Ray White Residential Sydney CBD Weekly Alert: Mind the Gap.
Welcome to my weekly property report for Sydney CBD property.
Residential Sales:
In this week’s property alert, I wanted to touch upon something that happened last week, it’s a conversation that weaves into the tangled web that is the current CBD property market.
It is not unusual for Real Estate Agents to receive calls from property valuers. Last week I received a call from a property valuer who was undertaking a valuation for refinance purposes only. The valuer had access to historical sales across the city that I had sold a number of those listed so hence the call. The valuer reeled off the sales and I offered some background information.
It is not the first time I have raised it but here lies my issue; part of my argument is that they use historical data. Ok, without giving too much away the apartment traded in the past two years for less than $4 million. A similar apartment traded through a competitor what appeared on face value as under market price for again under $4 million in the past 18 months. Should the property in question be offered for sale today I firmly believe that it would be sold within a matter of days for in excess of $5 million. This in effect would represent a circa 30% capital gain in the past 18 months – 24 months, certainly in line with the general movement of the market.
I am not sure the precise figure which was finally placed on the property but I sensed much resistance at $4.5 million which equates to circa $22,500 per square metre. This particular apartment was in a prestigious development with good views, decent parking spaces and good communal facilities.
If you review at what is allegedly being sold off plan these square metre rates are way beyond rate of $20,000 - $25,000 per square metre. These reported rates come in at $40,000, $50,000 and $60,000+ per square metre, quite some gap. I put forward a number of transactions that I had exact numbers and sizes for but to no avail.
I admit these properties are some years away from being built such as The Opera Residences in Macquarie Street. Perhaps it will take these properties to settle to create a new baseline for valuers to hang their hat so to speak.
We listen to more than just antidotal evidence that valuers are being cautious on all valuations but especially recently completed new builds. At the same time banks are increasing the interest rates for interest only and investor loans as APRA regulations come to the fore. AFR SMH
Despite this there are many landlords and vendors sat on the fence trying desperately to work out what is happening in the market. Regardless of all the negative sentiment in the press there is a genuine fear of getting out of the market and not being able to buy back in the future. Plus, another major factor is transaction costs such as capital gains exposure and stamp duty that also dampening city supply.
Personally, due to an array of factors I forecast the broader Sydney CBD market will not make the double-digit growth of the past couple of years. I believe the market will fragment, breaking across price brackets, locations and down to the micro-level being developments.
That said, there will be record prices achieved in city for the foreseeable future in some developments, where there is a line of determined buyers and with nothing transacted for months.
Therefore, if you are one of those sellers quietly sat on the fence its good news. For as long as volumes of property remain low there are plenty of buyers for your property.
So, if you have property around The Rocks, Hyde Park, Walsh Bay, Millers Point, Townhall or Darling Harbour, basically anywhere in the city within a development with a low turnover there are plenty of tailormade buyers and I would love to hear from you.
Residential Leasing:
I have received some renewed interest this week in 28 B Stamford Residences, 171 Gloucester Street to lease but this remains available. Should you wish to inspect this amazing apartment please do not hesitate to contact me.
A splendid winter weekend; The weather forecast for this weekend in Sydney CBD, the forecast for Saturday is mostly sunny with a top of 18 degrees and a low of 10 degrees. The forecast for Sunday is clear blue skies and sunny with a maximum of 17 degrees and a low of 7 degrees.
Whatever you have planned this weekend please make sure you have a fabulous one!
Kind regards.
Michael Lowdon
Director
Ray White Residential Sydney CBD
Address: Level 17 The Glasshouse 135 King Street Sydney NSW 2000
Direct Line: (02) 9249 3738 Mobile: 0400 203 630
Email: michael.lowdon@raywhite.com
Website: www.raywhiteresidentialsydneycbd.com.au
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