We’ve noticed more buyers are looking for a city crash pad than ever before.
We explore why.
The city crash pad – or pied-à-terre is a long-established concept: one started in Sydney in the 1800s by well-off graziers and gold miners who also wanted a city address. But in the 2020s, owning a second home in Sydney seems to be on the rise, and the pool of buyers now extends well beyond rural families.
In fact, we’ve recently sold several city crash pads to Sydneysiders who’ve moved elsewhere but who want to keep a home here in Potts Point and surrounds. These are part of the roughly 20% of Australians who own more than one property, according to the Australian Bureau of Statistics.
So who are these people buying a second home? What are they looking for in a property? And if you’re considering an urban pied-à-terre how do you go about it?
New retirees a key demographic
While more people seem to be buying second homes, not all buyers come from the same position. Instead, we’ve noticed a few main demographics in the market for a city crash pad.
The first is retirees, many of whom have lived in Sydney their entire lives but have now chosen to live elsewhere. While they may have relocated to Byron Bay, Bowral or Braidwood, a lot of these buyers have retained strong connections with Sydney: they often still have family and close friends here, and they want to be able to visit them. They also usually still regularly attend performances and sporting events in Sydney and even spend longer periods of time here – say over summer or during school holidays to help look after the grandkids.
These buyers often find a city crash pad gives them both the permanency and privacy they need for their frequent visits back to Sydney.
The impact of COVID and the move to the regions
The second group in the market right now is telecommuters, a lot of whom can perform most of their work from anywhere but also want to be near their Sydney office.
One of the key real estate trends to come out of COVID-19 was a new emphasis on lifestyle. More buyers than ever before began prioritising the way they lived at home. For many, this meant upgrading to a larger home (often with space for the home office). But some went even further, leaving their city life behind and moving to the regions.
This was especially true for those people who found they could perform a lot of their job remotely – often senior-level professionals and business owners. We’re finding a lot of these buyers want a place they can spend a few nights a week in. Then they drive – or jet – home for the rest of the week to be with their family.
Overseas and interstate buyers
A third group of crash pad owners are based overseas or interstate. Many of these buyers are from Sydney and intend to return here one day. They’re often regular visitors and want to keep their hand in the Sydney property market.
These buyers often own a city crash pad which they rent out short-term – usually on a platform such as AirBNB – and then use for themselves when they’re in town. This gives them the opportunity to have a permanent address in Sydney that literally ‘pays for itself’ thanks to strong rental income.
The investor crash pad
We’ve also seen a rise in the number of existing Potts Point or inner-city residents who decide to add a smaller apartment (often in the same building they may already live in) to their investment portfolio. Sometimes this is used for visitors and guests, including children, while other times, it’s become a sanctuary or workspace, separate from their own apartment.
What kind of properties do they buy?
While everyone’s circumstances are different, most crash pad buyers aren’t looking for anything too large. That’s usually because they want something low-maintenance that doesn’t require too much attention when they’re not around.
Potts Point has a relatively high number of smaller apartments, so there’s a good choice. While we do have a range of coveted penthouses and larger properties, the 2021 Census revealed that the median home in our area has an average of just 1.4 bedrooms, compared with 3.1 bedrooms nationally. Plus, 15% of local properties are studios or bedsits, compared to less than 1% nationally.
And there’s a huge range, too: from character-filled Art Deco properties to converted Victorian homes and terraces or modern complexes with lift access, pools and gyms.
That said, some city crash pad buyers want somewhere large enough to accommodate their whole family. We sometimes sell three- or even four-bedroom properties to people who intend to use it as their second home.
What’s most important to them is that often that their property is well-located, close to transport and secure. Having a strong rental appeal is also important if they intend to lease it out.
Properties we’ve sold recently that would make a perfect crash pad include one-bedroom apartments in Ikon, like 310/81 Macleay Street, which sold for $1.39 million or 404/81 Macleay Street, which sold for $1.5 million. 617/50-58 Macleay Street, a one-bedroom apartment in the Rex building, sold for $1.2 million. However, you can stay in the area but enter the market for far less, as 9/18 Royston Street Darlinghurst showed, when it sold for $685,000.
How to make the city crash pad work for you
If you’re thinking of buying a city crash pad in Potts Point, you should do your homework first. Test drive what life would be like both here in the inner city as well as where you want your main residence to be.
Don’t just do this as a holiday, but carry out your normal life. Try working, doing the shopping, and spending time doing the things you usually do.
Work out your finances, and if you intend to rent out the property to cover its cost or make an income, find out what it would fetch on the short-term rental market. (Be realistic about occupancy rates). You should also factor in whether you want a property management company to oversee the property or whether you want to invest the time and energy into managing it yourself.
Finally, remember that competition for good properties is tight. Get to know local real estate agents. After all, many of the best city crash pads never make it to public sale but are instead sold off market.
If you’re interested in buying or selling in Potts Point and the eastern suburbs, contact my team today.