City Beat July 2023: Sydney growth continues as first home buyers get new stamp duty concessions
Sydney unit values are continuing to bounce back from their 2022 losses.
Property data analytics firm CoreLogic's Monthly Hedonic Home Value Index found the value of Sydney units grew by 1.2 per cent in June, showing a consistent pattern following gains of 1.1 per cent in May and 1.2 per cent in April.
Sydney unit values are now 3.5 per cent year up year to date and just -3.4 per cent down compared to this time last year.
CoreLogic's Research Director Tim Lawless says a lack of available supply continues to be the main factor keeping upwards pressure on housing values.
“Through June, the flow of new capital city listings was nearly -10% below the previous five-year average and total inventory levels are more than a quarter below average.
"Simultaneously, our June quarter estimate of capital city sales has increased to be 2.1% above the previous five-year average.”
Although housing values continue to record a broad-based upswing, the pace of growth across most capitals eased in June.
“A slowdown in the pace of capital gains could be a reflection of a change in sentiment as interest rate expectations revise higher,” Lawless added.
“Higher interest rates and lower sentiment will likely weigh on the number of active home buyers, helping to rebalance the disconnect between demand and supply.”
Sydney's off the plan update July 2023
A number of agents across Sydney are suggesting sentiment is continuing to grow in the off the plan apartment market.
Colliers National Director Blake Schulze says, while sales are happening in both the top and bottom ends of the market, a significant trend has been the time taken to convert a lead.
“One notable observation is that the time it takes for buyers to move from an initial enquiry to a sale has reduced by 50 per cent, which is a significant trend," Schulze says.
There's been more enquiry come through from investors, Schulze says, however the purchasers are still primarily owner-occupiers. Schulze has also seen enquiry rise from first home buyers, who have been waiting for the NSW stamp duty saving changes that came into force July 1.
Read more: NSW Stamp Duty: The July 1 2023 change that will affect first home buyers
James Lampropoulos, Director and Partner at Laver Residential Projects, says the company have had their best selling month in around six months.
"The market sentiment across the board is still quite strong, in particular we are seeing the high end of the market (over $3 million) in Sydney performing very well as well as good quality stock up to $1 million," Lampropoulos said.
"These buyers are very active and still believe that property is the best asset class to secure their financial future."
Lampropoulos says they've already seen a surge in demand following the new stamp duty rules across their projects in Bexley, North Strathfield and Wentworth Point.
Laver has had success at the top end in The Rathbone in Surry Hills and Munro House in Elizabeth Bay in the last few weeks, which represent the middle to higher end of the market.
"Both projects are under construction, which tends to draw more buyers at this stage of the marketing," Lampropoulos said.
"Those in the $2 million to $5 million range are looking for something nearing completion. They’re not jumping in at the absolute off the plan, pre sales stage, because they tend to need to sell their current home to buy. They need peace of mind they’re buying and selling in a similar market.
"In contrast, those buying in the very top end of the market with budgets over $7 million or so aren’t so reliant on selling their current home, so they’re the more likely the early buyers."
Trio Property Agency's Thomas Panson has too seen first home buyers jump, in part due to the stamp duty concessions under $800,000, but also from renters who are now looking to buy due to increased rental prices across the city.
Panson says this has particularly affected the buyers in the $800,000 to $1 million range.
There's been success in both Newcastle and Orange for Urban Activation, who are marketing Iris Capital's East End development in Newcastle and 103 Prince in the popular wine region of Orange.
Urban Activation's Sales and Marketing Director Matt George says local first home buyers, downsizers and investors from the Hunter region and Sydney make up a large portion of the purchasers in Newcastle.
"Large scale two and three bedroom apartments are in demand with a continuing growing trend towards the limited supply of three bedrooms," George says.
George cites Newcastle infrastructure pipeline as an attractive proposition for both investors and owner-occupiers.
"Newcastle has had a huge amount of infrastructure, particularly with light and heavy rail over recent years, and has a wide range of growth plans into the future with Iris Captial’s East End Development and Honeysuckle HQ continually improving the retail and hospitality offerings substantially."
Urban Activation is also working on 103 Prince, the first multi-residential apartments and townhouse project in the Central West area. The project filled such a niche it sold out around half of the residences before it even launched.
The development approved project has been popular with local downsizers, particularly farm owners, who have never had an opportunity to downsize to something new. There's also been steady and regular interest from Sydney and New South Wales investors.