Inner Sydney market continues to recover in 2020: HTW residential
Recovery for investor stock in inner Sydney and eastern suburbs has been patchy and is largely dependent on the supply pipeline in the given area, according to the latest Herron Todd White (HTW) residential report.
The valuation firm asked their valuers to give an educated outlook on the residential market in their service areas.
"This time last year, we were discussing the reality of being amidst a property downturn, particularly due to tightening credit availability as a result of the banking royal commission along with widespread negative market sentiment.
"We are now experiencing very different conditions with most inner city agents reporting persistently low levels of listings and this, combined with the renewed interest caused by interest rate declines, is set to cause the market to continue to recover," the valuation firm stated.
This is particularly the case for good quality, owner- occupier dwellings.
The first home loan deposit scheme commenced on 1 January 2020 and is likely to have a direct impact on the lower end of the property market but also flow-on effects to mid-level properties.
The usual possible headwinds for the Sydney property market include affordability constraints, credit availability and wider economic and political matters.
"Surry Hills is one to watch this year, particularly since the completion of the light rail, which has improved the public transport servicing the area and implemented traffic calming and management measures to reduce congestion," the valuation firm said.
This combined with the removal of construction and the associated aesthetic improvements should see a price increase in the area.
It is then likely that the neighbouring bridesmaid suburbs of Darlinghurst and Redfern will see some value uplift as a flow-on.
"Similarly, Randwick, Kensington and Kingsford in the east will benefit from the completion of the Randwick section of the light rail last December, with the Kingsford section due to open in March this year," the valuation firm added.
Kingsford in particular, with a median house price of $1.98 million according to realestate.com. au, could well prove popular for buyers priced out of the neighbouring suburbs of Randwick ($2.35 million) and Kensington ($2,571,500).
After being one of the worst performing inner city suburbs in 2018, Pyrmont appears to be recovering, largely due to plans to redevelop the fish markets and surrounding Blackwattle Bay precinct.
In addition, Mirvac is looking to redevelop the nearby Harbourside shopping centre and The Star casino is undergoing expansion and refurbishment, with a proposal for a new hotel atop the building.
Redfern is well serviced by public transport and is close to the city, yet provides plenty of green spaces.
It appears to be comparatively affordable in relation to its surrounding suburbs with a median of $1.4 million for a three-bedroom property (realestate.com.au).
The median for a similar property in Surry Hills is $1.65 million and across the park in Paddington is a whopping $2.235 million.
A renovated three bedroom house in Surry Hills has recently been sold for $1.615 million.
The three bedroom, one bathroom house is located at 25 Bennett Street (pictured below).
It features stone topped kitchen, chic bathroom, and easycare garden.
The location is within close proximity to parks, Oxford Street and the CBD.
"The suburb as a whole is shaking its social stigma and it remains a popular choice for young professionals and families with the eastern corridor of the suburb considered the most desirable," the valuation firm commented.
As always, high density, investor centric markets should be treated with caution, particularly those with large pipelines of new apartments, including Waterloo, Zetland and Rosebery.
Whilst the current supply pipeline may settle and even return to below average levels in 2021, the timing of projects settling throughout 2020 is unfortunate for purchasers, as many projects sold off the plan in the peak of the market.
Therefore any purchasers unable to settle may be required to off load at a loss.
A recent example is 106/16A Gadigal Avenue, Waterloo (pictured below) in the Emblem development (below) that was sold off the plan on 17 June 2015 for $970,000 and re-sold (nine months after completion) on 21 August 2019 for $910,000.
The report suggests the other factor impacting this market segment is the ongoing negative sentiment related to building issues in newer, large scale developments.
This could potentially continue to be a significant factor and it is imperative that purchasers take due care when buying into newer large scale developments.
There are a few other elements that will unfold throughout the year that could have specific effects on some locations throughout the inner regions of Sydney.
For example, the lockout laws are set to be wound back across much of inner city Sydney (although not in Kings Cross).
"It will be interesting to see if this has some impact on property prices through changes to nightlife premises operating hours and the flow on impacts of noise and patron behaviour.