Newspapers and other forms of mainstream media add to the great seething mass of misinformation when they publish a single figure to describe price trends in a major capital city.
When they declare that Sydney prices have dropped 10% or 12% in the past 12 months, it paints a picture of a market where there is universal decline in prices right across the Sydney metropolitan area – which includes hundreds of suburbs as diverse as Bondi v Penrith or Manly v Campbelltown.
The proposition that a city so big, with all its diverse elements and situations, can be described with one figure depicting a single homogeneous market, is quite ludicrous. And when we dig a little deeper, we finds all kinds of different scenarios in play.
Our suburb-by-suburb analysis shows that there are close to 100 Sydney markets where median prices are higher than a year ago.
Many of the markets where prices have continued to grow are apartment precincts – it’s not happening across the board, but it’s a significant sub-plot in the Sydney market.
A feature of this scenario is the number of suburbs where the unit market is out-performing the house market.
Suburbs where the median house price has dropped in the past 12 months, but the median unit market has risen, include Lindfield, Annandale, Jannali, Matraville, North Bondi, Peakhurst, Roseville, Rozelle, Turramurra, Bondi Junction, Burwood, Dulwich Hill, Hurstville, Manly, Naremburn, Newport, Seaforth and Stanmore, among others.
In North Bondi, the median house price has dropped 18% but the median apartment price has increased 19%.
In Peakhurst, the median house price is down 16% but the median price for apartments is up 8%.
In Jannali, the median house price has dropped 10% over 12 months, but the median apartment price has risen 22%.
We believe this reflects buyers seeking affordability in an expensive market.
Sydney’s prolonged boom peaked in terms of buyer activity in 2015-16 and sales volumes started to reduce from that point – but it wasn’t until 2017 that it started to show up noticeably in the published price data.
After several years of strong growth, buyers in all market sectors began to resist the high pricing levels. Essentially, the Sydney market hit an affordability wall.
Since then, demand for the cheaper unit product has helped to boost price levels in some suburbs, while demand for houses in the same suburb has declined.
In Hurstville, the median price differential is $1.43 million for houses and $730,000 for units – i.e. the typical apartment is half the price of the average house.
There’s an even greater variance in Annandale, where the median house price of $1.6 million is more than double the apartment median of $755,000.
In upmarket Roseville, the median comparison is $2.85 million for houses and $1.08 million for units.
Those numbers help to explain why unit prices are defying the house price trend, in some areas.
Another part of the equation is the preference among younger buyers for the apartment lifestyle, rejecting the house-on-land in the ‘burbs choice made by their parents and grandparents.
TERRY RYDER is the founder of hotspotting.com.au
Originally sourced from Property Observer here.