Adam Ross Luxury market update
Opinion As 2015 drew to a close, many agents were left scratching their heads, asking themselves “What happened?” For the doomsayers in my industry, the sky appeared to be falling and many were petrified of what 2016 might bring. Media outlets reported that buyer activity had begun to slow in early November, auction clearance rates were down and by mid-December it was all quiet on the western front…. Or was it? So what’s the truth? In reality, the prestige market was and still is tracking along nicely. We only need to look across the bridge at the NYE sale of Villa Igiea for $52m and 9 Coolong Road, Vaucluse for $36m in the same month to realise that the top end is just as strong as it’s ever been. “But the Eastern Suburbs is different!” you might say? Perhaps. But what about the record sale of 26 Cowdroy Avenue, Cammeray for $13.15m in November? A one-off? Not so! Yes, the overall market has cooled. But you can’t confuse the prestige market with the mass market. At the top end there is still strong demand for premium property in blue ribbon locations.
At last count, there had been *3,093 headlines about a Sydney housing bubble (*source: Australian Financial Review Tuesday 8th March). Funnily enough in the very same week, the media reported the sale of 4 Shellbank Pde, Cremorne for $16.5m (a new suburb record). After 279 days on the market, the eventual sale price was achieved due to competition among three buyers in just one week of negotiations. There was nothing fictional about the stories reported. There were indeed three buyers fighting for the property… I know this because Michael Coombs and I were representing one of them. This kind of healthy competition is encouraging. Even more so to us because we know it’s a true reflection of market conditions at the top end. We currently have 17 qualified clients looking to buy in the $10m - $20m range. Some are even looking to spend more. But if you are reluctant to believe my “agent talk” perhaps consider the following statistics:From March 2014 to March 2015, the average time on market for properties in the $7m - $10m range on the lower north shore was 292 days. From March 2015 to now, the days on market in the same range and region fell to 120. The number of “off-market” deals increased by five transactions and virtually all of those listings that were once considered “stale” had sold. Note: This information has been provided by CoreLogic RP Data and APM. Its accuracy cannot be guaranteed. Parties should rely on their own enquiries and McGrath will not be liable for error or omissions herein.
What does that tell us? The answer is, stock is scarce and buyer demand is strong. I’m the first to admit that deals have been harder to put together of late. Agents have had to really nurse their buyers across the line. Markets are fluid and every time there is a change in sentiment we go through an adjustment period. The response from both buyers and sellers is not instantaneous. I’ve found from 10 years of experience that it generally takes three months for people on both sides of the fence to acclimatise. Let’s get back to December of last year when the market was flailing and then fast forward three months from there. We’re now in March and low and behold, the Lower North Shore has notched up six sales over $8m (that we’re aware of)… and we’re not even through the first quarter of the year. So, where are those doomsayers and what are they saying now? The answer is they’re too busy looking for stock because “the market is flying!”
Top lower north shore sales Address
Price
1
4 Shellbank Parade, Cremorne
$16,500,000
2
26 Cowdroy Avenue, Cammeray
$13,150,000
3
25 Burran Avenue, Mosman
Confidential
4
1A Muirbank Avenue, Hunters Hill
$11,200,000
5
33 Burran Avenue, Mosman
$10,000,000
2 1
3 5
Cremone
4
Woolwich
North Sydney
Watson Bay
Vaucluse The Rocks Rozelle
Top eastern suburbs sales Address
Price
1
Villa Igiea 6 Queens Avenue, Vaucluse
$52,000,000
2
9 Coolong Road, Vaucluse
$36,000,000
3
28A The Crescent, Vaucluse
$20,000,000
4
Iona 2 Darley Street, Darlinghurst
$16,000,000
5
Yoorami 90 Victoria Road, Bellevue Hill
$15,250,000
Cremone
Woolwich
North Sydney
Watson Bay
2 3 Vaucluse The Rocks
1
Rozelle
4
5
Spotlight – the luxury apartment market It only seems like yesterday that every penthouse in the city was for sale. These properties languished on the market (often for many years) and buyers were spoilt for choice. But over the last 24 months, the demand for large, luxury apartments has surged. Double digit sale prices for strata dwellings have become commonplace and it won’t be too long before $35,000 per square metre replaces $30,000 per square metre. So what changed? I believe there are three main contributing factors for the recent spike in luxury apartment sales:1. First and foremost Sydney has, in my view, only recently become a true “world city”. It wasn’t that long ago that multi-million dollar bolt holes were reserved for a select few of the very wealthy. However as more and more foreigners look to Sydney to educate their children and expand their businesses, the number of lavishly appointed high rise apartment sales began to soar. Conversely, we are also seeing local HNWI’s from the corporate world downsizing from their homes and into luxury apartments as they spend more time in Asia and other parts of the world with their businesses. 2. But it’s not just foreigners driving the high end apartment market surge. As agents, we often see people staying in their large multi-levelled homes with extensive gardens longer than they would like to. The reason being is that often they haven’t found
anything suitable to downsize to or they have found the property they like but have not yet offloaded their existing home. As the prestige market improves, we see more developers building larger style luxury apartments to cater for this portion of the market. At the same time, trophy homeowners are selling their existing homes in a shorter time frame than previously so the idea of buying something off the plan or nearing completion becomes more palatable. 3. A recent change to strata laws and the number of new buildings that are pet-friendly has seen an increase in people downsizing earlier in life. Up until recently the idea of having to give Sally (the 10 year old Golden Retriever) away was too much for most buyers to handle. (As a dog owner, I tend to agree!). The majority of new buildings are now pet friendly making the dream of apartment living more feasible.
Recent luxury apartment sales Address
Date
Price
Bennelong, 1 Macquarie Street, Sydney
2015
$22,000,000*
Sydney Wharf, 56 Pirrama Road, Pyrmont
2015
$12,000,000
Stamford Residences, 171 Gloucester Street, The Rocks
2015
$16,200,000
1/6 Buckhurst Avenue, Point Piper
2015
$13, 350,000
5/6 Buckhurst Avenue, Point Piper
2015
$13,500,000
Eliza, 141 – 143 Elizabeth Street, Sydney
2014
$12,365,000
The Astonia, 10 Cliff Street, Milsons Point
2015
$15,600,000*
The Residence, 18 College Street, Sydney
2015
$10,000,000
Watermarque, 2E Mosman Street, Mosman
2015
$8,400,000
2/16 Bay View Street, Lavender Bay
2015
$7,500,000
Top four McGrath lower north shore sales
25 Burran Avenue, Mosman Confidential
31 Milson Road, Cremorne Point $8,700,000
81 Minimbah Road, Northbridge $7,800,000
11 King George Street, Lavender Bay Confidential
Domain, Daily Telegraph.
So with very little completed stock left available, I think the ones to watch are Omnia at Potts Point (by Greenland) and of course the highly anticipated Sydney One (by Dalian Wanda Group) on the former Goldfields house site. And if it’s a lifestyle change you are looking for then keep an eye out for the next edition of this report which will include a feature on Southern Highlands property.
Adam Ross M 0409 663 051 T 9006 6314 E adamross@mcgrath.com.au W mcgrath.com.au