Ocean views, sought-after schools and hardly a property for sale in sight. Some of Sydney’s most tightly held suburbs had only a handful of sales within the past year.

The number of Sydney properties for sale plummeted amid the market downturn and economic uncertainty caused by rising interest rates, further reducing supply in areas with already low turnover – such as prime locations and smaller suburbs.

Waterfront Watsons Bay, Kirribilli and Whale Beach, where houses are in limited supply to begin with, were among more than 80 Sydney suburbs where five or fewer houses traded over the year to March, Domain data shows.

House sales were also limited in similarly small prestige suburbs like Point Piper, Darling Point and Tamarama, which each had between six and 12 transactions.

However, even areas with more housing, such as Bondi Beach, North Manly, Narrabeen and Brighton-le-sands, were among more than 370 Sydney suburbs where house sales slumped below 50, the benchmark used by Domain research to calculate a suburb’s median price.

As were middle ring suburbs like Summer Hill and North Epping, and outer suburbs like Mount Kuring-Gai and Camden.

For apartments, South Coogee, Clovelly, Millers Point, Enmore and Willoughby, were among the suburbs with limited sales.

It comes amid a drop in homes for sale, as sellers hesitate amid falling prices and rising interest rates. While prices have now been rebounding for several months, the number of homes listed for sale in May, was still down 20.7 per cent annually.

Ray White’s head of research Vanessa Rader said properties in prime locations, whether that was a waterfront or beach side position or a family-friendly suburb with good schools, were traditionally tightly held.

“These are typically pockets that have some kind of geographic advantage. You can’t just go recreate that too easily,” she said.

“If someone is selling an asset in these locations, where are they going to move to,” she said, adding this had become a greater concern amid low supply levels.

Rader said would-be sellers held back as prices declined. That then reduced the options for buyers, further deterring homeowners from selling, as they feared they would not find a suitable home to move to.

“It’s hard to find somewhere to buy, and if you have to go into the rental market, the vacancy rate is at a longtime low,” she said.

Uncertainty about the property market and broader economic outlook was also deterring sellers, as was the increasing difficulty of refinancing.

Eastern suburbs agent Ric Serrao, principal of Raine & Horne Double Bay, said traditionally tightly held suburbs had become even more so.

“There’s a percentage of clients who are opportunistic and when they feel the market prices are not on their side they just don’t list,” he said.

Limited supply increased competition for available properties, putting a floor under price declines, and supporting the recent rebound.

“How can something go down, when every time you’ve got a property you’ve got 10 to 15 people turning up,” Serrao said.

It was a similar story in the northern suburbs, where Pello Northern Suburbs principal Michael Dowling has seen listings become even fewer in low turnover suburbs like Denistone and East Ryde, which recorded 40 and 38 house sales, respectively.

“[East Ryde] is a very family orientated area, one of the areas in the Ryde district where all the neighbours seem to know each other … and there’s a lot of older people who have been there since the dress circle estate was built,” he said.

The area was popular with upgrading families from the north shore and inner west, seeking a comparatively more affordable house, in a family-friendly area and a central location.

Deciding to leave such a suburb behind is not easy, as East Ryde sellers Mark Khoo and Andrea Wong know, having recently listed their five-bedroom house to relocate closer to family.

They purchased one of the suburb’s original estate homes 18 years ago, from the property’s first owner, and later rebuilt on the block.

“East Ryde has been perfect for us raising a young family, it’s a very central location, close to schools, shopping centres and amenities, we’ve got lots of lovely neighbours, a strong sense of community and there’s lots of surrounding greenery,” he said.

“It was a difficult decision to decide to sell, but the market seems to be in a healthy state,” he said, adding there had been a strong level of interest so far.

“I think this reflects that it’s a sought after area with not much turnover.”

Dowling added that several months of price growth had given buyers and sellers more confidence to transact.

While listing volumes were still low, there had been a recent uptick in home appraisals across the northern suburbs, which could lead to an increase in homes for sale in three to four months time.

Source : TheSydneyMorningHerald

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According to Knight Frank’s Global Prime Residential Forecast, the projections for prime prices in 2023 and 2024 have been revised upwards. The 2023 forecast was initially 1.7%, revised to 2.4%, while 2024 was initially 2.1%, now 2.5%.

The factors set to shape 2024

The tumultuous 2023 has been characterised by global conflict, soaring inflation and interest rates, and general uncertainty.

But among the expectations for 2024, the report found headwinds may be easing, the proportion of cash buyers rising, and elections are the biggest risk to prime markets for next year.

The report found that cash sales rose from 46% to 52% in the last six months.

Politics and regulations are both a major hurdle and potential boon. On the one hand, tighter controls around energy, sustainability, and holiday letting may be concerns going into 2024, but on the other hand, relaxation of property and tax regulations may be an opportunity.

Upcoming elections include the Indian General Election (before the end of May 2024), US Presidential Election (November 2024), UK General Election (before January 2025), Canadian General Election (Before October 2025), and Singaporean General Election (before November 2025).

The report also found that the increase in demand is expected to be small, likewise the increase in supply, sales, and foreign buyer activity.

Melbourne and Sydney in top ten for price growth forecast

The Sydney luxury property prices are forecasted to rise five per cent next year, fifth behind Auckland, Mumbai, Dubai, and Madrid.

Melbourne came in at eighth in the world, with prime residential property prices predicted to increase by three per cent.

Perth and the Gold Coast are also forecast to see luxury homes rise in value, up four per cent each.

Source: Knight Frank Research.

Knight Frank head of residential research in Australia, Michelle Ciesielski, said cautious optimism was emerging in the luxury residential property market globally, with prime buyers appearing confident that economic headwinds were easing.

“In Australia, buyer appetite is strengthening, while supply of prime properties is constrained,” she said.

“The limited number of exceptional and most desirable prime residential property listings continues to create a price floor under many luxury Australian properties.

“This undersupply of luxury homes is one of the key factors set to shape the performance of the Australian prime residential market in 2024, with inflation and interest rates also set to play a big role.”

Michelle Ciesielski, Knight Frank

“In saying that, in this upper echelon of the market, we are seeing an increasing number of cash buyers, with the proportion being 60% of all prime residential property sales in Sydney and 65% in Melbourne.

“Climate risk, geopolitical tensions and currency shifts are also expected to impact the Australian luxury property market.

“Amongst these risks there are opportunities, however, with property set to continue to appeal as a means to diversify and spread risk, being seen as a safe haven for capital.”

Knight Frank head of residential in Australia, Erin Van Tuil, noted that the super-prime end of the market, especially A$20 million plus, is doing exceptionally well, with no shortage of buyers and limited homes.

“Most buyers are local Australian buyers, with a notable absence of foreign buyers committing to sales, despite enquiries.

“Relative to other Australian cities, Melbourne has counted more prime luxury product built over the past couple of years, which has made prime prices lag the stronger performance in other Australian cities.

“Melbourne is also still recovering from an extended lockdown in the pandemic, with the city seeing many residents move interstate to Queensland and the slower return of international investors which the city relies heavily on.”

Source : ThePropertyTribune

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According to the Regional Movers Index, 80% of the Aussies who left a capital for regional Australia in the past year came from Sydney.

This is up from the year to September ’22, when the index, powered by CommBank and the Regional Australia Institute, found 60% of capital to region migrants were coming from the NSW capital.

The CPI index showed goods and service prices in Sydney rose another 1.3% from July to September, 5.6% over the year, with housing inflation up 3.3% over the quarter, the biggest increase in the country.

Earlier this year, Muval removalists revealed nearly a third of all outbound enquiries they received were from Sydney, with CEO James Morell saying the cost of living exodus “could be on par with Covid”.

With much of the record recent overseas migration concentrated around Sydney, property prices have been driven back up, and more Aussies are just simply being priced out of living there.

Since bottoming out in January, Sydney property prices have risen 11.6% according to CoreLogic, with the median price for houses and units now at $1,121,196 and $832,222 respectively.

Two Red Shoes mortgage broker Rebecca Jarrett-Dalton says for first home buyers, Sydney is virtually out of reach.

“Even with a healthy budget of $800,000, the price cap for buyers taking advantage of the government’s first home loan deposit scheme, buyers are priced out of most of Sydney’s suburbs,” she said.

“To stay within budget, first home buyers would need to search for properties on the city’s fringes on the west, south-west and as far as the Blue Mountains.”

Where to now?

In the past year, capital city property prices have mostly appreciated faster than regional areas, with demand returning to the big cities after a regional surge during the pandemic.

Lots of this however is due to international migration, and with demand pushing up prices, there’s still a sustained trend of Aussies leaving the city for regional areas, with affordability likely a big factor.

This is one of the factors that could in turn help mitigate price growth in the big cities, with more buyers priced out looking elsewhere, easing demand.

Regional Australia Institute (RAI) CEO Liz Ritchie says capital to regional migration levels are up 11.7% on the pre Covid average, and there’s growing opportunity away from the likes of Sydney and Melbourne.

“In September there were 91,400 jobs advertised in regional Australia, which is partly why we’re seeing such strong migration to our country communities,” she said.

The Index found 39% of Aussies leaving the capital cities moved to regional NSW, up from 26% in the 12 months to September ’22.

The Snowy Valleys Local Government Area (LGA) in southern NSW seems particularly attractive, with net internal migration increasing over 200% over the past quarter.

However, the most popular destination for internal migration was Queensland’s Sunshine Coast, which attracted 16.7% of the total in the year to the September quarter.

Top five regional LGAs by share of internal migration

Top five LGAs by share of capital-regional internal migration

Source : Savings.com.au

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Sydney’s chronic housing crisis is costing the economy more than $10bn a year, according to research from the Committee for Sydney thinktank that also found just five major cities around the world were more unaffordable.

Researchers found the costs were being felt most by young Sydneysiders at the start of their careers who were affected by an inability to find affordable housing near their work, leading to a costly loss in productivity.

The problem is so severe that it threatens to hasten brain drain and squash the city’s startup ecosystem, making it even harder for people with business ideas to make them a reality and costing the city an estimated $2.9bn a year.

Inefficient commutes alone cost the city $2.5bn a year in lost productivity, according to the committee, with women worse off due to the “spatial leash”, meaning they often have to work closer to home.

Benchmarked against other major metropolises, the report found Sydney met the three key chronic unaffordability metrics and required immediate and bold interventions.

The city’s median property price has surged to 13.3 times the median income; 35.3% of renters are in housing stress and the city is ranked the sixth-least affordable city, beating New York and London. Only Hong Kong, San Francisco, Singapore, Vancouver and Tel Aviv were less affordable.

The committee’s head, Eamon Waterford, said the level of housing stress necessitated a major rethink from politicians and the public.

“If we measure politicians on an electoral cycle … will they solve housing affordability in the next four years? The answer is unequivocally no,” he said. “It is about identifying – what are the levers that we pull in the next series of years that are going to set us on the right path?

“You could look at it similarly to the way we think about climate change. You can’t solve climate change in a single electoral cycle.”

Estelle Grech, the committee’s planning and housing policy head, said the report was about showing the financial impact of the housing crisis and encouraging bold action.

“What we’re trying to do with the big figure and the research … is give government licence to make big bold, unpopular at times decisions, but decisions that need to be made,” she said.

“This is a big issue and we need a big response.”

The committee’s recommendations included inclusionary zoning targets for affordable housing in new developments, investing in “much more” social and affordable housing and increasing housing supply with transport, schools and childcare.

Waterford said the Minns government’s initial housing announcements were a “good first step, but they’re only a first step”, as were pledges made by the federal government.

The New South Wales government has acknowledged the dire situation for the state’s most needy after the priority social housing waitlist doubled in less than a decade and surged by 1,000 to 7,573 over the past year.

Waterford also urged the public to become more active in calling for more development.

“Support growth in your local community, become a yimby, show up to council meetings and speak on behalf of development that’s going to see significant numbers of houses being built into communities,” he said. Yimby, short for “yes in my back yard”, is a term adopted by those in support of development.

Waterford added: “Speak to your neighbors about the existential challenge, recognise that building housing for people that are different to you is a really good outcome for your community because that diversity breeds vibrancy.”

The alarm has been sounded after Guardian Australia revealed Sydney apartment buildings were being acquired by developers, demolished and replaced with luxury homes, resulting in a net loss of dwellings.

Source : TheGuardian

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Sydney’s most pricey rentals are set to get even more expensive, with the city’s luxury rental growth having shot up from 11.7% to 13.1% when compared to the last quarter, deviating from the worldwide slump in rental growth, according to Knight Frank’s latest report.

Prime rents down, but still elevated

Average prime rents in major world cities were increasing rapidly, with an annual growth of 7.5% in the 12 months to June, according to Knight Frank’s Prime Global Rental Index (PGRI) for the second quarter of 2023.

The PGRI provides quarterly reports of luxury lettings market patterns across 10 major city markets globally.

While the Q2 rate was below the 8.2% seen in Q1 this year and the 12.2% peak in Q1 2022, the present growth is still significantly higher than the norm. To illustrate, the pre-pandemic average annual growth of the 10 years to 2020 was 2.2%.

However, from the beginning of 2021, the market’s recovery from the early shock of COVID-19 has brought about an average growth of 6.6%, thrice the pre-pandemic average.

Knight Frank head of residential research, Michelle Ciesielski, said that the main factors behind the rental growth trend are a high demand from residents returning to cities post-lockdown, buyers being priced out of sales markets due to price rises driven by interest rate increases, and a scarcity of new supply caused by problems in construction throughout the pandemic.

The second runner-up in luxury rental growth

Sydney’s annual luxury rental growth of 13.1% was the third highest, according to the PGRI, behind London’s 14.4%, and Singapore’s 24.5%.

Knight Frank Prime Global Rental Index (Changes to Q2 2023)

Luxury rents in the capital city experienced the most substantial growth over the past six months, at 8.7%, and the second highest growth over the past three months, at 3.2%.

“The overall index has risen by 23% from Q1 2021 to date,” Ciesielski said.

“Growth in specific cities has been even stronger, with New York, Singapore, and London seeing rental growth of 56%, 53%, and 51% respectively over the same period.

“While some of the PGRI growth hubs have seen a moderation in the pace of rent rises, including Singapore, London and New York, and the index overall shows a fall in the pace of rental growth, Sydney is seeing the opposite trend with annual growth increasing compared to the previous quarter.”

Ciesielski remarked that while rental growth will eventually stagnate, the dearth of new stock being delivered means that high rents will remain the norm.

Little hope on the horizon

“A chronic undersupply of rental homes currently extends to most parts of Sydney at every price point, and this continues to be reflected in the double-digit rental growth for luxury property being recorded,” said Knight Frank head of residential, Erin van Tuil.

“In affluent areas, there tends to be at least one home in the street having some type of renovation work done, and many take up a rental home while these works are being carried out. Construction delays over the past few years have meant these prime rental homes are required for double or triple the time than first expected while they wait for tradespeople and prime cost items from around the world to be delivered to finish the job.

“We continue to experience a skills shortage in Sydney, and this extends to the executive level who are most likely going to need a prime residential home provided when lured to work here. Elevated rents are being paid to secure a prime rental home until they settle into the city.

“In the past few months, there has been an increasing number of box office movies being filmed in Australia with actors and production crew using Sydney as their base, placing further pressure on the top end of our rental market.”

Source : ThePropertyTribune

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“Inner-city units are likely to continue to see stronger rates of growth because the pressure point is coming … from that flow back [of people] from overseas.“

PRD Real Estate chief economist Dr Diaswati Mardiasmo said the rental shortage had been exacerbated by new housing projects being deferred or abandoned because of high construction costs, and labour shortages.

“You’ve got higher demand [as immigration returns], and supply hasn’t recovered,” she said.

“Then we are also getting investors tapping out … as the cost of their mortgage payments, body corporate, and rates have gone up,” she said.

While inflation was slowing, the pace of rent rises increased on the latest Consumer Price Index figures, Mardiasmo said. Rents could rise further still, but would soon max out.

“We will hit an affordability ceiling,” she said. “When the income is not enough … people are more willing to move further out … or they’ll go for a smaller place, or try to find [a place] to share.”

This was already reducing demand for some locations and homes, with some property managers reporting a drop in applications and increase in the time taken to lease, Mardiasmo said.

A slowdown in rent increases can’t come soon enough for tenants like Shahil Gupta, who is paying $480 per week for a one-bedroom unit in Parramatta, where rents increased 22.2 per cent.

Gupta and his fiance hoped for a two-bedroom, but realised it was impossible on their budget. By the time they inspected 30-odd units they felt lucky to get anywhere in decent condition, within a half hour walk of the train station.

“Every place we went to was either out of budget or there was just a lot of competition,” the 28-year-old said.

“[Many of these properties] were just meeting the bare minimum … the bathrooms were dirty, there were stains on walls, in locations far away from stations, and even then, the prices were so hiked up.”

Gupta has picked up a tutoring job, on top of the four days a week he works, to cope with rising living costs, but does not know how he would cope if his rent increased later this year when his lease lapses.

Tenants’s Union of NSW chief executive Leo Patterson Ross said high numbers of people were calling for assistance with rent increases, and at the end of tenancies – because they were unable to find an affordable rental.

“These increases are pushing people out of communities … and causing a lot of distress,” he said.

Stronger protections for renters, more housing supply and rent stabilisation measures – similar to limits on rent increases in the ACT – were needed to address the crisis, Patterson Ross said.

Source : TheSydneyMorningHerald

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In NSW’s capital Sydney, house prices have rocketed upwards by 4.5 per cent since hitting rock bottom in November last year.

According to the PropTrack Home Price Index, the increase implied a rise in median home values of $45k, or $1470 per week since late last year.

In the past three months prices were up 2.7 per cent, representing an increase in median home values of $27k, or $2100 per week.

“Greater Sydney saw the fastest growth in home prices of any capital city over June. This marked the sixth consecutive month of price rises for Australia’s most expensive capital city. Sydney has now recouped much of the losses recorded over 2022,” PropTrack economist Anne Flaherty told news.com.au.

Ongoing property price growth acceleration in Sydney despite climbing interest rates pointed towards a significant imbalance between supply and demand, she said.

Sydney house prices have been climbing more than $2000 every week. Picture: NCA Newswire/Gaye Gerard

“The total number of properties listed for sale in Greater Sydney remains subdued and, in May, was a staggering 18 per cent lower compared to the same time last year.

“Fewer listings are contributing to more competitive market conditions which is seeing prices rise, despite higher interest rates.”

Prices were expected to continue climbing along with the population growth and a slowdown in how fast homes were being built.

“What’s more, the speed at which new homes are being built is slowing, with development approvals and construction starts slowing,” Ms Flaherty said.

“This is expected to exacerbate the issue of undersupply over the coming years which could drive prices even higher.”

Some of Sydney’s formerly more affordable suburbs have also skyrocketed in recent months.

“Price growth over June was strongest in the relatively more affordable outer suburbs, with the Blacktown, North Sydney and Hornsby, and Parramatta regions recording the strongest price growth,” she said.

Meanwhile, a handful of regions out the city’s outskirts had dropped in price.

A significant imbalance with supply and demand was to blame. Picture: NCA Newswire/Gaye Gerard

“In contrast, some regional areas are continuing to see declines, including the Southern Highlands and Shoalhaven, the Mid North Coast, and the Hunter Valley,” she said.

Every capital city except Darwin recorded increases in the latest PropTrack Home Price Index release on June 1, following prices accelerating and broadening in May.

Canberra and Hobart joined the rebound as their recent falls reversed and all regional markets saw prices rise in May except regional NSW and regional Victoria.

Canberra and Perth recorded the largest increases in May. Sydney, the market which led the downturn, has also led the recovery, with prices up 3.03 per cent in May from a November low and now down less than 2 per cent from levels seen in the same period last year.

Home price growth has been stronger in the capital cities than regional areas this year. This trend continued in May, with regional areas lifting a small 0.03 per cent and capital city prices lifting 0.45 per cent.

Regional markets have however outperformed on an annual basis.

Source : News.com.au

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