The PROPERTY DOCTORS, Sydney Australia Novak Properties

EP. 1294 LITTLE JOHNNY HAD $650K - CAN HE BUY MORE OR LESS IN THE MARKET A YEAR LATER?

September 15, 2024 • Mark Novak, Billy Drury • Season 27 • Episode 1294

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Curious about why entry-level properties in Sydney's suburbs are behaving so unpredictably? Uncover the surprising trends and data-driven insights that could reshape your real estate decisions. In today’s episode, we dissect the performance of entry-level properties in key areas like Manly, Dee Why, St Leonards, and Botany over the past year. Despite rising interest rates, some suburbs are defying expectations with growth, while others are facing more volatility. We'll share real-time data from RP Data to help first-time buyers and investors navigate this hot market.

In the second half, we explore broader trends that have emerged post-covert, focusing on how cautious buyers are now gradually re-entering the market. Though some areas are still catching up to pre-covert values, the potential for capital growth is enticing. We’ll discuss how interest rates and the possibility of rate cuts could impact your buying decisions. Whether you’re a first-time buyer or an investor, this episode is packed with insights to guide you through Sydney’s dynamic real estate landscape.

Speaker 1:

Okay, guys, more or less than a year ago, we're going to play a game. We're going to look at some core suburbs across Sydney. We're going to stick to the entry-level price range in some of these core suburbs and we're going to tell you how they've performed exactly over a year. Stay tuned. I'm the ringleader, billy Bob, the old man in a young man's body. How are you this morning?

Speaker 2:

I'm good we're reporting on behalf of the first home buyers and parents, investors that are trying to break into the entry level price point and it's pretty competitive out there. I think these numbers are going to help people with their decision making for the next six to 12 months.

Speaker 1:

And sometimes this creeps for the next six to 12 months, and sometimes this creeps prices down, prices up. You look back six months later and you go, or three months later you're going. Is this my imagination or is the market doing this? So we wanted to bring you the live information, fresh from RP Data, and talk about exactly what suburbs around Sydney are actually exactly to the dollar and the percentage doing.

Speaker 2:

Yeah, now there's also another number I'd love you to keep an eye on when we bring up these little tables, look at the number of sales. I like looking at the number of sales, the volume, in each of these suburbs, because more or less stock will influence price as well. More or less stock will influence price as well and as we move into spring, we're seeing more stock now than we have done.

Speaker 1:

The last 12 months. Yeah, that's good observation, billy, the old man, the young man's body, um, the um, if you. We do a metric of what's on the market on realestatecom. So there's 100,000 properties in the northern beaches, approximately at full stop, and at any one time we will witness a certain amount for sale on realestatecom. Now that number has changed, it started it hovers. I'll give you a year by year blow at these times of the year. Sometimes we've seen 11, 1200 and sometimes we've seen it as low as 600 at this time of the year and at the moment we're seeing at 800. So it's doing typical spring sort of more stock on the market, but it's still pretty low, which is good for capital growth yeah.

Speaker 2:

So let's get into some of these suburbs and let's show you what's happening out there. Suburb number one manly. I was talking with a client yesterday, um at an appraisal, talking about manly, talking about the entry-level price points. This is just apartments and we can't filter just the $600, just the $700 price point. But you can see the curve and what you'll find throughout the segment is it's fairly consistent across all of these different suburbs. That's 12 months.

Speaker 1:

Okay, one year. Okay, that's interesting. So from a year ago, what was that price? At the beginning of the little graph, there Sitting just under $1,700.

Speaker 2:

1.7 million for unit, yeah, which is astonishing, but here's where it can be skewed right. It's not to say manly is an unrealistic suburb, you know, for a first-time buyer it's the number of sales. Uh, sorry, that might be, give me a sec. Number of sales in manly, um, let me just get my phone. Um can skew it like if you've got a suburb with seven million dollar apartment sales, it's going to skew the data, there's no doubt about it. So you've got to be careful and sort of look, look at um, look deep. You know real estate will come and filter, filter backwards, because that will help you with your search, so that's pretty interesting.

Speaker 1:

So prices even though the rates have been going up for a couple of years now, it's just weird that prices aren't going down.

Speaker 2:

It still continuously shocks me what other suburbs we got on to the next DY, and we are going to get out of the northern beaches in just a moment. Dy is a good one. I love dy because it does again. Yeah, it does um. So what was it? What was it?

Speaker 1:

what was at 950 and it's now over a million, about five percent. It's pretty interesting, guys. I'm really I'm surprised. Now I do have to say what sparked this today was to get into dy. This is a median price, so don't be too spooked. But to get it to better in dy you were price, so don't be too spooked. But to get a two-better in DY, you were doing it for about $750 about a year ago. Probably now it's going to be over $8850. So I was like how the hell did that happen and when did that happened? It moved. What other suburbs in sydney were looking at philly bob?

Speaker 2:

st leonards for a year. I've got a client that's looking in both dy and st leonards at the moment. Just look how volatile that is with. Let me just take you back to dy quickly. It's pretty. It's pretty gradual. St leonards really has been a bit of up and down and again, I encourage just to look at the number of sales and the price points. You know these suburbs are selling Because something like DY there's not much. You know entry-level units there are about 500,000, 600,000, you know on the really smaller side and most are trading around 700,000, 800,000.

Speaker 1:

So there's not much multi-side and most are trading around seven, eight hundred. So there's not much um. So we're still looks like you know one year, saint leonard's fairly level. What are the suburbs?

Speaker 2:

we've got um botany, what? Botany took a hit for most some of the year, but it came back strong botany took a hit for most some of the year, but it came back strong, yeah, yeah, to give you an idea, um, that was, that was manly 279 sales. Yes, saint leonards, you know. So just have a look at those red and greens. That sort of pointing is in the right direction. Parramatta Whoa, whoa, started at 605,000. Now we're sitting, yeah, almost back to where we left off. Same, same, yeah, really interesting.

Speaker 2:

Any other suburbs Liverpool Up. Yeah, really interesting. Any other suburbs? I think so Liverpool Up.

Speaker 1:

Yeah, up considerably Wow.

Speaker 2:

So, going from what to what, it's up from 1.12 to 1.2. It's actually not. It looks a lot. Sorry, that's the number of sales. You can see number of sales up. Sorry, they didn't have the data available for the amount but there's more stock.

Speaker 1:

Oh, false, misleading and deceptive conduct.

Speaker 2:

More stock on the market to the tune. Look at the number of sales in the suburb over 1200 in a year you're.

Speaker 1:

That must have been a lot of new unit blocks being released yeah, that's astonishing so to give you an idea, um syd sees about 500 or 600 sales a year. So this has done twice as much as Sydney CBD for residential apartments. That's an astonishing number for Liverpool, astonishing.

Speaker 2:

What's your pun? Next six months in this same price point? Where do you think it's going to go?

Speaker 1:

Oh look, I think there's going to go. Oh look, I think people, there's going to be mixed reactions from people when I say this, but I think we're definitely up. Um, I think we've where it's. Um, it's the opel. It's the opposite to a bubble bursting. It's a bubble getting blown up. Um, I just, you know, I just think there's gonna be uh, really good capital growth in the next 12 months. I estimate we'll see 10 to 15 percent in affordable suburbs. So I think houses like when we're not going to see five percent, they'll just level out and see. You'll say zero to five at best, but I think units in affordable suburbs, I think we're going to see 10 to 15. It just makes sense that people support affordable properties with their budget because people are strapped yeah, here's what I find.

Speaker 2:

When those rates went up, it really put a hurdle in between making moves because of finance and because of servicing. So when rates went from 2% to 6%, their borrowing capacity was halved and almost halved again. It went to absolute. You know nothing compared to what they had options before. We're going to see the reverse effect. When rates come down, people will have the option to move and they will make the jump. We've even got, you know, friends and family, you know know locally that have got the deposit ready but they can't get the funding.

Speaker 1:

As soon as that borrowing capacity changes, they're ready to go and also, I think there's a pent-up demand, like if people aren't, if there's not a lot of transactions in the area for years and years and years. We saw this from covert, if there's, you know, where people abstained, abstained, abstained. It was a bit of a release valve when they just decided to do a deal. Um, you know, a couple of years after covert and I think I think people have abstained a little bit the last couple of years, I think, look, we'll see, we'll wait and see what happens and people will get to a stage. But I don't think they're going to be splurging on big ticket items. I think they'll be splurging on on entry-level properties. Um, yeah, but but uh, do not forget, guys and girls.

Speaker 1:

We are, for instance, in in a lot of suburbs in sydney with units. We're saying capital growth, capital growth for 24 months, blah, blah, blah. You know, across bar, you know, but we're still not back to where we were. We haven't caught up from where we lost. Like, if you look at dy, for example I don't know if you can see this hey, where'd that go?

Speaker 1:

soldier, okay yeah like we're not back to where we were.

Speaker 2:

Yes, we're on the rise, but we're not halfway.

Speaker 1:

Halfway, yeah yeah, um, so it's pretty interesting, but that's the property market today. That's what someone like little johnny can expect if he's going out to buy a property. As to a bit of a temperature and what's happening out there, um, and I think if you can afford it, you know, definitely, um, motivate yourself and get out there and do it, because there's capital growth there in affordable price ranges too right, and hopefully these rates are not going to get any steeper.

Speaker 2:

So if you can afford it now, you can borrow now. I think you've weathered the heart of the storm.

Speaker 1:

Yeah, some of the data that came through from government was not beefy or was even a little bit scary, but I think they'll support some interest rates cuts on the back of the data that's come through in the last month or two. So, yes, it's good news for interest rates.

Speaker 2:

Good news for folks on buyers. There you go. Yeah Thanks, billy Bob, see you guys.