Monday, 22 January 2018

Falls in apartment prices are accelerating in Sydney’s construction hot spots

Best Asia Real Estate Blog editor’s comments – As I said a few weeks ago, the current downturn in Sydney, Australia real estate prices is not temporary but will begin to increase exponentially as more people get scared out of the market.

This is good news for those wishing to rent or buy and bad news for those who already own or want to invest.

My advice to investors is look for greener pastures in Asia, in particular in Bali where prices are now down as much as 50% from the 2014 highs.

For further information check out our website or contact me direct at Lawrence

You may also attend my first free Bali Real Estate Seminars of 2018 - See full description of seminar below article or click on this post. FREE SEMINARS

EARLY falls in apartment values in Sydney’s residential construction hot spots are now on a par with the amounts highly paid professionals earn in wages, including lawyers, new data shows.
The Daily Telegraph JANUARY 19, 201811:00PM

Apartment prices have been falling so rapidly across Sydney’s residential construction hot spots that units are losing more in value each week than their owners earn in wages.

Exclusive data obtained by the Daily Telegraph revealed the biggest falls were recorded in the Sydney Olympic Park precinct and parts of the inner west and Parramatta.

Median unit values in these regions dropped by up to $145,000 over the past year, a rate of $2788 for each week and the equivalent of the average lawyer’s base income.

The falls have come amid a wider slowdown in the Sydney housing market following nearly three years of unprecedented price hikes.

Unit construction in NSW keeps climbing Source: CoreLogicSource:Supplied

At $895,000, the median price of a home across Sydney as a whole is currently about $14,000 (2.1 per cent) lower than it was at the start of October, with most economists agreeing that prices peaked in July.

Suburbs between the inner west and Parramatta recorded even larger price drops due to the large supply of new units and softer demand from investors, who comprised the majority of buyers in 2016. chief economist Nerida Conisbee said the price falls were inevitable.

“Parramatta in particular has been getting a lot of new units, but there is only so much you can keep building until there’s an oversupply and prices start decreasing,” Ms Conisbee said.

“Units may have also hit prices buyers can no longer afford, so they’ve backed away.”

The suburb of Mortlake, just opposite Olympic Park, had the biggest drop in median apartment values for the year.

Suburbs between the inner west and Parramatta recorded even larger price drops due to the large supply of new units.

Typical apartment prices fell by $145,000 to hit $890,000 — an average loss of $2788 for every week of the year, according to the CoreLogic data.

Apartment values have been falling by $1490 per week in Rydalmere, while unit prices in neighbouring suburb Ermington have been dropping by $1057 a week.

The impact of rampant home building in Sydney Olympic Park has also been felt in the surrounding inner west region.

Concord unit values fell by an average of $538 per week, while apartments in Annandale, Balmain, Rozelle and Forest Lodge fell by $697 to $1634 per week.

Most homeowners in these areas would not have felt the pinch from the value falls if they purchased more than a year ago because prices went up so rapidly in the years preceding the current slowdown, Ms Conisbee said.

EDITORIAL: It’s time ... prices have dropped

This meant the value of their homes remained higher than their purchase prices — for now.

“At this stage, prices are still returning to equilibrium,” Ms Conisbee said. “I think we’d have to see a real change in the economy and unemployment for there to be a (collapse) in prices, although there may be more adjustments.”

Falling prices was good news for Romy Dellacorte, 38, who is looking to buy her first home.

When she started looking for a first home she was overwhelmed and enlisted buyers agent Rod McLoughlin from the Buyer’s Agency Sydney.

“It is definitely good news, most of my friends, we are all in the same boat, it seems impossible to buy in Sydney,” she said.

First home buyer Romy Dellacorte. Picture: Jonathan NgSource:News Limited

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“It has been impossible to get a foot in the market, the fact prices have dropped is great,” she said. “Most of my friends are in the same boat — it seems impossible to buy in Sydney.”

First-home buyers Prayash Khadgi-Shahi and Manisha Sthapit were able to snap up a two-bedroom unit at Homebush for $644,000.

“The apartment is just over a year old and, compared with prices my friends paid recently, it was a fair bit cheaper,” Mr Khadgi-Shahihe said.

Prayash Khadgi Shahi and his wife Manisha are the proud new owners of an apartment at Homebush. Picture: David SwiftSource:News Corp Australia

Billionaire apartment king Harry Triguboff admits “the market is going down”. He has put one of his hotels­ on the market to finance­ his new Meriton developments­. “I am not getting­ enough sales,” Mr Triguboff told The Australian.

Mr Triguboff said offshore buyer demand had been falling over the past year and blamed the raft of taxes aimed at foreign buyers, including increased stamp duty costs.

Terry Ryder, founder of research group, said the risk of further price falls had made Parramatta and the Sydney Olympic Park precinct “risky” markets to invest in.

The regions were the only two Sydney areas which recently made a list of Hotspotting’s 10 “no go zones”, the markets where property buyers were most likely lose money.

In making the list, the regions joined other markets around the country with a heavy oversupply of units such as inner Brisbane and inner Melbourne.

Approvals for new units in those markets have recently begun to slow but CoreLogic figures showed NSW approvals have been steaming ahead.

Close to 70,000 new NSW homes were approved in the September quarter, well above the 40,000-odd approved in Victoria and the roughly 25,000 approved in Queensland.

CoreLogic analyst Cameron Kusher said the approval levels showed NSW had an “insatiable appetite” for constructing new units.

Homeowners uncertain of how the changing market may affect their sales prospects should keep in mind market conditions varied wildly across Sydney regions, according to buyer’s agent Rich Harvey of Propertybuyer.

“Parramatta and Sydney Olympic Park still have more land for building more units so are prone to oversupply,” Mr Harvey said. “This isn’t the case in many areas closer to the city and beaches which are still seeing some price growth.”

Are you tired of traditional investments such as banks and bonds that only offer 1-6% per year which do not keep pace with the real inflation.

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Whether you are a buyer, seller, broker, agent, investor, lessor or renter you can benefit from attending one of our two free Real Estate Seminars in Bali this month.

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