City Beat August 2023: Sydney unit value growth softens as listings rise, but not in the off the plan apartment market
Sydney's unit market continued to see growth over July, however at a slightly slower pace than recorded in the two months prior.
Property data analytics firm CoreLogic's Monthly Hedonic Home Value Index found the value of Sydney units grew 0.7 per cent in July, a tad softer than the 1.2 per cent gains in June and the 1.8 per cent in May.
Sydney unit values are now 4.2 per cent up year to date and just -1.4 per cent down compared to this time last year.
Nationally it was a fifth consecutive month of housing value recovery, however the rate of growth has lost momentum over the past two months.
CoreLogic Research Director, Tim Lawless, noted the most substantial reduction in growth has occurred in Sydney.
“After leading the upswing, the monthly pace of growth in Sydney housing values has halved from a recent high of 1.8 per cent in May to 0.9 per cent in July," Lawless said about both houses and units.
He said the significant rise in fresh listings has also proven to be a contributor. They're up nearly 10 per cent compared to this time last year, and 18 per cent above the previous five-year average.
"An increased flow of new listings provides more choice and may be working to reduce some of the urgency felt among prospective buyers,” Lawless said.
What's happening in the Sydney off the plan apartment market?
While the supply of fresh listings is improving across the Sydney property market, it's not the case in the off the plan property space, where there's been little to no new projects launch in the last month or so.
Top Spring Australia has seen records smashed at Ode Double Bay, with the penthouse and sub-penthouse both breaking the previous $16 million record in the affluent suburb.
Sydney Ma, Managing Director at Top Spring Australia, says Sydney remains one of the country’s strongest and most consistent performers.
"Within inner city areas like the Lower North Shore and Eastern Suburbs, the product-driven demand for high quality properties with a truly unique lifestyle hasn’t wavered."
They've seen success at The Newlands, their park front St Leonards masterplan, with a number of purchasers coming from the North Shore and Lower North Shore.
"These sites, so close to the Sydney CBD and bordered by absolute park front on three sides, are incredibly rare and in an area where glass towers dominate," Ma said.
"In our experience, purchasers are expecting more luxury finishes and timeless architecture with opportunity for investment upside. The access to lifestyle and culture opportunities in these prime locations is key and our response at The Newlands is human-centric design in a resort-style setting that sets a new lifestyle benchmark."
David Lee, who is handling sales at Sekisui's The Orchards masterplan in Norwest, said he's seen a surge of investor activity, despite the significant interest rate moves over the last 15 months.
"This cohort of purchasers recognize the benefits of buying in a well-located area such as Norwest, a north-west growth suburb. It is all about location for them and making the numbers work.
"The ability to walk to Norwest Business Park and Norwest Metro Station is very appealing to renters. Rental demand continues to soar in Norwest due to supply constraints in this area which is an attractive proposition for investors."
Lee says owner occupiers have been focused on three key aspects before buying off the plan; design elements, quality of finishes, and track record of developers.
"An amplified interest in developer track record is driven by an increase in construction companies heading into administration," Lee says.
He says the larger apartments across The Orchards have been favoured by upsizers and downsizers using the equity from their home to move into a lock up and leave apartment. The larger units have also been popular with those who are more often than not working from home.
"Demand continues to outstrip supply," Lee says.
Sekisui has just launched Veue Central, the latest stage at the $1 billion The Orchards masterplan.
Read more: Sekisui reveal Veue Central, the next stage of their $1 billion Norwest masterplan, The Orchards
Read more: City Beat July 2023: Sydney growth continues as first home buyers get new stamp duty concessions