There’s little doubt the Sydney property market is experiencing flatter conditions than it has been in the past few years.
But that doesn’t mean it’s all bad news in Potts Point. We take a look at the current real estate market in 2011.
Auction clearance rates still high
The auction clearance rates for Sydney as a whole are pretty low, hovering around 52%, according to CoreLogic. But in the eastern suburbs, it’s a different story.
Here, the auction clearance rate remains a very healthy 78.6%, according to the same figures. That’s the highest of any sub-region in the entire country and testament to the East’s ability to weather any property downturn better than most parts of the city.
There’s no denying it’s a slower market
That said, there’s no denying things have slowed from where they once were. At the height of our city’s surging property market, the auction clearance rate peaked at over 88% across the whole city.
But Potts Point is a little different to most areas in Sydney. It’s now very much a blue-chip suburb that’s popular with a range of buyer demographics. It also has properties in every price point so that people on a range of budgets can enjoy the same cosmopolitan lifestyle and have easy access to cafes, restaurants, the harbour, CBD and beaches. This means, to some extent, it’s always popular and always sought after by buyers.
Like the rest of Sydney, price growth hasn’t been as fast and furious in 2018, as it has been recently. And some buyers and sellers are taking a more cautious “watch and wait” approach than they have been over the past couple of years.
The banks are playing a part
We’re still seeing a reasonably high volume of sales in Potts Point but it’s certainly not what it was. Under the $2 million mark, we’ve observed a slow down in the market – and properties in this part of the market can take longer to sell than we’ve become used to.
This slowdown is due in a large part to tighter lending requirements by the banks, which started in 2017 but were strengthened due to the Banking Royal Commission.
This has meant that buyers who could have borrowed enough to spend $1.5 million last year can only get enough to spend, say, $1.3 million this year. And the overall result is that many buyers in the market simply can’t stretch as far as they once could.
The upper end is charging along
This isn’t the case at the upper end of the property market, which is still relatively buoyant. Prestige buyers are more likely to pay cash or often have to borrow less than people in the middle and entry-level parts of the market. And that means properties here are shielded to some extent from the changes to lending requirements.
High-end penthouses are still selling thanks, in part, to strong interest from downsizers. These buyers are often ready to move quickly using the proceeds from the sale of a larger family home. The lower Australian Dollar means more expats are entering the market too and foreign buyers are becoming more interested in Potts Point than at any time in the past. For example, we just sold 19/18 Macleay Street, a sub-penthouse in The Villard, for $12.5 million.
Five-year growth is strong
According to realestate.com.au/invest, over the past 12 months, the median unit sales price in Potts Point was $687,000. This has increased by 34.7% compared to the same period five years ago, equating to a compound annual growth rate of 6.1%.
In nearby Darlinghurst, the compound annual growth rate for houses is even higher, at 9.2%.
For investors, who are receiving market rent, this can often equate to an annual rate of return that’s well into double figures.
Buyers are getting more control
Corelogic has reported that in the current Spring market, buyers are getting closer to the driver’s seat than they have been for some time. In particular, the slower market conditions make it a very good time to upsize, with more time to think and make your next property move, and less of a gap to jump.
Potts Point is about to see the launch of two new residential developments. Omnia, on the site of the old Crest Hotel, is nearing completion with 135 new apartments and some pretty amazing penthouses. And The Hensley is a boutique development on Bayswater Road. These follow the trend for commercial to residential development we’ve been watching in recent years, and simply adds to the variety of new developments on offer to buyers in all price points.
The 2011 Postcode
With too few house sales to accurately measure, here’s what the median sales price now looks like in mid-October 2018 for each of the suburbs with the 2011 postcode.
Median sales price units $687,000
Median sales price units $875,000
Median sales price units $785,000
Median sales price units $927,000
Get in touch with our team today to start your property search today.