Sydney northern beaches residential market still weak with no turnaround in sight: HTW

Sydney’s prestige northern beach suburbs property markets remain weak, “with no sign of improvement" according to property valuers Herron Todd White’s (HTW) October market review.

According to HTW, the northern beaches of Sydney – comprising the suburbs of Pittwater, Manly and Warringah all the way to Palm Beach – traditionally are among the hardest hit when the overall Sydney market is soft.

“The first suburbs to show signs of softening tend to be the upper northern beaches suburbs, and the further north you go, the weaker the market tends to be.

“The main factor resulting in this trend is the number of holiday/weekender type properties.

“People who work in inner Sydney during the week may purchase a property on the northern beaches to get away for the weekend.

“When economic conditions remain soft, these weekend homes are often the first asset to be sold off by owners,” says HTW.

According to the firm, the trend of Sydneysiders selling their holiday properties on the northern beaches occurred during the GFC, and in the last 12 months there is “evidence of this pattern repeating itself”.

“With the global economic situation still unstable a turnaround in market conditions is unlikely in the foreseeable future.

A further factor contributing to the weak northern beaches market is the lack of transport, “which has always been a negative for the area”.

“Although relatively close to the Sydney CBD, public transport and worsening vehicle access due to traffic contribute strongly to the weakened demand for property, especially in soft market conditions.

“There have been many local government proposals to improve the roads into the northern beaches but we are yet to see any action taken,” says HTW.

Similar challenges facing prestige suburbs are noted by John McGrath in his Sydney spring McGrath report, who says the Sydney property market is experiencing “a two-speed turnaround”.

“Properties under $1 million are in strong demand whilst those above $2  million are less so.

“The key catalyst for the upper end recovery will be the share market. Interest rates, rents and unemployment are not really influencing factors for the top end.

“Many luxury owners are still awaiting some clearer resolution on the macro economy and the eurozone before jumping back into the market,” says McGrath.

The outlook for the North Sydney residential market – just across the city from the CBD – is a lot better, despite HTW witnessing a slight decrease in activity in the first-home buyers’ market and mid-market range in the last year and local agents advising that a lack of stock is slowing down the market.

“We are still seeing property that has been marketed well and realistically priced being sold in short periods of time," says HTW.

“We believe this illustrates that the market is still quite strong with prospective purchasers present in the market, ready to move in and purchase the ‘right home’."

However, HTW also warns of the need for better transport infrastructure and growing traffic congestion issues.

“As more people move to the north west there is going to be more demand placed on key transport and road corridors, so a lot of pressure falls on to the government to proceed with the construction of the new North West City Rail Link.

“With the lack of transport in these areas, more and more people are driving and this leads to traffic congestion.

“In the past potential purchasers may have thought twice before buying in the area due to the lack of support by government for a north-west city rail link.

According to HTW, across Sydney, units and entry level homes are the best performers, with these properties continually in high demand.

It notes that there is still strong demand for properties price below $1 million.

“Ashfield, on the outer fringe of Sydney’s inner-west market has been a very strong performer recently.

“As the inner-west suburbs become too expensive for first time home buyers, we have seen Ashfield representing excellent value resulting in increased demand.

“Ashfield is on the fringe of the first time home-buyers bracket for single residences and long term growth is expected as evident from other inner west suburbs.

“Proximity to the CBD and public transport are positives for Ashfield adding to the popularity,” says HTW.

Manly photograph courtesy of Flickr.