This was published 1 year ago
The Sydney homes defying the property market slowdown
By Kate Burke and Elizabeth Redman
Despite a slowdown in Sydney’s housing market, one type of property remains in hot demand: A-grade homes.
Competition has eased for Sydney real estate since the post-lockdown surge in properties for sale, but top-quality homes – renovated, well-located or in a popular school catchment – are still highly sought after, experts say.
It’s a different story for other properties. While buyers were prepared to snap up B-grade and C-grade properties earlier this year – fearing they would miss out if they didn’t act quickly in a rapidly rising market – the sense of urgency has disappeared and buyers are less prepared to make big compromises.
Quality homes are still attracting strong competition, but demand has pulled back for B-grade and C-grade properties.Credit: Peter Rae
Buyer’s agent Peter Kelaher, managing director of PK Property, said top-quality homes that were appropriately priced had drawn interest from five to seven bidders at auctions in recent weeks. B-grade homes – with compromises like an average location, renovation needs and no parking – might have drawn two bidders.
C-grade properties – those in need of serious work, located on main roads or compromised by power lines through the block – were finding no bidders and taking a 10 or 15 per cent hit, he said.
“A-grade is still doing very well, B-grade is doing well, and C-grade: we’re calling them doughnuts because no one is going,” Mr Kelaher said, though he noted that even top properties in some markets had been subject to a slowdown due to extra supply coming onto the market.
Homes in prime locations, or those with strong emotional appeal to buyers, were still selling as well as they had a month ago, said John McGrath, founder and executive director of McGrath Estate Agents. But interest in other homes had pulled back as the market was “flooded with a surge of listings”, he said.
“Anything with an issue, or less differentiated, or even investor stock, is down about 5 per cent,” Mr McGrath said.
There were still plenty of buyers, but they had more choice, and with fatigue setting in for some, the option to put their property search on hold until next year was appealing, Mr McGrath said. Domain figures show the number of homes listed over the four weeks to December 5 was up more than 50 per cent year-on-year but had eased from the initial post-lockdown surge.
“The sting has come out of the tail,” he said. “Unless you’ve got something that is somewhat unique, people are less urgent to buy.”
Mr McGrath expected a busy start to 2022, with a lot of stock lined up for the new year and many agents already fully booked for auctions in January and February. The greater supply would result in slower price growth but was unlikely to bring a material drop in prices, he said, tipping instead a levelling off, with the return of expats to help support demand and keep prices healthy through most of the year.
Among properties still attracting good demand was the Stanmore home of downsizers Liz and David Weichert, which sold last month.
The Victorian home on a double block had been renovated but retained period details. It featured four bedrooms, a swimming pool, an extra studio space/home office and outdoor entertaining area.
“The house has been fantastic – it’s a really beautiful, old Victorian house,” Ms Weichert said, adding that she also liked the neighbourhood and the public transport and schools nearby.
“It certainly brought in good interest and a lot of people through.”
Liz and David Weichert by the pool of their recently sold Stanmore home. Credit: Janie Barrett
Her agent, BresicWhitney director Chris Nunn, said the home drew four bidders who liked the land size, the home’s orientation, its generous living space and the pool.
“A-grade homes, where buyers don’t have to compromise, are still in very high demand,” Mr Nunn said. “It feels like that category of property is still on the up and up because they haven’t gotten any easier to buy.”
Buyer’s agent Henny Stier, co-founder of OH Property Group, said the increase in homes for sale had eased the sense of buyer urgency, with fewer people now settling for properties that she dubbed “lemons”: those with significant pest and building issues, bad topography or without backyards. Homes in need of a lot of work, or in heritage or conservation areas, were also not clearing as well.
“Earlier this year they were flying out the door … but now [buyers are] like: ‘No, we’ll wait until next year’,” she said.
Top homes are still drawing numerous bidders and strong competition on auction day.Credit: Peter Rae
Sellers, rather than buyers, now had a fear of missing out, concerned that the ship had sailed on booming growth, Ms Stier said. She added that she had seen more price drops in recent weeks – albeit some of those homes overpriced to begin with – as vendors raced to do deals before more homes hit the market next year.
A-grade properties were still doing fine, though, as were knockdown-rebuilds on good blocks of land. But the appeal of buying the worst house on the best street to get into a preferred market had worn off. Given the high cost of fixer-uppers to begin with and the increased renovation costs and build times, more buyers were prepared to risk waiting, and to pay more to secure a renovated home, Ms Stier said.
“If it’s a really rare product, a once-in-a-10-year opportunity, people will still buy them, but not if it’s the type of home where another one will come up in three months … if it’s another three-bedroom that needs a full extension, they’re a dime-a-dozen,” she said.
Northern beaches selling agent Michael Clarke, of Clarke & Humel, said he had noticed a lull in activity a month back off the initial surge in listings, but B-grade and C-grade homes were now going one by one as the new year approached.
“Those homes that don’t necessarily tick all the boxes were getting impacted four or five weeks ago, but they’re once again being hoovered up by buyers who are keen to know where they’re going in 2022,” he said.
He was, however, aware that other pockets of Sydney weren’t holding up as strongly as the beaches, which had benefited from increased buyer demand over the course of the pandemic and were typically busier as a market than others over summer.