Buyers are taking advantage of Sydney’s falling prices and snapping up great-value quality properties
Property values in Sydney have recorded their sharpest annual decline since 1983, at 8.1% according to CoreLogic data. However, banks are not duly concerned and are letting the slowdown play out.
“To date, the Reserve Bank has not been overly concerned with falling dwelling values, largely because it has mostly been contained to Sydney and Melbourne, and both cities have seen a substantial run-up in values over recent years,” says Cameron Kusher, research analyst at CoreLogic.
As a result, dwelling prices are set to drop even more throughout 2019, with Sydney taking the brunt of it alongside Melbourne.
“If the slowing housing market delivers an impact to consumer consumption, we could then see a change of tack and see some of the temporary macroprudential measures eased back throughout 2019,” Kusher adds.
The Sydney downturn has also affected areas like the Central Coast and Wollongong, but REA Group chief economist Nerida Conisbee has identified areas that are outperforming the market. “Places like Orange are doing pretty well, along with the Northern Rivers shire going up towards the Queensland border. Byron Bay and the smaller towns around seem to be seeing high demand as well.”
Good news for upgraders
For buyers looking to upgrade, the downturn has been a positive market movement, as upgraders are now able to save a considerable chunk on homes in prestige suburbs.
“I don’t think conditions have ever favoured [trade-up] buyers as universally as they do now,” says Nick Viner, founder of buyers’ agency Buyers Domain.
“There’s an incredibly rare window of opportunity to secure a really good quality property with extraordinary long-term potential because the competition just isn’t there at the moment.”
He cited some reasons for this as lack of competition, the implementation of a tax duty surcharge on foreign investors, tight lending conditions imposed by the banks, and the overall tightness of credit.
“It is impossible to know when the market has hit the bottom until it is on the way back up. But Sydney auction clearance rates are down – currently not much over 40%. Buyers can be picky, so there’s a chance to purchase blue-chip properties that are usually very difficult to secure in a rising market,” Viner says.
SUBURB SPOTLIGHT
TOUKLEY: Market in a downswing
The suburb of Toukley is a beautiful spot on the Central Coast, surrounded by lakes and beaches. It has numerous natural attractions, such as Tuggerah Lake and Birdie Beach, which bring in tourists.
Investors in this area, however, are beginning to feel the effects of NSW’s slowdown, as property prices recorded a fall for the fi rst time since December 2013. The average vendor discounts on houses and units in October 2018 were also quite high at 6.8% and 5%, respectively.
Unit rental rates shot up by 10.3% to a weekly average of $320 in the year to October 2018. Units also spend an average of just 43 days on the market.
Tourism: Surrounded by lakes and the sea, Toukley attracts tourists who enjoy fi shing and the beach
Rental rates: Unit rents rose by a whopping 10.3% to $320 in the 12 months to October 2018
