Circular Quay about seven years ago - netting the owner a cool $260k!!


 



 
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.
Copyright © 2012 Chalk Road, All rights reserved.