August 2018

This is the 4th in a series of stories summarising monthly news and happenings in Sydney real estate, and more broadly.

Upwardly, or at least sidewardly mobile

This month the area of concentration seems to focus on a maturing understanding on ‘softening’ housing values felt throughout the real estate industry, but especially in Sydney and Melbourne. The panic is over and industry voices are looking at the way forward, as well as more nuanced and likely future directions.

For example, Domain discusses the current rates of population mobility, and how this can affect the housing market. Are we moving less than we were a decade ago? This article discusses reasons and references that might show this is the case. Statistically speaking, Australians are – overall – one of the more mobile populations on the planet, and although this may be in decline due to increasing financial pressures especially in the cities, it is still above the international average.

Economist for Domain, Trent Wiltshire discussed data of the housing turnover rate that showed the Australian average mobility had fallen to below 5% in the March quarter (2018), which is below the ten year average of around 5.3%.

He states, “If the driver of this is worsening housing affordability, then all governments need to implement policies to improve affordability, such as by increasing the supply of housing in cities.”

Other cited drivers could include a lack of job opportunities in varying areas; once again pointing towards the increasing gravitational pull of the few major centres.

With these factors in mind, Cameron Kusher writes for Core Logic about the data in reference to trends in unit construction, and likely outcomes over the next few years. Especially in Sydney, he says, while there has been a large increase in unit supply over the past 5 years, there has simultaneously been a softening of the market with values and rental growth slowing.

Further to this, because there are significant numbers of units still in construction, this could point to a further weakening of the market, and even the possibility that units purchased off the plan may not give the savings expected. “In some cases”, Kusher writes, “the settlement value may be lower than the contract price”. The financial implication of this could be that buyers “may need to top up their deposit in order to meet their lenders loan to valuation requirements”.

Make the sale

Considering the shape of the market, a return to grassroots understanding for new vendors is becoming more important. If you want to get a sale, you’re going to have to put in the effort to make it worth a buyer’s while. Greg Natale and Troy Dowker give some fundamental advice on preparing your home for sale. The top level take-aways include:

  1. Remove clutter
  2. Paint everything new
  3. Attention to detail
  4. Landscape

If this sounds like a lot of work, consider how much you actually want to sell the place. Has the person 2 streets over has put the effort in? As a buyer, what would you want to invest in: a house where it looks like maintenance effort has been made, or one where it looks like it has not? In the current climate this story is an especially wise consideration.

The vendor had a hard time selling this house

Fact and Figures

The monthly report by Core Logic on the Sydney market, and nationally, has no real surprises but further confirms the direction that things seem to be heading in.

  • 10th straight month of falling home values
  • Brings the accumulative fall in values to 1.9% which is quite mild considering values are still 31% higher than they were 5 years ago
  • Sydney and Melbourne declines in values are accelerating and this is largely attributed to tighter credit conditions
  • Nationally, dwelling sales have dropped by almost 10% over the last 12 months with the largest annual declines in Sydney and Melbourne, at a respective 17% and 15%.
  • Market stock is 8% higher than it was this time last year, making it the highest amount for this time of year since 2012
  • Sydney house values have now dropped by 7%; units by 2.2% since peaking.
  • The most expensive quarter of Sydney’s market is down by 8% over the last 12 months while the most affordable quarter has fallen by less than 2%
  • Prediction of continuiing ‘subtle declines’ in the second half of 2018
  • NSW is seeing a growing population exodus to other states

Graph credit: Core Logic

Weird and Wonderful

In this month’s weird and wonderful are not one but two entries – both from Domain. The first by Nicole Frost, which discusses the hitherto thought extinct species of innercity Sydney units for less than $400k. Yes – it’s a thing! The story shows a number of examples of this increasingly rare occurance.

The second item comes at the absolute other end of the spectrum.

Lucy Macken writes that (bucking another trend) the North Shore’s most expensive house yet has entered the market at $35m. The house belongs to former Woolworths boss Bill and Vonnie Wavish, and is a 4 level residence in a prime position of Kurraba Point. If this were to sell it would smash the only months old previous record of $25m for the purchase of Mosman’s waterfront Hopetoun, which itself broke the previous record of $23m in February, also in Mosman.

This comfortable apartment in Paddington was passed in