NSW The Signs of Sydney Slowdown....

Hi @Tekoz,
I had a bit of a think.
I follow the 1 br and 2 br unit market rather than 3br because families buying a 3br in the inner city would preferably be wanting a townhouse or house, and couples typically would buy a 1 or 2br unit - the 3rd bedroom would simply be an additional cost.

That's not to say there isn't a market for them however. But I imagine a 3br unit has a relatively high buy in, around 900k and if you could stretch just a little bit more you'd get a terrace. If I had that kind of money I'd go the terrace as it has land and will become relatively more scarce in the future.

But if you can rent out rooms... yeah, I concede it would be viable.
Just my thoughts... As I said it's not really a market I look at. I currently look at purchases not more than 500k for my IPs. I'm comfortable working in that space.

 

Hi @Tekoz,

I agree with Gockie, the market for 3 Bedrooms apartment is very small. Most people will be looking at 1 or 2 bedroom because of the affordability and easier to rent at median rent price.

You can potentilly look at 2 bedroom + media/Study which is significantly cheaper than 3 bedroom, but with the price of 2 bedder.

 

I think 3-bedder units are really for families that want city or public transport amenity. They certainly don't make much sense outside transport hubs. Meadowbank ( the newer side ) has plenty of 3-bedders for example and is also a transport hub due to train / ferry convenience.

Developers don't really build many 3-bedders since 2-bedders are probably easier to sell. Unless of course there are planning guides/codes that stipulate sizes of apartments.

 

Possibly....the areas I see dangers in are the Hills, parts of Pazzamatta...and places like Zetland....some crazy off the plan prices.

 

Depends on the market...but in some places in Sydney the downsizers have snapped them up as they trade out of houses and invest the difference in preparation for retirement.

 

@Gockie I bought a 40sqm in Elizabeth Bay for 350k in 2010. Now worth 550k+. And being rented out furnished at a great yield. Don't think it was foolish at all.

 

That's a good argument. Can you think of any other groups of people preferring 3br apartments?

I know my colleague was looking and looking to buy her first PPoR and was getting despondent on the townhouse prices around Parramatta. Getting outbid all the time, she did think of a 3br unit purchase but in the end, she settled for a 3br duplex in a slightly cheaper suburb. I think the fact a duplex has the land whereas a unit only gives you airspace was the difference. They are bringing up a son who is in kindergarten at the moment and didn't want to bring up their kid in an apartment.

Anyway, I'll continue to stick to the full houses on land (land for possible duplex/dual occ and reno potential) and 1 and 2 bed apartments... Lower buy in, high demand.

 

we have friends who downsized from a five bedroom / tennis court property in Turramurra to a three Bedder in Wollstonecraft . I think they each want a study / spare bedroom for the kids .

Nice position / not cheap .

I can certainly seeing it appealing to downsizers who want the freedom of being able to lock the door and go OS without having to worry about the garden.

We saw some in Turramurra Ave which would have been a good option for that group.

Cliff

 

Ok. "Individual circumstances may vary". And I apologise, I shouldn't have said that.
But...
1. Strata fees can be a killer for smaller properties. A studio could be facing strata fees of $800 per quarter whereas a 1 bedder might have say $1000-$1100 per quarter. A much more functional space has a slightly higher strata fee.

2. They can be harder to sell. Some lenders severly restrict their lending to properties under 50sqm, others start to do it under 40sqm. If you can only borrow 70% on a property less than 40sqm but can borrow 95% on a property of at least 50sqm, many people will go the larger property.

3. In a boom, people will consider anything to get a foot in the door, and you'll be ok. When its not a boom.... it's like buying on a main road or busy street. There are better buying options.

Anyway... smaller properties can be good for purposes like short term rentals.

I feel that the capital growth/comfort of living will be better in a slightly bigger property.
I had a friend who lived in a shoebox sized studio near Kings Cross.... so so noisy. Not an environment I'd personally want. I'd prefer a slightly further out 1 bedder.

But each to their own.

 

How much speeding up do you rhink the arpa decision/influence that lead to banks upping interest rates by 0.47% example for all investor loans???

Or did this move simply start the decline?

 

I think it's slowing down for sure. I've had two agents do follow up calls on me today. The one in Liverpool asked if I wanted to buy. I said only if you get me a house under 400k or a cheap unit. Told me about a 280k 2 bed unit. Waiting for my mate to reply with whether he wants it or not then will pass it on to one of the fellas on here. Mate doesnt seem too keen on conditions around it (Cash unconditional if he wants that price).

 

I definitely think the market is slowing down....just got 2 emails from agents about revised prices on 2 different properties in Glenwood. That area has been going crazy.
I still think they're asking for too much.lol

 

I think the impact of APRA will be felt even more in Spring. More evidence based analysis later but I do agree that the pool of investors especially the new ones will be smaller than Pre APRA.

 

@Gockie, @WinDyz. and @sash Cool, many thanks people for the insight and sharing, yes it is make sense.

Especially the OTP apartment nowadays, they are getting more and more expensive and smaller in size !?!?!

I've been inspecting Dulwich Hill for 3 bedder apartment (3/2/2) next to Light Rail and near bus stop, the asking price was $750k and sold for $816k
http://www.realestate.com.au/property/78-3-williams-pde-dulwich-hill-nsw-2203

Strata is the killer here with Video intercom and 2x Swimming Pools cost you $1089 per quarter.
That's definitely not for Young professional or down sizer.​

 

Hi,

Might be a slow process for a slowdown? As most investors would have their interest rates locked in?

Cheers.

 

@larrylarry No mate, it only affects the newbie investor or the short pocketted ones. The Developrs and deep pocketed people still make some decent offer in the market so it is certainly only affect some market not all.

 

816k for 3/2/2 is not that bad though... rental yield will be quite low, but i guess this is more targeted for Owner occupier, for those who prefer lifestyle and location.

 

I think there's a lot more newbies than the very experienced. Of course those with truckloads of cash and equity will have no huge issues.

 

I'm planning to rob a bank to get around APRAs tightening. Anyone wanna join?

 

Me Me Me ME Count me in hahahah!