Sydney’s west booming, but is it too hot?
Sydney’s west is absolutely booming, according to real estate agents at the coalface, however it might just be too hot for investors who are starting to look now and aren’t willing to be discerning.
With evidence of certain sales above that seen several months ago (see below), and competition heating up in the more affordable suburbs, Raine & Horne CEO Angus Raine said that it’s an obvious surge.
“It’s clear the surge in real estate activity has spread to Sydney’s outer ring suburbs, with our offices in Liverpool, St Marys and Penrith reporting that first-home buyers and investors are snapping up the shrinking pool of homes for sale,” said Raine.
Property buyer’s Rich Harvey told Property Observer that some people get scared about a hot market and fear it’s going to turn into crazy buying. Sometimes, they’d be correct.
“Mistakes can be made in a hot market because they make emotional decisions rather than rational decisions. At the affordable end of the market, low interest rates are driving buyers. There’s very strong competition and it’s getting harder to get properties off market, they’re usually being put up for auction or tender,” Harvey said.
“It’s not necessarily time to stay away. In a warmer market there’s more transactions and the ability to make a quick equity gain is there,” he said, pointing to opportunities in every market provided the right price is paid on the way in.
However, Sydney’s west was recently said to be ‘too hot’ by Sydney-located buyer’s agency Right Property Group at their Melbourne seminar that Property Observer attended. They said that while they’d been bullish in the western Sydney market, particularly around Mount Druitt, for several years, they have now backed off.
The sales evidence:
10 Wagstaff Street, Edensor Park (pictured below)
Unfinished, four-bedroom house, mortgagee-in-possession
34 bidders, more than 100 attended
Auction: more than $100,000 above reserve
Median price for similar properties in the area is $500,000. The lower interest rates are mobilising buyers.
Source: Raine & Horne Liverpool, Vince Labbozzetta
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63 Canberra Street, Oxley Park (pictured below)
Three-bedroom house, double lockup garage, 860sqm, land zoned 2c
Auction: $40,000 above reserve
The market is hotting up because interest rates are low and rental returns are generating healthy gross returns around 5%.
Properties such as 63 Canberra Street, Oxley Park are attracting first home buyers, investors, self-managed super funds and those looking for good size blocks that can easily house a separate granny flat.
Properties in St Marys and surrounding suburbs are often selling within give days at up to $20,000 above expectations.
Source: Vince Turner, Principal of Raine & Horne St Marys
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58 Mamre Road, St Marys (pictured below)
Under contract within 48 hours of listing
Listed at $335,000
Sold for $350,000
Source: Raine & Horne St Marys, Vince Turner
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117-119 Victoria Street, Werrington (pictured below)
Off-the-plan
Sold for $12,000 more than in June
Three-bedroom townhouses
$349,000 each (similar properties sold on the same street for $337,000 three months prior)
These properties will rent for $420 to $40 a week.
The market under $400,000 is strong with new apartments and townhouses jumping in value by about $12,000 in the past three months
In August 24 properties were sold, including 12 townhouses off the plan.
Source: Raine & Horne Penrith, Gary Rossetto
The heat of the market, and the growth, is not solely being experienced in Western Sydney.
Mr Harvey expects the entire Sydney market to rise on average by five or 10%, arguing against SQM Research Louis Christopher’s suggestion that 15% to 20% might be the final figure.
“I’d love to be proved wrong, but price growth is going to be capped by wages,” he said.