This article is from the Australian Property Journal archive
According to leading Sydney real estate firm Laing+Simmons the residential market in the Harbour City will be a renter's delight in 2004.
Here Laing+Simmons look at the market region by region…
West
In Sydney’s west, development will generate activity in the residential property market.
“We will see a lot of apartments coming onto the market in mid-2004. The F7 orbital will link the M5, M4 and M2 and make the whole area more accessible, while the new shopping complex in Toongabbie, which includes 125 residential units, will increase supply and encourage further investment,” says Joe Bousimon, principal Laing+Simmons Toongabbie.
“The supply of new homes will also increase. A lot of buyers are purchasing old homes on large blocks of land with the intention of leasing them out in the short-term, and building new homes in the long-term. This development will start to show its face in the New Year.”
Bousimon adds that the market is unlikely to be effected by interest rate rises.
“Being a mainly entry-level market, investor activity will continue to be strong. Interest rate rises may even encourage further investment from buyers unable to access more expensive markets in other areas of Sydney.”
Central Coast
Unlike many areas in Sydney, increasing interest rates will have a significant effect on homeowners and investors, many of whom are on the borderline in terms of meeting current repayment demands, says Lisa Lang, principal Laing+Simmons Ettalong Beach.
“People with a low disposable income will really feel the pressure of having to pay $50-60 extra in mortgage repayments each month,” she said.
In terms of development, the completion of the Outrigger Resort at Ettalong Beach and the Circular Quay to Ettalong Beach fast ferry service will create 130 new jobs locally and make commuter travel easier and faster.
Lang says rising stock levels, along with the effect of interest rates, will create a very positive outlook for renters, “In the month of November the number of rental properties on the market doubled compared to July. Considering this, and the fact that many buyers will turn to the rental market following interest rate rises, 2004 will see a high level of activity in the rental market.”
North
Nick Separovich, principal Laing+Simmons Chatswood, says the market will become more consistent in 2004.
“While things have become difficult to predict towards the end of this year, next year will see a leveling off of prices and demand as the effects of interest rates on short term investors kick in.”
The increase in interest rates is unlikely to have any effect on the long-term owner-occupier market, as fixed home loans are still at historical lows, however it will serve to decrease the number of short-term investors buying property and thereby the number of rental properties on the market.
“Rising interest rates will do two things. In the rental market a decline in short-term investors will see a decrease in supply and an increase in demand for rental property, which will in turn boost rental prices. In the sales market it will cause an increase in demand for renovated older-style apartments that, compared with the brand new ones, are far more reasonably priced at around $350,000 to $400, 000,” says Mr Separovich.
East
According to Kevin Mendes, principal Laing+Simmons Bondi Junction, the opening of the new Westfield shopping centre in the Bondi Junction business district will generate movement in the commercial market and create a resurgence of apartment sales.
“There is a current lack of supply in the east, so any properties that do come on to the market are quickly snapped up and for very high prices. Increased commercial activity as a result of the new Westfield will attract new residential development and meet demand from investors in the area.”
Kevin adds that buyers at this end of the market are unlikely to be affected by interest rate rises.
Inner West
Development and low interest rates will sustain the property market in the inner west, says Laing+Simmons Drummoyne principal, Frank Colacicco.
“Pendium, a new development in Five Dock is due for completion in May 2004 and will comprise 103 units, community library, 2,500 square metre supermarket and additional car park. Already, we’ve sold 98 of the 103 units off the plan so there is a clear demand for property in the area which will continue to be sustained through residential development,” he said.
“While interest rates initially scared investors, they are still very low and won’t have a great impact on the market. We’re selling property for around $800,000 to $900,000 so at that end of the market an extra $100 per month in repayments won’t have a big impact.”
South
According to Alex Tehfe, principal Laing+Simmons Rockdale, Sydney’s south will see an oversupply in the residential market, with more development planned for the area.
“Renters will be competing on product so vendors will be forced to bring down prices in order to remain competitive. This will mean cheaper prices for renters,” he says.
Tehfe says that declining rental prices will be further fuelled as first homebuyers move to the west for investment.
