By Sue Wiliams
Weaker prices, more modest interest rate rises on the horizon and a flurry of homes coming up for sale have dramatically turned Sydney into a buyers’ market for the first time in three years.
And while housing experts might be divided on many topics, they’re united on this: now is the time to buy before the cash rate stops being hiked up and prices start to recover.
“As a buyer, now is a great time to get in there,” says Lloyd Edge, author of the real estate book Positively Geared. “We’re now seeing it as a buyers’ market with prices down and the Reserve Bank of Australia [RBA] being a bit more conservative about interest rates.
“Some buyers are still a bit nervous, but others are having a go. It’s a good time for home buyers, especially if they’re in rented property with rents rising, and rents more expensive now than mortgages, and for investors who are after cash flow because of those high rents and low vacancy rates.”
With Sydney home values experiencing a peak-to-trough fall of 13 per cent, on CoreLogic figures, the bottom of the market might not be far off, believes Nerida Conisbee, chief economist at Ray White, making this the best time to look for good properties to buy.
“Prices are now down but may not come down much more,” she says. “The market is moving slowly, so there’s more time to make decisions without that fear of missing out, and the bottom of the market could be quite soon. As soon as the RBA stops increasing interest rates, prices may start to rise again.
“Sellers now really want renovated places, too, which are hard to find. While unrenovated homes can be picked up for a good price, construction costs are still high, so you’d have to hold onto them longer, which mightn’t be ideal. So, renovated homes are in the highest demand.”
“So, instead of looking at Bronte or Bondi or Maroubra, somewhere like Botany or Brighton-le-Sands can offer good value,” he says. “They’re good bridesmaid suburbs that will take off because of their infrastructure and amenities and comparative affordability.”
On Domain’s latest House Price Report last year, Botany had a median house price of $1.7 million, rising 8.9 per cent over the previous 12 months, compared to Bronte’s $5.7 million after a 6.5 per cent rise, Bondi’s $3.96 million (with not enough sales for a reliable calculation of the percentage increase), North Bondi’s $4.375 million up 6.6 per cent, and Maroubra’s $2.75 million, up 13.6 per cent.
One couple currently selling in Botany, say the suburb has changed enormously in the 12 years they’ve owned their house. The suburb is far more residential, with great cafes and restaurants, parks, an Olympic-sized swimming pool and yoga studios.
“It now really is a hidden gem,” says Tania Flack, 55, a naturopath and nutritionist. “I really love Botany as it’s so quiet and you can walk everywhere, yet it’s so close to the airport and just 10 minutes from the nearest beach and 20 minutes from the city. I’m going to really miss it.”
She and husband Steve Williams, 60, a safety consultant, are sea changing to Port Macquarie on the north coast and have put their three-bedroom, newly-renovated house at 111 Banksia Street on the market. McGrath Coogee agent Marnie Seinor takes it to auction on February 11 with a price guide of $2.05 million to $2.25 million. With two living areas and a huge open-plan kitchen-dining space, as well as a deck with a barbecue, and a landscaped private garden in one of the suburb’s quietest streets, it was a hard decision to sell.
“It might not financially be the right time to sell because of the fall in prices and the market, but it’s the right time for us,” says Williams. “We bought a house on the coast 20 months ago and want to have a change of pace, so we’ll have to accept whatever the market dictates.”
Supply is still generally an issue everywhere in Sydney, says First National Real Estate chief executive Ray Ellis, although more listings are now starting to come in.
“But we’re not seeing the mortgage stress sales some people predicted as a result of the rise in interest rates as average savings went up during the pandemic, which has provided a buffer,” he says. But we think, with the expectation that interest rates will go up again but not as dramatically as last year, that now is a good time to buy.”
The difficulty is always not being able to accurately pick either the top, or the bottom, of the market, admits Thomas McGlynn, chief executive of BresicWhitney and the deputy president of the Real Estate Institute of NSW.
“But as soon as interest rates stabilise, the property market will start to gain some momentum again,” he says. “At the moment, however, the uncertainty around interest rates creates better opportunities for buyers. It’s a good time to pick up A-grade property you would have had to pay a lot more for previously, particularly if it doesn’t require a lot of renovation.”
Buyers could also try to negotiate on price if some homes have been a while on the market, recommends Arjun Paliwal, head of research at data-driven buyer’s agency InvestorKit. “And buyers should check comparable sales for the past two to six months to make sure vendor prices have been adjusted downwards in line with the market,” he says.
“We’re not far off the point where interest rates will steady and then buyers should look for the key turn of the market. And that might come quicker than they think.”