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Autumn 2012 Property Newsletter

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Dear Clients and Friends, 
19 Wentworth St picture

With Q1 2012 now behind us, here are Chalk Road's views on the Sydney residential market. Some commentators have suggested the bottom of the market may not be far away; we feel this past quarter should only be viewed as one of stabilisation in some specific segments. There is too much inconsistency to go beyond that description.

Needless to say, conditions remain more in favour of those buying than selling.  Many market dynamics identified in our Summer newsletter still remain relevant today.  If you missed this edition which summarised 2011, you can find it here.  

Best wishes,
Edward and Hannah Flitcroft

Where's the competition?

Normally the first weeks of any year see real estate agents brimming with enthusiasm as they attempt to capitalise on buyer activity following Christmas/New Year holidays. This year however we have detected far less optimism from agents. 

Rather than highlighting any positives they have been expressing the toughness of market conditions. Comments made to us in recent weeks include:

  • “We think prices have retreated to 2003-2004 levels for many homes”
  • “Any property that doesn’t tick all the boxes just isn’t selling”
  • “Plenty of people are coming to our inspections, but they are just not pulling the trigger”

picture of palm beachWe feel these sentiments are quite telling; even more telling is that agents have been willing to share these views so openly. RP Data's latest figures estimate the volume of discounting on asking prices across Sydney homes is -7.1%. This figure can be misleading in relation to many high-value properties in suburbs such as Mosman, Palm Beach, Vaucluse. In some cases, we are aware the difference between initial asking prices (from a few months ago) and those currently being sought has ranged from 10% up to 20%. Agents selling many of these properties are increasingly reliant upon "Expressions of Interest" campaigns rather than auction or private treaty. This approach restricts public visibility of any downward price movements, as a formal "asking price" never gets published at any stage during its campaign.  

Yet whilst there are areas of ongoing softness it would be wrong to assume the market is in a parlous state. There continue to be properties sold in all suburbs across many price brackets on a regular basis. Even with clearance rates hovering around 53%, there was $302m of residential property purchased in Sydney the week prior to Easter (a figure higher than the same week in 2011). The difference with today's market is the increased amount of time it is taking to find a buyer, as well as the reduced number of people actively competing for each property - often there is just one interested party and rarely more than two. 

picture of Cairo St
Another feature of the current market is many sales are only coming about through long, detailed negotiations. Buyers are reluctant to participate in auctions which is seeing many agents trying to close deals in advance of formal auction dates wherever possible. Conditions are also enabling buyers to negotiate many of their own preferred terms (eg extended settlements, reduced deposits). Notwithstanding these factors real estate agents are still notching up sales, albeit to very price-sensitive buyers.  

We are not suggesting the time is ripe for every prospective purchaser to move into buying mode, as specific price brackets and locations will remain flat for the remainder of this year. However, it is more advantageous to be active in the market whilst the level of competition is extremely low. Not only does this afford buyers more time with their decision making, in some cases it can enable a single buyer alone to set the market on a property. Once the market begins to move in a positive direction, a vendor and their sales agent can play competing parties off against each other, confident this will ultimately result in an increased price. Until then, it remains “advantage buyer” across most market segments.

Chalk Road's observations

North Shore and Northern Beaches

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  • Family homes in Mosman and Cremorne have been quite soft for the past six months; not just at the higher levels but more recently in the sub-$2m category. However, with eight sales above $4m this past month it indicates some vendors' expectations are becoming more realistic 
  • In the mid-North Shore, Roseville houses are proving more resilient than those in neighbouring Lindfield and Killlara
  • The volume of choice for top quality homes in these three suburbs has been low 
  • Demand for many 2 bed units on the lower north shore (eg Neutral Bay, Cremorne, Waverton) has dropped over the past two months
  • Nearer the coast however, apartments up to $900k in Manly, Fairlight and Queenscliff have proven reasonably strong.  Any property (house or apartment) above $2m in these areas is proving much harder to move
  • Palm Beach and Whale Beach properties above $3m have continued to struggle, with not one completed sale above this figure in 2012. A clifftop house on Whale Beach Road, Palm Beach purchased for $7.25m in 2006 remains unsold at just $4.7m but is ilkely to sell soon
  • Nearby Bayview and Avalon have experienced strong good results
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Eastern Suburbs
  • Conditions remain tough for vendors of most premium houses; we feel this will continue for the duration of 2012
  • Prestige locations such as Bellevue Hill, Point Piper and Vaucluse (especially) have large numbers of unsold stock
  • Bronte has experienced three strong results since December ranging from $5m - $7.8m
  • Three of the eight highest sales in the East this year have been luxury apartments in Potts Point ($7m and $6.6m) and Darling Point ($7m)
  • Paddington terraces are ticking over very strongly below $1.4m. The market does become less robust as you close in on $2m and there is a distinct shortage of quality homes in both Paddington and Woollahra between $2m and $3m.
  • There are active buyers for properties between $5m - $8m in these two suburbs, one of whom quietly purchased a freestanding Woollahra home for $7m last Friday in an off-market transaction
  • Kensington, a popular suburb for young families, experienced some below-par results recently in the $1.9m-$2.3m bracket. Potential buyers were able to consider free-standing homes in ‘more expensive’ Randwick North/Bronte/Clovelly for the same money, hence the downward pressure on Kensington
  • One-bedroom apartments have been impacted by the discontinuation of the First Home Owners Grant. A number of one bedders in Bondi/Tamarama/Coogee that might otherwise have sold for $500k last year have sold for closer to $450k, but this is offering great opportunities for investors
  • Two bed apartments up to $800k along the coast and near UNSW and Prince of Wales Hospital continue to sell well, appealing to investors and owner-occupiers alike. 
  • Recent weeks have seen an easing in the level of buyer interest for 2 bed apartments in Rose Bay, Double Bay and Darling Point between $650k and $850k
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Inner City and Inner West

  • Properties continue to attract strong numbers at open inspections which is translating through to a high ratio of completed sales
  • One leading agent in Annandale/Balmain informed us that 70% of attendees are coming from outside the area itself - many from the Eastern Suburbs
  • Buyers seeking better value within the inner-west are shifting their focus from more expensive Leichhardt and Annandale to nearby Petersham and Marrickville
  • A standout performer has been 1 and 2 bedroom apartments in Surry Hills. Strong buyer interest has seen up to three to four parties competing on a number of these properties, a statistic agents from many other areas of Sydney could only dream of


Window of Opportunity

We all know the big issues impacting the current market - think Europe, consumer confidence, Chinese growth, a high $AUD, interest rate directions, not to mention the reduction/absence of financial sector bonus pools and job opportunities. For those in the position to do so, these factors present a strong opportunity for savvy buyers to step in without much competition before market demand builds again. It wasn't long ago when 4 to 5 parties would go home demoralised after an auction. Remember? We do.

The Chalk Road approach is about educating our clients about current market conditions, briefing them on every suitable opportunity we uncover and determining the right time to pursue the best of them. Whether that process takes one month or six months we won't rush any decision until it is 100% right for our client. If you want a dedicated set of eyes and ears in the local market, even if you are not ready to purchase until Spring, we can assist with ongoing in-depth analysis and due diligence. On many fronts, it is a great time to be a buyer, especially for anyone looking to upgrade. We are being presented with a select group of off-market and silent listings to inspect. Contact us if you wish to start your preparations before Spring arrives.

Top 20 Sydney house sales - the last 12 months

Table of top 20 house sales

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"Just doing my job"

Auction rooms can be unpleasant places at times. This story relates to a property recently sold under the hammer for $3.65m. Having attended this auction (something we do many days/nights of each week), it was apparent the underbidder had reached their limit with a final bid of $3.4m. At this stage, a young couple re-entered proceedings and placed what should have been their final act of the evening - a bid of $3.43m. 

However, the shrewd and experienced sales agent applying some strong-arm tactics was able to extract an extra $220k from these people who bid against themselves despite no other competition remaining.  At the conclusion of proceedings, the sales agent walked past me with a wide smile on his face and said “that’s why vendors pay us the big bucks!"

The sales agent was only doing the right thing by his vendor, but this clearly illustrates what can and does happen to many inexperienced buyers. Such scenarios are not uncommon, but can be avoided by engaging professional assistance to help you when the auction day arrives.





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Recent Sales of Note

Auction Clearance Rates picture

Clearance rates only tell part of the story

A reader of the mainstream media would know Sydney’s 2011 auction clearance rates finished the year around 55% with similar results so far this year. Whilst these numbers paint a broad view of proceedings, you need to take a much closer view of the market to know what is really going on. 

For example, whilst Sydney’s Super Saturday auction results from March 31 showed a 53.8% clearance rate from 737 properties put forward, there were varying results across the city. The inner-west had a 76% clearance rate on that day, the lower north shore 61%, whilst the city and eastern suburbs sat at 56%. 

There are many variables not addressed in simple clearance rate figures which you need to be across: 

  • What REALLY happened to all those properties pulled from auction three days before?
  • What about the large number of auction results simply not being published?
  • What about all those properties sold a few days or weeks AFTER being passed in?
  • How did houses perform vs units?
  • How did semis perform vs terraces? 
  • What about the performance of the other properties sold via Private Treaty or Expressions of Interest?
Word of Mouth picture

We are word of mouth

Chalk Road is renowned for its discretion and relies solely on word of mouth for its business. 

Please forward this newsletter onto anyone who will find it of interest - friends, family, colleagues.  

picture of 15 Pine St

15 Pine St, Cammeray

$1.81m on 31 March 
580 sqm
4 bed, 3 bath, 2 car, pool

Updated home in the catchment of Cammeray Public School with a level, north facing backyard & pool. The master bedroom had a spa and walk-in-robe. Sold prior to auction.
picture of 30 Reynolds St

30 Reynolds St, Cremorne

$1.79m on 31 March
435 sqm
4 bed, 2 bath, 1 car, pool

Renovated home with a north facing terrace, lawn and pool. At the start of the campaign expectations were for $2.1m. This was downgraded to between $1.8m-$1.9m before selling just below this amount.
picture of 200 Whale Beach Rd

200 Whale Beach Rd, Whale Beach

$2.8m on 17 March
755 sqm
4 bed, 4 bath, 2 car

Situated in the middle of the beach on the high side of the road. Listed for sale at $3.3m late last year, it eventually sold for half a million less. The vendors bought it in July 2009 for $3.1m.
picture of 53 St Marks Rd

53 St Marks Rd, Randwick

$2.1m on 10 March
334 sqm
5 bed, 2 bath, 1 car
Sold prior to auction. Renovated two storey freestanding house on the eastern side of the street with a block of units on its rear boundary screened out by bamboo. It had been bought for $1.9m in May 2009.
picture of 701/14 MacLeay St

701/14 MacLeay St, Elizabeth Bay

$7m on 23 Feb 
 4 bed, 3 bath, 4 car
Extensive 7th floor apartment in tightly held "Pomeroy". It had gunbarrel views of the harbour and city skyline, wide terraces and two living areas. Took four months to sell. It was originally bought off the plan for $4.5m in 2002.
picture of 25 Mooramie Ave

25 Mooramie Ave, Kensington

$2.275 on 22 Feb 
4 bed, 2 bath, 2 car
 (tandem), pool

Prior to the campaign commencing expectations were around $2.5m. Good family home in one of Kensington's better streets. Large open plan kitchen/living with a large lawn & pool. Owners paid $2.15m in May '06.
picture of 32 Jarvie St

32 Jarvie Ave, Petersham

$850k on 14 April 
227 sqm
3 bed, 2 bath, 1 car

Situated on a bend of Jarvie Ave, this compact freestanding Californian Bungalow had just been renovated to include an open plan kitchen/living/ dining which opened onto the north facing deck at the rear.  Had been bought unrenovated for $575k in August 2009.
picture of 32 Provincial Rd

32 Provincial Rd, Lindfield

$1.938m on 1 March
1120 sqm
4 bed, 2 bath, 2 car

This 1907 home had original grand rooms in the front with a modern open plan living area at the rear. It passed in at its November auction and a subsequent offer of $2.1m prior to Christmas was rejected.
picture of 5 Glover St

5 Glover St, Mosman

$2.405m on 30 March
512 sqm
4 bed, 2 bath, 1 car

Originally passed in to a vendor bid of $2.375m on March 3. This federation home had a large level, north facing lawn at the rear and had retained original features in the front rooms. The vendors had bought it for $2.35m in late 2007.
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34 The Crescent, Fairlight

$2.15m on 3 March
419 sqm
4 bed, 4 bath, 4 car
This recently renovated house had 3 bedrooms with ensuites, a large terrace off the open plan kitchen/dining and views south to The Heads. The vendors bought it renovated in Jan '09 for $2.05m.
picture of 40 Fitzwilliam Rd

40 Fitzwilliam Rd, Vaucluse

$4.25m on 22 March
1,050 sqm
5 bed, 2 bath, 0 car

Failed to sell prior to Christmas but sold prior to auction in a refreshed 2012 campaign. On an elevated position with views from Manly to the Harbour Bridge with original features intact and an old fashioned floor plan. 
picture of 29 Thompson St

29 Thompson St, Tamarama

$7.8m (est.) on 17 March 
533 sqm
4 bed, 3.5 bath, 4 car spaces (all tandem)

On Tamarama beach. Failed to find a buyer in 2008/2009; re-listed with a rival agent this year, then it sold in less than a month. The new owner is rumoured to be planning a complete re-build.
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9/13 Springfield Ave, Potts Point

$715k on 22 March 
81 sqm interior
2 bed, 1 bath
Art Deco apartment at the quieter rear of "Vanderbilt", a strata block on Springfield Row. It had an additional sunroom, internal laundry and had been fully renovated. Previously sold in unrenovated condition for $372k in June 2002.
picture of 18 Hugh Ave

18 Hugh Ave, Dulwich Hill

$1.3m on 29 March 
460 sqm
3 bed, 1 bath, 2 car
A Californian bungalow with well maintained original features including significant wood panelling, leadlight windows and a clawfoot bath. Its rear deck and lawn faced east and importantly for the area was in the Summer Hill School catchment area. It sold after its first open house.
picture of 58 Marlborough Rd

58 Marlborough Rd, Willoughby

$2.95m (est.) on 23 March
1105 sqm
5 bed, 2 bath, 1+ car, pool

Appealing home with formal living & dining rooms, open plan north facing rear with terrace, lawn and pool. Did need further internal work however.  A strong result $100k above expectations.
picture of 43 Prince Albert St

43 Prince Albert St, Mosman

$4.8m (est.) on 5 April
895 sqm
4 bed, 3 bath, 2 car, pool
This two storey, well maintained federation home had a good sized level garden with pool and a large parent's retreat upstairs. First hit the market in early December, eventually selling 122 days later.
picture of 7 the esplanade

7 The Esplanade, Mona Vale

$3.875m on 3 April
946 sqm
4 bed, 4 bath, 2 car, pool

Re-built home with 19m wide waterfrontage. A terrace, lawn and pool faced west onto Pittwater. Withdrawn from auction in August 2010, it was then listed for sale at $4.5m, eventually selling 18 months later.
picture of 65 Goodhope St

65 Goodhope St, Paddington

$4.906m on 24 March
308 sqm
4 bed, 3 bath, 2 WC, 2 car, pool
Bought in Nov '09 for $3m as a warehouse, this 7.5m wide terrace had been fully rebuilt. Intially sought $5.8m+ via Expressions of Interest in October 2011, eventually selling at auction this year.
picture of 26-27 Olola Ave

26-27 Olola Ave, Vaucluse

$11.8m on 27 Feb 
2,226 sqm
5 bed, 4.5 bath, 6 car, pool, tennis court

Grand Hollywood style mansion on huge, elevated and secluded level grounds with harbour views to the north. Having bought it for $7.5m in 1999 it was listed in September 2011 with initial hopes of $14m+.
picture of 4/46 Arthur St

4/46 Arthur St, Surry Hills

$777k on 25 Feb
94 sqm interiors
1 bed, 1.5 bath

A warehouse style apartment with a completely open plan kitchen/living/dining and bedroom. It was a very light top floor apartment with numerous windows on three sides. It was bought in July 2011 for $713k.
picture of 38 Sunnyside St

38 Sunnyside St, Gladesville

$1.545m on 10 March
610 sqm
4 bed, 2 bath, 1 car
This house, in a sought after street, ticked many boxes. It had a large landscaped deck and backyard, a master bedroom with ensuite & walk-in-robe and a sunny open plan kitchen and living area.
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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