By Guest Blogger: John Cunningham, Managing Director
Cunninghams
The northern beaches property market is defying logic at present and is performing in the main at levels that match the peak of 2017.
Considering the dip of late 2018 to early 2019 with election and taxation fears and then the jitters of the early COVID-19 days this spring recovery is now following traditional market conditions.
Buoyed by low interest rates and a stable fiscal environment the Northern Beaches is also not seeing the distressed sales environment at this stage with banks quietly saying (off the record) that we are in one of the lowest stress regions in the country.
When all is considered these conditions are then reinforced by a continued decline in properties offered for sale which has dropped to the tune of 40% over the past 10 years and this has seen a decline in sales of over 25% during the same period. In other words, our supply and demand is severely out of balance with no relief in sight. This is forcing prices up and unless there is more stock coming to the market as we progress through spring this trend will continue. There are signs of more stock on the horizon with plenty of appraisals taking place across all price segments, but I fear that this slow decline of stock is here to stay, as there has been no movement in property tax reform, nor planning reforms to open up more medium density housing on the Northern Beaches to add to the supply and satisfy the demand.
The depth of buyer demand is so strong that all segments of the market are now performing strongly with even the investor market rebounding over the past month as yields continue to improve in a very tight marketplace.
Average rents are up by 10% and in the House market up 20% in many cases and this is fuelled by prospective tenants becoming far more discerning in their choices and as such are willing to pay accordingly for quality. It proves the point that presentation is everything and when it comes to property investment quality attracts quality and the ROI is up accordingly.
The biggest performer on the Northern beaches this past year has been in the Upsizer/ family home market where demand simply cannot be met, and it is also where most of the “on the quiet” sales are being experienced.
There are simply more people who want to live here than leave here, and with downsizers and first home buyers back in force we are seeing auction clearance rates back to the high 70% to 80% levels with nearly 60% selling prior to auction over the past 2 months. Our data shows big increases in buyers coming from the Eastern Suburbs, Upper North Shore and many expats returning home. This is addition to those that already migrate to the Northern Beaches from Lower North Shore and Inner West.
All in all, it’s great signs for existing property owners to see their assets appreciating in value but not so great for First home buyers trying to get their slice of paradise, unless of course we are still to see the real impacts of the economic post Covid-19 world. But right now, that does not seem important to buyers who want to secure their lifestyle preference in our amazing part of the world.
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