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February 06, 2009
Filed Under (Property Market) by admin on 06-02-2009
If the massive number of prestige residential properties hitting the Sydney property market since the end of the school holidays around 29 January 2009 is any guide, CurtiseCall may have been correct when suggesting in “Good riddance 2008. Market wrap and 2009 Sydney property market predictions “ on 23 December 2008 that keeping up appearances in the prestige property market would prove unaffordable after Christmas.
Many others prestige properties have been withdrawn from sale with their owners now looking for tenants. In the contraction we also predicted, the prestige properties concerned are all close to the City. In Woollahra alone, historically one of Sydney’s most resilient suburbs, at least 27 prestige homes are being publicly advertised for sale at the date of this bulletin. This is a staggering reversal. Fifteen months ago, this was a suburb where stock was in such short supply that finding a prestige property was like looking for the Holy Grail. In what might prove to be a sign of the times and harbinger, at least two of those properties are back on the market having been purchased within the past 20 months. They are 17 Attunga Street, Woollahra which was purchased on 21 August 2007 for $3.3 million and 82 Ocean Street, Woollahra which was purchased on 11 October 2007 for $4.225 million They join 43 Surrey Street in nearby Darlinghurst which last traded as recently as 7 March 2008 for $1.44 million and 20 Narani Crescent, Northbridge which sold on 14 July 2007 for $3.25 million. To understand the scale of this phenomenon, CurtiseCall has compiled this suburb by suburb sample of the prestige properties for sale listed chronologically against their advertised auction dates in the next six weeks: 7 February 2009 97 Middle Harbour Road, Lindfield 18 February 2009 177 Hargrave Street, Paddington 19 February 2009 39 Lancaster Road, Dover Heights 21 February 2009 15 Lyons Street, Dover Heights 20 Clairvaux Road, Vaucluse 25 February 2009 12A Holdsworth Avenue, Woollahra 26 February 2009 6 Ophert Avenue, Vaucluse 28 February 2009 1/79 Elizabeth Bay Road, Elizabeth Bay 1/24 New South Head Road, Vaucluse 14 March 2009 29 Jersey Road, Woollahra So, for the thousands of users who have hit “Good riddance 2008. Market wrap and 2009 Sydney property market predictions “since 23 December 2008 apparently in search of the answer, the cluster of auctions scheduled during the period 7 February 2009 and 14 March 2009 and especially on 28 February 2009 should provide the clearest evidence for some time as to the true state of Sydney’s prestige property market and thus, the likely direction of prices. Helping this analysis is the fact that the majority of selling agents in the eastern suburbs have chosen auction over expressions of interest campaigns. Given the notorious absence of buyers from the Sydney prestige property market in the past few months, this can only be vendor bravado bordering on bluff. The question now is whether or not in response to this flood of supply, the many cashed up buyers out there will see this as a chance to pick the eyes out of the market or call the bluff. CurtiseCall predicts the latter and that the beginning of the buyers’ prestige property market we have also predicted will be publicly proclaimed. As Sydney buyers’ agents and advocates, Curtis Associates will be in there pitching to drive down prices. If the prices don’t fall on the day, our advice will be simple: Wait till they do. Now to the other end of the Sydney property market: CurtiseCall sees real problems emerging after 30 June 2009 if governments continue with existing policy settings including the1% interest rate cut on 3 February 2009. In the frantic rush to respond to the global financial crisis, those governments seem oblivious to the possibility of sowing the seeds of our own mini sub prime crisis at least in the outer suburbs of Sydney. All the ingredients and more are present. The analysis goes like this: The first home buyers taking advantage of the lowest interest rates in 50 years as well as the various First Home Owner Grant schemes and stamp duty exemptions are quite possibly those most at risk of becoming unemployed if unemployment rises from the current 4.5% to 6.5% and possibly 8% as seems to be the consensus amongst economists. According to Fujitsu Consulting, young and growing families as well as those on the disadvantaged fringe will make up over 56% of New South Wales households experiencing mortgage stress by June 2009. If that unemployment coincides with the scheduled end of the Commonwealth’s First Home Owner Boost element of those schemes on 30 June 2009 and forced sales result regardless of low interest rates, there may be no buyers for those homes at the prices artificially inflated by then extinct government largesse. The result could be negative equity and something far worse than the rental roundabouts the largesse was intended to end. This of course may have consequences for those investors looking for and able to achieve positive yields from the Sydney residential property market as will be discussed in the next CurtiseCall. Strap yourselves in for the ride and stay posted! You must be logged in to post a comment. |
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