Tag: Domain

From Domain.com.au

Despite efforts to cool the property market, Sydney house prices have run away yet again, growing at their strongest rate in over a year.

The harbour city’s median house price is now at a record $1,068,303, after a 2.7 per cent jump over the September quarter, Domain Group data released on Thursday found.

This has seen some property owners make hundreds of thousands of dollars by flipping properties purchased in the past few years.

Three-bedroom 4 Milton Street, Chatswood sold for $3.3 million in August – up $1.75 million in three years. Photo: Richardson & Wrench Chatswood

It has also pushed home ownership further out of reach of first-time buyers. And experts say this is likely to get even tougher with more price growth on the horizon, despite Treasurer Scott Morrison warning the state governments they need to tackle housing affordability.

Some of the growth in the September quarter was thanks to a surge in Investor activity, which increased 9.2 per cent in the year to August 2016, Domain Group chief economist Andrew Wilson said.

“The growth is raging back into Sydney … we have auction clearance rates in the mid-80 per cent range, and there were two interest cuts in August and May this year,” Dr Wilson said.

The strongest region over the past 12 months was the lower north shore – up 12 per cent in a year. Over the quarter, house prices in the area increased 6 per cent.

But apartment owners weren’t as lucky, with prices up just 1.1 per cent over the quarter to a median of $685,865.

Among house sellers making substantial profits in the lower north were the former owners of three-bedroom 4 Milton Street, Chatswood. It sold for $3.3 million in August – up $1.75 million in three years.

This was a street record and more than $500,000 above expectations, Richardson & Wrench Chatswood principal Warren Levitan said.

There were 14 interested buyers, but the home sold to an offshore purchaser with plans to knock it down and rebuild prior to moving in. In the meantime, it has been rented for $900 a week.

“A lot of the [price growth] is due to the local Asian market, where there are still buyers willing to pay top price … there’s also not a lot of stock,” Mr Levitan said.

They weren’t the only sellers making an enviable profit. Three years ago, 2 Cabramatta Road, Mosman sold for $1,873,000. In September, it sold again for $2.95 million. The sellers of 28 Devonshire Street, Crows Nest also saw their home jump $750,000 in three years.

This “revival” in the Sydney market will “likely be on the RBA’s minds next week,” HSBC chief economist Paul Bloxham said.

But while there’s likely to be more price increases over the next few months, it will be “single digit rather than double-digit growth” on an annualised basis, he said.

He pointed to an increase in supply and a tightening in the guidelines for lenders as what will see property prices grow at lower levels than those seen in 2014 and 2015.

New guidelines from the Australian Prudential Regulation Authority released on Monday require lenders to ensure borrowers are able to afford repayments on a 7 per cent interest rate when assessing whether they’re eligible for a loan.

This means someone buying a median priced house would need to be able to pay $6040 a month on a 25 year loan. Assuming they had a 20 per cent deposit.

This is about the same amount as the entire take-home pay packet on a $100,000 salary.

BIS Shrapnel residential researcher Angie Zigomanis agreed price growth was likely to continue, as “investor numbers are looking better and it looks as if the banks are loosening some of their criteria for lending”.

Strong migration into NSW and fewer homes available for sale would also put pressure on property prices, he said.

Century 21 chairman Charles Tarbey also had “bullish prospects” for the market in the lead-up to Christmas, but warned prices may start to moderate in 2017.

NAB Group chief economist Alan Oster was also not convinced there would be any huge increases in house prices in the near future, as there had been a slowdown in business conditions across NSW.

Already, the apartment market has shown signs of slowing in some areas. Canterbury Bankstown, the south, the west and the upper north shore all recorded modest price declines for units in the three months to September.

Over the year, the biggest drop in apartment prices was seen in Canterbury Bankstown, with a decline of 4.7 per cent to a median of $505,000.

The median apartments across Sydney increased 0.9 per cent in the 12 months to September.