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Sydney’s most expensive apartments 2011

Posted by Mark Mendel in Sydney Property News on 01 29th, 2012

Last week Domain wrote an article about the most expensive apartments in Sydney in 2011… Wow! Below is a list of the top 20 apartments sold.

Rank $m Address
1 $12.7 College St, city
2 $12.5 Liverpool St, city
3 $11.6 Buckhurst Ave, Point Piper
4 $10.8 Buckhurst Ave, Point Piper
5 $10 Buckhurst Ave, Point Piper
6 $10 Buckhurst Ave, Point Piper
7 $9.85 Phillip St, city
8 $9.7 Onslow Ave, Elizabeth Bay
9 $8.85 Rockwall Cr, Potts Point
10 $8.5 Sutherland Cr, Darling Point
11 $7.3 Bennett Ave, Darling Point
12 $7.25 Campbell Pde, Bondi Beach
13 $6.7 Milson Rd, Cremorne Point
14 $6.17 Macleay St, Potts Point
15 $5.52 Liverpool St, city
16 $5.5 Grantham St, Potts Point
17 $5.5 Grantham St, Potts Point
18 $5.07 Macquarie St, city
19 $5 Moruben Rd, Mosman
20 $5 Beresford Rd, Rose Bay

Besides this list there are probably a few more apartments that were on the market and didn’t sell and reportedly one apartment that has been sold off the plan in the Sydney CBD overlooking Hyde Park for $25million!

So after reading the article, what caught my eye more than anything was the acclaimed strata fees for the second most expensive apartment on the list being located in Stockland’s The Hyde. The cost of the unit was recorded at $12.5m but what is more amazing is the strata fees which are claimed to be $142,000 a year!!! Are you serious! This seems to be an absurd amount of money and can only wonder what this fee covers… What is important to know for investors though is that you want to look for developments with low strata fees. Anything up to about $3,000 per year is fine depending on the development and price you are paying for the apartment. Don’t let it deter you if it’s more, simply run the numbers and in some cases there may be good reason why your strata fees are higher and in return for high strata fees you may get facilities which tenants really want and are prepared to pay a higher rent to have! Also make sure you budget for strata fees to increase over time as they always do. Also remember as an investor, strata fees are an expense which you can claim and thus become tax deductible.

See the Domain article here.

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The Sydney public transport conundrum

Posted by Mark Mendel in Sydney Property News on 12 5th, 2011

The Sydney public transport system is a significant factor in determining property prices. On the one hand you have the ‘outliers’ – people who want to live in houses and who cannot afford the house prices of houses anywhere within 10 kilometers of the CBD. This creates demand in suburbs beyond the inner ring suburbs.  Many simply don’t want to be battling with the Sydney public transport system and may be eying inner suburbs for the future.

On the other hand you have people who want the convenience and the lifestyle associated with living in inner suburbs – Lower North Shore, Inner west, the City fringes and the Eastern Suburbs. Here supply and demand factors mean that apartments and semi-detached houses have risen strongly in value over the past five years.

The paradox is that the problem seems intractable.  No fewer than six different consulting firms have been engaged to look at ways of adding capacity to Sydney’s rail system. More recent advice by transport experts is that, over the next 25 years to allow more trains to run through the city – requirements that will cost in the region of $20 billion to $30 billion.

Newspapers have reported that senior bureaucrats have been told a multibillion-dollar overhaul of the system would be the cheapest and most efficient way to add capacity to CityRail during the next 25 years. One estimate shows costs of between $26 billion and $37 billion for adding capacity during the next 25 years. Without extra capacity through the CBD, trains will soon be so crowded in peak hours that services will need to be cut.

Two of the options raised involve using existing technology and double-deck carriages and building a second rail crossing over the harbor feeding a new station near Martin Place.

Another option, known as West Link, requires a second harbor crossing feeding a new station closer to Barangaroo. But three other options involve the ”three-tier” program of overhauling large parts of the CityRail grid, replacing it with ”metro-style” trains. These plans promise to run 28 trains an hour on existing lines through the city, compared to the maximum of 20 now.

A modified version of the three-tier strategy would cost $26.9 billion. The most expensive options would maintain double-deck trains across CityRail.

Whichever way one looks at these reports, it is clear that the same factors driving property prices today in Sydney as far as the split between those that want inner suburb convenience and lifestyle and these looking for affordable solutions, will still be driving prices in 5 years time.

Money spent on public transport won’t solve the problems but it will put money into the system.

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New Apartments Turramurra and Suburb Profile

Posted by Mark Mendel in Sydney Suburb Profiles on 11 17th, 2011

Turramurra is a suburb on the Upper North Shore of Sydney, in the state of New South Wales and is located 20 kilometres north of the Sydney CBD, in the local government area of Ku-ring-gai Council. Turramurra is a large suburb extending from Lane Cove National Park in the south to Ku-ring-gai Chase National Park in the north.

As a leafy, attractive and quiet suburb, it is particularly appealing to newly married couples who want to start families and this proliferation of young families has seen the establishment of local primary and high schools. With few new apartment blocks approved to be built in the area and only a small village centre, the suburb has retained much of its heritage charm. Yet more recently, the council have revealed plans to redevelop the area surrounding the railway station to incorporate a commercial centre and include higher density new apartment housing developments.  These new apartments in Turramurra are in high demand from people that wish to live in the highly desirable suburb but don’t wish to live in the large homes which currently dominate the Turramurra landscape.

New apartments in Turramurra have recently been sought after by young professional couples that are looking to live in more suburban areas than inner city Sydney while still providing easy transport routes across Sydney. Turramurra ticks these boxes with a train station on the Northern line as well as the Pacific Highway running through the suburb connecting residents with the F3 Freeway along with Chatswood and North Sydney. There is also a private bus service run by Shorelink.

With demand for new apartments in Turramurra, there has been talk of redeveloping the area around the Train Station into a new Town Centre or Civic Place. The key Site will be Ray street.

In the future this Key Site will become a community focal point, centred on a large new town square. A number of community facilities are to be located in this area within new premises. A new Turramurra library will also be provided fronting the proposed public space. This area will also become a major shopping destination with a new larger supermarket and associated specialty shops. To service these uses a new road bridge will be constructed over the rail line at the end of Ray Street connecting with Rohini Street. The bridge will provide a second access point for both vehicles and pedestrians.

Forbes Lane will be widened (through development setbacks) to create a new two-way street with on-street parking, a taxi stand and a kiss-and-ride area for the train station.

Shop-top housing will be provided on the retail podium providing further support for the retail and community uses. Council’s parking will be relocated to new basement parking upon redevelopment.

If you are thinking about buying a new apartment in Turramurra, then see the available new apartments on Find Investment Property.

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New Westmead Apartments and Suburb Profile

Posted by Mark Mendel in Sydney Suburb Profiles on 11 10th, 2011

Westmead is a suburb of Sydney and is located 26 kilometres west of the Sydney CBD in the local government area of the City of Parramatta and is part of the Greater Western Sydney region. The Postcode for Westmead is 2145. It is only 2km from the Parramatta CBD.

Westmead is a growing suburb that is known mostly for the Westmead Hospital that sits within its suburb borders. Health is the major employer in the area, with a large public hospital, a large public children’s hospital, a mental health hospital, a private hospital and three medical research facilities spanning basic, genetic, and molecular science for both adults and children.

There is also a train station at Westmead.

Due to the demand in the area, a number of new apartments in Westmead have been built or are planned to be built to cope with the increasing need for housing. Many of the older style homes in the area are been demolished to make way for new apartments.

Between 2001 and 2006 there was a population increase in the area of 26% which was well above the Sydney Average. This is due to not only the demand for people wanting to live in the area but also the number of new apartments in Westmead being built during this time.

In general, people in Westmead work in a professional occupation.

If you are thinking about buying an investment property in Westmead such as a new Westmead apartment off the plan, then you should look at what listings are available on Find Investment Property.

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Sydney Property Market to Correct?

Posted by Mark Mendel in Sydney Property News on 10 31st, 2011

Despite much speculation that the Sydney property market is overpriced and ready for a fall, upward momentum continued into Q1 2010, although at a slower pace than expected. House prices rose by 1.4% in Q1 2010 while unit prices rose by 1.6%. However, over the twelve month period median prices have risen by 14% and 12% respectively. Remarkably and against the odds, this has taken prices above the peak reached in 2004.

ABS data suggests that house price growth has continued into Q2 at around 5%, with annual growth of just over 20% in Sydney. However, other providers of price data consider it has slowed further.

In real or inflation adjusted terms Sydney continues to sit below 2004 levels, suggesting no real growth for six years. This is similar to trends in the early 1990s where real prices didn’t reach previous peaks until seven to ten years later.

It’s the shortage factor.

A shortage of housing is set to drive rent upwards in the medium terms. Prices may follow, particularly in apartments in the middle and outer ring suburbs. For example apartment rents rose 2.2 percent in the September quarter, the highest rise in the nation. This coupled with flat property prices, rental yields are raising. Apartments, on average bring in 5.1 percent returns; houses 4.5 percent. Rents rising as expected, vacancy low but affordability an issue.

Vacancy rates tightened to 1.1%, down from 1.3% of the previous year. Rental growth of $10 per week in Q1 2011 was the first increase in rents for five quarters and amounted to an increase of 2.5%. With continued undersupply and a healthy level of population growth, rental growth should continue through 2011, particularly in the absence of any short term incentives to move into home ownership.

Dwelling approvals rise continues, but still around 10,000 short per annum. The dearth of new development has been well publicised Once again units were the driving factor, and continues the trend of the past ten years.

Over 80,000 people are likely to have moved to Sydney, generating a need of over 29,000 dwellings, before demolition and household change are taken into consideration. With no further rate hikes expected in 2011 pressure may continue on prices until rates fall in the first quarter of 2012 (if rate cuts do eventuate).

Affordability to decrease as rates and prices rise, and should limit price growth.

Not surprisingly affordability has been weakening as interest rates and prices (and thus loan size) increase. As at March 2011 some 34.5% of average household income was being used to service an average mortgage in NSW of just over $305,000. This is somewhere between the average 5 and 10 year proportions.

Population growth remains strong but as migrants slow, fewer leave interstate. Slowing international immigration appears to finally be eventuating, slowing to 39,000 people from almost 45,000 people in the previous two half years. However, as the gap between NSW median house prices and other States narrows, fewer people are leaving.

While the slowdown in international migrants is expected to continue as tighter immigration rules apply, the improving economy will continue to ensure that a high level of immigration is required. If the net loss interstate can remain low NSW population can continue to grow in excess of 100,000 per year.

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Where to for Sydney property?

Posted by Mark Mendel in Sydney Property News on 10 26th, 2011

Property market observers often refer to the Sydney housing market as amongst the most expensive housing market in Australia and one of the most expensive housing markets in the English-speaking world.

By way of example, the latest Demographic International Housing Affordability Survey showed Sydney’s housing market to be the second most expensive (behind Hong Kong) out of the 325 markets examined.

This is supported too by the September release of MacroBusiness Australian Housing Valuation Report which as shown in their chart below and based on a ration of Multiples (median dwelling prices divided by median household disposable income),  shows Sydney identified as the most expensive housing market based on this measure.

Median Multiples - August 2011

As any home buyer in Sydney will attest to, it is undeniable that the housing market is ‘‘expensive’’, but there is there is also compelling evidence that Sydney’s house prices are based on stronger foundations than the other Australian capitals and that Sydney offers better value from an investment perspective.

Economics 101

Even if you have not studied Economics 101 you will appreciate that supply and demand is the primary and fundamental driver of prices for any commodity. Housing is no different. Indeed housing is THE exemplar for supply and demand at work.

One of the key drivers of Sydney prices over the past few decades has been the consistent supply and demand imbalances. When compared to other states the Sydney supply demand equation has almost always been in favour of upward bias in price pressure (allowing for pauses such as we are now seeing).

Indeed there is a fallacy about supply and demand and many people believe we have a national housing shortage and it is an accepted view that there is a significant shortage of stock. The fallacy has been generated by the tendency to add past shortages to the current year’s figures and the constant press about reducing development activity.

Here it is immigration and state migration that is a prime factor and data released by the Australian Bureau of Statistics reveals that Sydney is under-supplied and Melbourne over supplied (when planned buildings are taken into account). In fact, New South Wale’s (read Sydney’s) annual dwelling completions recently plumbed 30-year lows while the other states (particularly Victoria) experienced a mini construction boom.

Although Sydney’s dwelling construction rate – defined as the number of dwelling completions per 1,000 head of population – has for 30 years lagged the national average, it has slumped over the past decade. Sydney is now constructing homes at around half the rate of the other states.

The resources boom is also having an impact on state by stage markets and here it is noted that BHP Billiton recently predicted that over the next five years the mining industry would generate around 170,000 new jobs. Again, taking a leaf out of Economics 101, each new job created has a multiplier effect; it becomes clear why we should optimistically embrace our future.

Dwelling Completions

Sydney was unaffordable for most of the last decade and this market, on average, achieved a growth rate of 5.7 per cent p.a. Its last decade growth rate is an indicator of things to come in other similarly now unaffordable capital city markets. This outcome is not to say that Sydney’s house prices cannot/will not fall; rather that it is less susceptible to a downturn than some of the other capitals, such as Melbourne. Sydney’s price premium has eroded as the chart below shows.

Sydney’s real (inflation-adjusted) house price performance relative to the national capital city average since 2007.

Real House PricesAssuming Sydney’s housing values in relation to the other capital cities are likely to revert to some mean level, the current low valuation gap suggests that Sydney’s housing market is likely to outperform the capital city average.

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Sydney Rents Rise 13%

Posted by Mark Mendel in Sydney Property News on 10 17th, 2011

Sydney rents have risen by as much as 13 per cent in the last year, with the biggest hike at Edgecliff in the eastern suburbs.

Tenants are now paying about $60 more a week than they were a year ago, latest figures from Run Property show.

The Sydney suburbs of Edgecliff, Randwick, Ryde, Newtown, Surry Hills and Neutral Bay all recorded rent increases of more than 10 per cent for new tenancies in the past year, the report released today said.
Edgecliff topped the list with a 13.1 per cent rent hike.

In Melbourne, Thornbury, Oakleigh, Fairfield, Carlton North, South Yarra, Kew and East Melbourne recorded rents rise by at least 9 per cent.

Thornbury had the highest increase of 12.2 per cent.

By contrast, Brisbane rents rose by an average of just 3.4 per cent, or $11 a week.

Run Property CEO Rob Farmer said the jump in rents showed there was still value in investment properties.

“The smart money is starting to flow back into investment property, especially now that the sales market is off the boil and there are buying opportunities out there,” Mr Farmer said in a statement.

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Artarmon Apartments and Suburb Profile

Posted by Mark Mendel in Sydney Suburb Profiles on 07 4th, 2011

Artarmon is a suburb on Sydney’s beautiful lower north shore and the postcode is 2064. This is very conveniently located only 9kms from the Sydney CBD and the local government area is Willoughby. Artarmon is also very close to Chatswood, which is becoming a very dense CBD hub.

About 50% of those who live in Artarmon are owner occupiers with the majority being couples. The predominant age group is 30 – 39 and there is a good mix of older style homes and apartments. As the lower north shore becomes more of an area where many are choosing to live and downsize to  new apartments are becoming increasingly popular.

Artarmon has a mix of residential, commercial, retail and industrial and it’s this mix that makes it a truly unique suburb. Many people relocating to Artarmon are choosing new apartments because of the convenience that they represent. Many of the new apartment developments in Artarmon are walking distance to the train station and shops. Chatswood is 5 minutes on the train and offers everything one could wish for. The city is only 15 minutes on the train. It is no wonder this area has high demand given its proximity to the CBD and Chatswood and this is just one of the reasons that rental returns are strong and vacancy is low.

Even thought Artarmon is in a perfectly located area, it is a very quiet suburb and has a very relaxing feel to it. This is perfect for those who love the fast paced lifestyle that Sydney boasts but also like to have the opportunity to relax in the comfort of their own home (or new apartment!)

Artarmon offers more boutique style developments which keeps with the theme of the area. This is perfect for all and the new apartments offer dynamic floor plans and outdoor living. This suburb offers very stable growth and yield and is perfect for first home buyers, those wanting to downsize and of course investors as the tenant pool is so large for new apartments in Artarmon.

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A Second Airport for Sydney…is ‘maybe’ coming

Posted by Mark Mendel in Sydney Property News on 04 28th, 2011

For decades we have heard discussions about a second airport for Sydney. It has been a political talking point for as long as I can remember and still to this day the politicians have absolutely no idea what they are going to do about it, when it might happen and what it is going to cost.

In contrary to NSW’s lack of activity on the airport agenda, China is planning on building a new airport every 40 days for the next five years! That’s 45 new airports! An unbelievable effort if achieved and all based on China’s booming economy and the requirements of travel within the country.

Australia’s number one airport is Sydney and is ranked 23rd busiest in the world based on passenger numbers. Although it is ranked so high, the size of the airport and the number of runways simply can’t cope with the continual growth of flights coming in and out of the country as well as the domestic flights internally. Sydney is in dire need of a second airport and at the moment nothing is being done about it.

Now that there is a “taskforce” involved (something the Government sets up to make it look important and more importantly appear as if something is being done about it…even though it seems that nothing really is) they need to start the motions once again as to the most desirable location and of course this brings out all the those who oppose it because they  don’t want the new airport in ‘their’ backyard (which I can understand).

So, what are the options available?

-          Badgery’s Creek – 64km by road with travel time estimated at around 1hr to the Sydney CBD

-          Holdsworthy Army Base – 50km by road with travel time estimated at around 1hr to the Sydney CBD

-          Richmond air force base – 64km by road with travel time estimated at around 1hr to the Sydney CBD

These are the options for consideration but there are others which really need to be brought to light and cater far better for the future rather than just the bandaid solution for today.

One of the best out-the-box solutions that I heard some time ago was to utilise Canberra’s “International Airport” (which,  by the way,  doesn’t accept any international flights) and connect it to Sydney with a fast train. This not only helps redirect some of the flights to Canberra but also will stop some flights altogether as the Passengers on the Sydney to Canberra flights may find it easier to utilise the fast train between the destinations. The other advantage of this is the possibility of building a fast train from Melbourne to Canberra allowing people to choose between flights and train.

Staying on the same track of fast trains (excuse the pun) the other option is to expand the airport in Newcastle and provide a fast train from Newcastle not only to Sydney but also up the coast to Brisbane.

I can understand that a fast rail network would be expensive but Australia has to move with the times and by simply not building a new airport in Sydney (estimated to cost between $15 – $25 billion) that money could be better spent on a rail network which will help serve the greater population of Australia along with its international visitors.

So a second airport or a rail link… you tell us?

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Sydney Rents Jump in 2011

Posted by Mark Mendel in Sydney Property News on 02 20th, 2011

Following an increase in rents in 2010, 2011 is likely to provide further rental growth benefiting property investors looking to buy new apartments.

In 2010, median rents jumped by 10% or more than double what they did in 2009. The urban Taskforce blames the government for a lack of new supply of housing stock including new apartments, townhouses and house and land packages. Aaron Gadiel, CEO of Urban Taskforce, said lack of new housing was clearly placing strong upward pressure on rental prices.

“Residential lot production is presently running at less than half the level required by the NSW government’s own Metropolitan Strategy.”

 Moreover, Mr Gadiel said that no Australian capital city approves less new homes per head of population than Sydney.

 “The city’s per capita housing supply has halved since 2003,” he said

 Developers want to build but the release of new land and the slow planning approvals are restricting the supply of new housing in Sydney. Another contributing factor is the locals in each community that are against new development. The “not in my backyard” campaigns by existing residents and local politicians are causing more harm than good.

Mr Gadiel says, “We need to see lower development levies, more transparent, greater investment in urban infrastructure and a more flexible planning system that responds to the requirements of the whole community, not just those who are trying to block new housing.”

As 2011 gets underway, there are predictions that rents across Sydney and the rest of Australia could even jump higher than 2010.

“For the coming year we expect rental markets to tighten further and rental growth during 2011 will [most] likely eclipse that of 2010,” Mr Kusher said

RPData blames housing affordability for the increasing rents.  As property prices rise, it makes it more difficult for people to enter the market leaving more renters to compete for rental stock. Effectively the undersupply of new housing is causing both the increasing prices and the lack of supply for renters.

The common theme here is that unless the NSW Government doesn’t do something soon to help increase supply of new homes across Sydney in the inner, middle and outer rings, Sydney prices are going to rise faster than they have before with a drop in home ownership and a skyrocketing rental market that may just become out of control.

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