First homebuyers in Sydney start with smaller units with the plan to trade up in five years
The Sydney mindset for first homebuyers proves to be about buying a small apartment and trading up within five years; properties still selling at a loss or being passed in; and, check out Nicole Kidman’s impressive portfolio in our real estate wrap.
NSW
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The first homebuyer dream is increasingly premised on buying a small apartment and trading up within five years.
It is especially the mindset in Sydney, where one in three prospective FHBs are planning to buy a small apartment, Genworth First Home Buyer Sentiment Report found.
But the cheap apartments at weekend auctions didn’t all go the way of the first-time buyer.
It was a downsizer who secured a 1970s Cronulla apartment that fetched $443,000, after being listed with a $400,000 guide.
The underbidder on the 24sqm, one-bedroom offering through McGrath’s Liam Tsaprazis and Luke Grosvenor was an investor.
At West Ryde, an investor paid $504,000 for a two-bedroom apartment through Raine & Horne’s Jim Voulgaris.
The weekend’s 77 per cent success rate was the lowest preliminary tally since June, according to CoreLogic.
Despite the many hurdles, CoreLogic head of research Cameron Kusher expects FHB levels to remain up because of government incentives. But he noted they “will likely find it more difficult to enter into the market” as investors compete for similar properties.
“Investors often have more borrowing power than owner-occupiers because of the equity they already have in other property that they own,” Kusher noted.
Kusher thinks “there may be a sense of urgency from FHBs” to enter the Sydney market, as they foresee affordability deteriorating.
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Blacktown, Wollondilly, Penrith, Liverpool, Campbelltown and the Central Coast were pinpointed by CoreLogic as the municipalities having the most listings likely to be targeted by first-timers.
The Genworth report that surveyed 2001 prospective first homebuyers found almost three in four believe now is a good time to buy their first home, citing the recent falling prices as the primary reason.
Some 60 per cent plan to buy with a less than 20 per cent deposit, compared with the 47 per cent of recent first-time buyers who bought with a small deposit. “To bridge the deposit gap, they are intending to rely on other sources of support including the federal government’s first home loan deposit scheme and asking their parents or family for assistance,” Genworth CEO Georgette Nicholas said.
About 15 per cent plan to use lenders’ mortgage insurance. Nicholas warned the rising use of parental guarantees was cause for concern given the “knock-on” effect in the event of a borrower default. “There are also broader implications for the strength and stability of the Australian financial system during an economic downturn,” she added.
The trend to hold a first home for a shorter time-frame reflected “a more pragmatic approach to entering the market sooner”, she noted.
The survey found one in four Sydney FHBs plan to buy an investment property as their first home, compared with one in six nationally.
There were 516 weekend Sydney auctions, with 383 results captured and 297 sold.
Ryde returned the highest preliminary clearance rate at 85 per cent from 27 results.
The next highest result was inner southwest at 83 per cent from 47 results. The outer west had the lowest preliminary clearance rate. The top sale was $5.86 million for a four-bedroom Lloyd Ave, Hunters Hill house sold pre-auction through McGrath’s Tracey Dixon.
Granny-flat gold in Bankstown
The granny-flat investor is back, with a 1950s Blacktown home, with granny flat, fetching $863,500 at a weekend auction.
It sold to a first-time buyer, who will earn rental income of $420 from the three-bedroom house and $360 from the rear two-bedroom granny flat.
There were still three investors in the bidding at $850,000. McGrath agents Joel Hollings and Peter Sutherland had 12 registered bidders, including three from the same street. They had 75 groups come through during the marketing.
Sutherland noted there were 40 per cent fewer homes for sale than in previous years.
“We have really seen a recovery in the last 12 weeks, and a two fold increase in buyers,” Hollings said, adding it came from more readily available credit.
The granny flat was built on the 664sqm block in 2011 at a $74,000 cost. The property last sold in 2015 at $851,000 and in 2011, just before its construction, for $377,000.
Rare unit the best place to start
Bound for the Central Coast, newly-engaged couple, Eliza Branford and Jesse Peacock, have listed their Hunters Hill apartment for auction next weekend.
“I love that it’s bright and open and I love the location,” Ms Branford said.
“We can stroll over to the village or Woolwich Pier.
“Hunters Hill is the perfect distance from the city because you’re away from the hustle and bustle but it’s easy to get there as well. I’m sad to be leaving.”
Simon Harrison, at Belle Property Hunters Hill, has set a $725,000 price guide. Hunters Hill does not have that many apartments, with this one located on the peninsula side near the village.
“It offers great liveability as well as investment potential,” Mr Harrison said, suggesting a likely $675 to $700 weekly rent.
“First homebuyers are back in the market,” Mr Harrison noted. “And they have access to stamp duty concessions up to $800,000, so this property is attracting those young people.”
Scene stealer: Tamarama in the spotlight
A Tamarama home, listed by cinematographer Peter James, was passed in on a $9.8 million vendor bid at its weekend auction.
The Peter Stronach-designed home on Thompson St had been given a $9 million price guide by its Ray White listing agents, Thomas Popple and Ashley Bierman.
The property boasts beach and ocean views, a pool, sun deck, spa and sauna on its 580sqm parcel, plus a frontyard tropical water feature.
James, who has worked on films including The Cars That Ate Paris, Driving Miss Daisy and Mao’s Last Dancer, paid $250,000 for the property in 1981.
Tamarama’s highest recent sale was $7.3 million on Gaerloch Ave to interests associated with the Lowy retailing family. It had sold for $7.6 million in 2017.
The suburb has had six sales above $10 million since 2008.
The record for the highest sale in the suburb was set in 2017 when Annie Conley paid $13 million for a home at the northern end of the beach. It now has a $16.5 million asking price.
Properties still selling at a loss
Losses are still possible in the rebounding Sydney market, as seen when a Padstow unit fetched $605,000 at weekend auction.
The three-bedroom, two-bathroom, top-floor apartment in Davies Rd had previously traded in 2016 at $615,000, meaning a $10,000 price fall over the three years.
It is not the most significant price decline, but evidence that over exuberance in boom markets can hurt when selling.
Last month a Paddington terrace sold for $2.05 million, equating to a $110,000 loss. The 1890s Underwood St listing last sold at $2.16 million two years ago.
The biggest recent loss was $1.5 million earlier this month on a Vaucluse home that sold for $6.5 million. The Olola Ave home had sold for $8 million in 2018.
Loss-making resales, in the most recent CoreLogic pain and gain report, sat at 9 per cent of all sales in Sydney in the March quarter.
Star in your suburb
Hollywood actress Nicole Kidman has spent some $30 million on real estate in and around Sydney since she bought her first home back in 1987.
That humble unit above Mosman shopping village cost her just $81,000.
Her occasional base Down Under these days is a $13 million double penthouse in Milsons Point, along with a Sutton Forest farm with Georgian-style homestead in the NSW Southern Highlands.
She also owns property in the US with her husband Keith Urban.