NSW real estate: Apartment abundance brings price plunge in ‘overdone’ areas
AIDAN DEVINE, The Daily Telegraph
April 29, 2017
SYDNEY’S property price frenzy is beginning to die down — real estate experts forecast prices in most suburbs will see little growth over the coming months while falling marginally in areas with a high concentration of new units.
CoreLogic data showed Sydney’s median home price would likely finish April down 0.1 to 0.2 per cent from March levels, with more subdued market conditions expected to continue over the traditionally quieter winter months.
The main drivers of the slowdown have been a push by banks to tighten investor access to credit and a drop in foreign purchases, which have dampened demand.
A stream of new housing, mostly units, has also hit the market, easing buyer competition for homes.
The result is that apartment prices have already been falling in pockets of the city’s inner south, Homebush region and the Greater Parramatta area — areas where developers are releasing a slew of new housing, with more projects still in the works.
The biggest fall was in Hillsdale, a suburb in the Botany area roughly 7km south of the CBD, where the median price of a unit dropped 21.8 per cent over the past year.
Median unit prices also fell by more than 10 per cent in Sydney Olympic Park and Auburn, while prices in Mascot and the Sydney CBD fell roughly 7 per cent.
Suburbs around the Parramatta CBD recorded minor drops in apartment values of 3-5 per cent, including in Ermington, Dundas, Granville and the suburb of Parramatta.
“Record-high levels of apartment supply are likely to act as a brake on capital gains.”
CoreLogic head of research Tim Lawless said weaker unit performance contrasted with a strong market for detached houses, which remained in short supply across the city.
“The weaker growth conditions within the unit markets’ sector reflect heightened levels of new supply across specific inner city unit precincts,” Mr Lawless said.
“Record-high levels of apartment supply are likely to act as a brake on capital gains in precincts where supply is high.”
BIS Shrapnel analyst Angie Zigomanis said units in areas such as Auburn and Parramatta, along with Mascot and other parts of the city’s south, were more vulnerable to price falls because of a large supply of “homogenous” unit developments aimed at investors.
SUBURBS AND PRICE FALLS
Unit prices have fallen in parts of Sydney as new construction decreases buyer demand
|Hillsdales - Medium $632,000||Down 21.8%|
|Olympic Park - Medium$690,900||Down 12%|
|Auburn - Medium $517,500||Down 10.5%|
|Sydney CBD - Medium $741,500||Down -7.3%|
|Mascot - Medium $840,000||Down 6.9%|
That reliance on the landlord market meant unit prices in these areas were affected by the recent push from banks to issue fewer loans to investors, Mr Zigomanis said.
Suburbs with a heavy concentration of unit stock aimed at investors have not gone unnoticed by homebuyers.
Pamela Lodge, 25, was recently on the hunt for a new apartment and said she scrapped her initial plan to buy in Parramatta after realising the units on offer tended to be smaller and aimed less at owner occupiers and more at would-be landlords.
“A lot of people think Sydney’s (price growth) cycle has ended, so they want to take out their money.”
“Some of the properties were just 50sq m and I wanted something bigger,” she said, adding that she later bought a one-bedroom apartment off-the-plan in the Foundry, a new development in Liverpool.
Laing and Simmons managing director Leanne Pilkington said such attitudes were becoming more common among buyers, who are pickier than before.
“Auction clearances rates were over 80 per cent for much of this year, which usually shows there’s many people willing to pay a lot of money for property but now clearance rates are dropping,” Ms Pilkington said.
“Agents are also reporting less people at open homes and there is less competition than there was, so I don’t think we can expect big growth in prices to continue.”
A slowdown would help stabilise prices, which would be good for the market, she added.
Nicholls & Co Estate Agents founder Cameron Nicholls said more property owners, particularly investors, were cashing out of the market after deciding it had peaked.
“A lot of people think Sydney’s (price growth) cycle has ended, so they want to take out their money and buy in a place where the cycle is starting,” he said.
Many owner occupiers were also cashing out, often by selling their homes and moving to regions outside of Sydney with cheaper housing, Mr Nicholls said.
North Strathfield resident James McCrow has listed his home with Devine Real Estate agent Roger Agha and said he is selling his two-bedder on a 300sq m block at 8 Conway Ave to make a treechange.
“It’s not only about the prices,” Mr McCrow said. “The area has changed. It’s still convenient to get to the city and the amenities are better but the density keeps increasing.”