Gambling Chips
Sydney Morning Herald
Saturday March 13, 2004
With prices in a rut, now might be the time to buy into the North Shore.
The North Shore is Sydney's Mayfair, says Australian Property Monitors' Louis Christopher. ``It's a blue-chip region. Sure, the city and the east are prestigious but the North Shore is blue chip and it's always going to retain its value compared with other regions in Sydney.
``If people could afford it, there are many people who would like to live there. That doesn't mean to say prices cannot fall, but relative to other parts of Sydney, it's a pretty strong area."
But price growth seems to have stalled in some of the most prestigious North Shore suburbs and has even gone backwards in the more expensive suburbs. Prices in Longueville, for example, fell by 8.5 per cent in 2003, according to APM, and such prestige suburbs as Mosman had dramatic falls in auction clearance rates late last year.
So, does that mean the current climate is a good opportunity to buy a chance to secure good quality property in a premium location?
Macquarie Bank's Rod Cornish says there are no undervalued pockets of property on the North Shore but there might be some buying opportunities for people prepared to pay good prices. ``You might be able to get something at a better price this year than it could be bought for last year," he says, adding that a slower market allows buyers the luxury of being choosier.
MOSMAN CHEAPIES
When it comes to ``bargains" in Mosman, the prices are all relatively high. As one of Sydney's most expensive suburbs, with a median price of $1.5 million, its prices have risen an average of 10.7 per cent a year since 1993.
Robert Simeon, of Richardson & Wrench Mosman and Neutral Bay, says that the entry point for a freestanding home in Mosman is around the $1.2 million mark, ``although these properties are fast becoming few and far between". Semis start around the $700,000 mark.
He points to figures just released by the Real Estate Institute of NSW which show that Mosman posted a 17.92 per cent increase in property values for the December 2003 quarter.
``The market has seen no changes to the dynamics that drive it so far in 2004. The only significant difference is that the overall volume of property is on the decline, which confirms that property prices will be maintained. We anticipate capital growth for 2004 to average out at about 10 per cent," he says.
Simeon says the traditionally high demand for properties in this sought-after location is also expected to continue. ``Buyers' inquiries remain strong across the broad spectrum [of properties], so demand still exceeds supply, which again places vendors in the driving seat," he says. ``There are just 5900 houses in Mosman, and over the past seven years approximately 4200 homes have been sold, so prospective purchasers are having to contend with reduced supply."
Not even so-called ``land value" properties come cheap in Mosman. McGrath's Piers van Hamburg has the suburb's cheapest semi on the market this weekend. The derelict two-bedroom Federation semi at the quiet end of Macpherson Street has council approval for its replacement with a two-storey, three-bedroom house, and is for sale by negotiation for between $680,000 and $720,000. It was withdrawn before a planned February 21 auction and is looking for a buyer.
The property was bought for $675,000 in 2003 when stamp duty would have added another $25,000. If the semi sells for less than $700,000, then buyers are definitely getting a better bargain than the sellers did when they bought in 2003.
The next ``cheap" properties to come on the market in Mosman are eight former Defence Department houses in Markham Close, Georges Heights. The blocks range in size from 500 sq m to 700 sq m and Colliers International's Peter Chittenden says they will sell for about$1.5 million each. ``Some might sell for a bit less but they will appeal to people who want the exclusivity of Mosman for that $1.5 million mark," he says.
The eight houses will go to auction on April 28, and there are another 11 Defence properties due to come on the market later this year or early next year.
THE UPPER NORTH SHORE
There are bargains in the $2 million to $3 million range on the upper North Shore, says Mark Blake, of Luschwitz Real Estate. ``Up here, you get a fantastic property in that price range, on a huge parcel of land and more like an estate than a house," he says. ``You can get a much better house in that price range around Pymble or Turramurra than you can in the east or the northern beaches."
The upper North Shore market has had fantastic growth in the past two years, but Blake says the market for houses around the million-dollar mark has softened since last year's interest rate rises.
``What you get around here are professional, middle-class families who have big mortgages and want to get that mortgage down before they send the kids to private schools," he says.
The real mark of quality for a house in any of the upper North Shore prestige suburbs Pymble, Turramurra, Wahroonga, Warrawee, Killara or Lindfield is to be within 10 minutes' walk of the railway and on the eastern side of the line. Blake says the area's many private schools are a big drawcard, and that buyers are also looking for easy access to the city by train.
He suggests that West Pymble and West Lindfield will have the lowest-priced properties in the prestige areas.
Stuart Morris, of Keith Soames Real Estate, has sold a few cheapies in Wahroonga this year, including a cute 1930s weatherboard on 707 sq m for just under the asking price of $645,000.
``I sold one in Ingram Road for the high $500,000s, so they are around," he says. ``Yes, there has been a levelling in the market but it's hard to say if that will mean more cheaper properties will come on the market I'd need a crystal ball to answer that properly."
Morris says buyers need at least $600,000 to buy on the fringes of the premium upper North Shore suburbs. ``Once you get close to the railway, it gets very dear and you can pay $2 million or $3 million for something on a lot of land."
LANE COVE AND THE RIVER
Northwood and Longueville are among Sydney's most expensive North Shore suburbs because of the abundance of large homes many with water views on big blocks of land.
But McGrath agent Brent Courtney says the reality is that prices in the prestige area have come back to what they were at the beginning of 2003. ``Things are taking a lot longer to sell," he says. ``The interest really tapered away at the end of last year when rates went up."
Lane Cove, which has more lower-priced homes, is holding up well, with local agents saying there are bargains to be had in the $1 million-plus range. Hamilton & Co's Jocelyn Gregory says the $900,000-plus market has softened since late last year. ``We've had offers that I have felt in my heart are too low, and the million-dollar-and-up bracket has definitely come back in price," she says.
Cheaper properties in Lane Cove start in the high $600,000s and low $700,000s price range.
The premium areas of Lane Cove are near Riverview, the ``Greek avenues" near the shops, and the Osborne Park area. ``The cheaper properties are holding up well because they are the access point to the suburb so they are still desirable," she says.
JUST A WORD ON BARGAINS
As Louis Christopher points out, what is a bargain today could easily be a better bargain in six months time. ``People have to remember that if you get something cheaply today, those same factors that made it cheap could make it even cheaper in another six months time," he says.
The tried and true method of buying property position, potential and price will always hold true, regardless of a rising or falling market.
Rod Cornish says properties in the more affordable price range of the prestige locations will hold up well, especially in the $600,000 to $800,000 price range.
``People will always want premium locations so there will be demand there. Basically, it comes down to how affordable it really is for people," he says. ``The only properties that will outperform a slow Sydney market are the properties that a greater number of people can afford. I would say there are no more opportunities on the North Shore for people to buy and sell within a year or two and make quick money."
Cornish says owner-occupiers who plan to live in a house for at least five to 10 years cannot really go wrong by choosing a good location.
GREEN LAWN, LONG GRASS
Melanie and Steve Hodges, above, moved from Petersham to Pymble in 2001, swapping their inner-city abode for a leafier, larger family home in the upper North Shore.
``We really liked this area because it has good access to the city with parking at Gordon station and trains every 15 minutes," Melanie says. ``We really wanted to gosomewhere which would be a nice place for kids to grow up."
The couple paid $630,000 for their four-bedroom house on more than 900 square metres of land three years ago. ``We were lucky because we sold our place at Petersham when it was on a high and bought in at Pymble after it had had negative growth," she says.
``We just had our place valued, and it's worth between $950,000 and $1.1 million," she says. ``I think people realise this area is a great place to bring up a family. There are good public schools and private schools around here."
Pymble is within a 30-minute drive of the northern beaches and the city, as well as being close to the Hodges' families. ``There are grandparents in St Ives and Newport and it's important to be close to them for the kids," Melanie says.
The Hodges believe the upper North Shore is more family-friendly and has less crime than Petersham, where they had been burgled four times in two years and had their cars broken into.
``Safety was a really big concern of mine and I didn't want my kids to grow up in a place where you had to have bars on the windows," Melanie says.
``I also wanted them to have some green space around them. We only had a courtyard with two trees in Petersham."
However, she says the large blocks of land and the leafy aspect mean people need to be prepared for maintenance.
``It costs us at least $50 a week to have the pool cleaned, the lawns mown and the garden looked after."
DON'T MISS...REALTY CHECK
Afterwards he is off to watch Channel Seven's Alias with his wife. She tapes it for him. He says it is essential viewing.
See centre pages.
© 2004 Sydney Morning Herald