Suburb spotlight: Neutral Bay seeing increased buyer activity

Located in Sydney’s lower north shore and five kilometres from the Sydney CBD, Neutral Bay has been seeing increased buyer activity in the last 12 months, especially in the entry-level section of the prestige market.

Dr Andrew Wilson, senior economist for Australian Property Monitors, told Property Observer the lower north shore area has seen some increase in the luxury end of the market. While there has been quite a bit of activity, “it’s still not the level it was three to four years ago,” he said. 

He also noted that the area remains attractive because of its proximity to the Sydney CBD, as well as amenities such as shops and schools.

The median house price in Neutral Bay is $1,650,000, up 24.1% on last year, according to the latest RP Data report.

The median rent for a house currently stands at $860 per week, reflecting a rental yield of 2.7%.

A two-bedroom house at 60 Military Road (pictured below) is currently on the market for $875,000.

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According to RP Data records, the property sits on 158 square metres and last traded in 2007 for $539,000. 

The listing notes that it is currently tenanted for $700 per week, reflecting a rental yield of 4.16%.

The median unit price in Neutral Bay is $643,000, up 3.3% on last year. The median rent for a unit is currently $550 per week, reflecting a 4.4% rental yield.

A studio apartment at 3D/23 Baden Road (pictured below) is currently on the market for $375,000.

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According to RP Data records, the 35 square metre apartment last sold for $260,000 in 2003. It has also been listed for rent in July this year, at an asking price of $330 per week.

Wilson added that Neutral Bay has attracted a mixed demographic, from young professionals to families. It is also known to be a high density suburb. Over 72% of dwellings in Neutral Bay are units; separate houses make up 10.2% of total dwellings, while 17% of dwellings are townhouses, according to the Australian Bureau of Statistics.

In addition, Wilson mentioned that Neutral Bay sees more changeover buyers. 

“There has been a surge of interest in apartment living. Neutral Bay is attractive to professionals looking for an apartment lifestyle – I’m not sure it’s affordable for first time homebuyers; it’s more of a changeover buyer environment, for people moving into the $1.5 million to $3 million price range,” he said.

As for how Neutral Bay will do in the months ahead, Wilson believes the Sydney market in general will see a “strong finish towards the end of the year”.

“The market will remain strong in the middle and upper section of the market. Activity will moderate through next year. Where it heads will depend on how the economy pans out,” he said.

Tenant demand remains high in the Neutral Bay area as well.

“There’s always a strong demand for tenants – it’s a lifestyle market to a large degree. The area has many positives, like its proximity to the CBD,” Wilson said.

Shanon Campbell, head of Ray White Lower North Shore Property Management, agrees that the tenancy market is doing well at the moment. 

“We’ve got strong enquiries coming through from people moving around. Especially this time of the year when school's coming to an end, people are looking to get moved and get settled christmas and the new year. Businesses have people moving, we’ve got people renewing contracts,” she said.

She added that the tenancy market is looking up at the moment, with an increase in asking rents.

“12 months ago you weren't so much increasing rents, especially if you have good tenants. At the moment we’re reviewing rents, rents are going up again – which is good,” she said. 

In addition, Campbell noted that investors are starting to come back into the market. As such, more properties are available for rent.

With the low interest rates, she has noticed a trend where tenants are looking to purchase properties if the price is right.

“A lot of tenants looking to buy, therefore pushing the prices up. Some people are hesitant with signing lease agreements in case a property comes up at the right price,” she said.

“12 months ago, most tenants wanted to sign longer term, 18-24 month leases. Now, people want to sign six month leases to keep their options open,” she added.

However, Campbell adds that investors need not worry about a lack of tenants in Neutral Bay.

“The Neutral Bay area is nice and close to city. We've always got a fairly high demand. There’s the family clientele, young professionals - they're always moving. People like the convenience of being close to the city,” she said.

She adds that it’s going to be an interesting market for the next twelve months.

“A lot of people are talking that this is a bubble – I don’t know if it is,” Campbell said.

Director of Home Property Agents Gabi Somlai has 25 years’ experience in the Lower North Shore area. He says the population in Neutral Bay has become increasingly younger, with the current median age at around “late 20s to early 30s”.

He agrees that the market has moved in the last few months, and prices have increased “10-15%”.

Somlai says his biggest issue at the moment is a shortage of stock in the market.

“There are a number of houses available in Neutral Bay, Cremorne, and Mossman in the $2 million to $2.5 million pricing. But people are looking for two-bedroom apartments between the $600,000 to $800,000 mark. For one bedroom units, up to the $600,000 mark. And for semi-detached houses, around $1.5 million,” he said.

For the six months going forward, Somlai believes that prices will continue to increase.

“The reason for that is low interest rates. For a couple of years the market was pretty much depressed and unfortunately there is not enough properties on the market. All of this shows increased enquiries and increased prices,” he said.