Monthly Sydney Property Insights


When our 6th February 2009 CurtiseCall described Sydney’s February 2009/ March 2009 prestige property market as a “vendors’ bluff”, we were not wrong. The Sydney prestige property buyers’ market ($1.5 million +) was publicly proclaimed on 28 February 2009.

Contrary to the 60% plus auction clearance rates reported in the media, the clearance rates for the 35 prestige properties referred to in that article were, as our Principal Chris Curtis commented last Monday on the ABC’s 7.30 Report, around 24 %.

This huge difference in reported clearance rates shows how sales occurring in the sub $1 million bracket and especially in the first home buyers’ market, are skewing the statistics.

Thirteen of the 35 properties were offered for auction on 28 February 2009. We were at six of those auctions and can report first hand that one was cancelled, two were passed in on vendors’ bids with no other bids and two were passed in with bids. Although missed in last weekend’s mainstream press, a quality offering at 21 Robertson Road, Centennial Park sold for $5.81m with three parties fighting it out after the property went on the market at $5.6m.

Cautioning that sample sizes remain small, there are already some clear trends:

  • compared to the same time last year, a flood of prestige properties close to the City is now being openly marketed and many more are silently for sale
  • up to December 2007 many prestige property sales, especially on the lower north shore and in the eastern suburbs, were largely driven by bonuses earned in the financial services sector. Those buyers began to fall away in January 2008 and have now all but disappeared
  • over the past 12 months, properties offered for sale have first been in the discretionary lifestyle areas from Port Douglas to the Sunshine and Gold Coasts in Queensland to around Culburra in southern NSW taking in the Southern Highlands and Blue Mountains
  • as the economic cycle deepens so the contraction has moved closer to the centre starting with the outer Sydney lifestyle suburbs such as Palm Beach and Whale Beach
  • that contraction has continued into suburbs like Vaucluse and Mosman having a relatively high proportion of highly geared ‘aspirant wealth’ prestige property owners
  • after the Christmas 2008 school holidays, the contraction began to lap the City’s shores by touching the ‘bomb proof’ suburbs like Bellevue Hill, Point Piper, Darling Point , Paddington and Woollahra
  • many unsold properties are being offered for lease with an oversupply at the top end putting downward pressure on prestige property rents
  • at well attended auctions around town, buyers have called the vendors’ bluff and kept their hands in their pockets. Hence the 24% clearance rate.

Where to from here?

In the immediate term, the supply / demand equation has undoubtedly and radically shifted in the buyer’s favour which can only be good news for those many and often faceless buyers of Sydney prestige property. This really is a buyers’ market in which, all things being equal, prices should fall.

Will all things be equal?

That depends on your view of the financial global crisis. However, the following list suggests that if there is a window it could be small; vendor fear may not be as widespread as thought and that significant price falls such as occurred at 17 Attunga Street, Woollahra – bought on 21 August 2007 for $3.3 million and recently traded after some renovations for just under $3 million – may be more at the margins than across the board:

  • a lot of people made a lot of real money in the past 10 years, do not have mortgages, do not need to sell and do not need mortgages to buy
  • despite the now length of the global financial crisis and torrents of bad economic news, there have been few mortgagee sales in the Sydney prestige property market
  • although of less relevance to the bigger ticket top end, interest rates are also at historical lows and are likely to fall further with finance still available to credit worthy borrowers
  • Curtis Associates has noted a marked increase recently in foreign and expatriate inquiries.

Media reports of massive price reductions in the prestige property market should therefore be read with caution. Those are often properties that were overpriced in better times. Our old favourite, 38 Victoria Street, Potts Point is still on the market now with a $3.495 million price tag – a further $200,000 less than the price reported in our last CurtiseCall.

As the sale of 21 Robertson Road, Centennial Park shows, there can be several parties in the room picking the eyes out of the market and sufficiently unconcerned about the global financial crisis to bid over $5.6 million for real quality. The last comparable sale in Robertson Road was in boom times 3 years ago at $5.75m which also suggests a plateau rather than a price fall.

Similarly, of the eight transactions in the three weeks to 28 February 2009, 3 Wallaroy Crescent, Woollahra sold for $5.3 million with there being at least two other rumoured sales above $6 million.

As Chris Curtis said on the 7.30 Report, this is a buyers’ market but the buying takes some skill.

(We have deferred the promised commentary on the property investment market this month following the Reserve Bank’s surprise holding of official interest rates. We believe next month will be a different story).



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