Sydney developers go crazy

Sydney developers go crazy

 

George Raptis tells us that while Sydney is taking a breather, it is still performing well.  Good properties are short and demand is strong.  He says developers are going crazy.

 

Transcript:

Kevin:  As you heard at the start of the show, this week and next, we’re going to be looking at Australia, at the different property markets. Where better to start than in the Sydney market, one of the hottest markets we’ve seen in a long time? Our expert on the ground there is none other than George Raptis from Metropole Properties in New South Wales.

George, it’s been an incredible time – hasn’t it – for that market?

George:  It sure has, Kevin.

Kevin:  Let’s have a bit of an overview. We’ll have a look at the Sydney market first and then take me into the state overall. Tell me what you’re seeing there now.

George:  It was a head-spinning 2015, wasn’t it? Property markets had started 2016 with a bunch of mixed predictions: some people calling for property bubbles, others forecasting lower but some continuing capital growth.

The scorecard is in for the first quarter, and yes, our property market have slipped down a gear a little. The Sydney market is taking a well-earned breather, with house prices dropping in some locations, but overall, they’re up nearly 50% from the previous market trough in 2012.

Kevin:  What’s impacting the market now, both positive and negative, George?

George:  I’d say the fundamentals for our harbor city property market are sound because jobs are being created here and the population continues to grow strongly, actually. There was a lot of the media reporting that Sydney markets dropped. That’s true; the market is still fragmented with a shortage of good properties, especially in areas like the inner western and eastern suburbs, at a time when there is still strong demand from both homebuyers and investors.

Kevin:  Are there any areas that you’d avoid, both in Sydney and in the state?

George:  I haven’t been in [1:44 inaudible] a long time, as you know. There are certain areas that I am concerned about, especially areas in previous industrial areas where they’re now over-developing, a lot of new things mushrooming out of the ground.

The last time I saw it was the last boom here in Sydney in the 1999–2003 fall when a lot of people bought speculatively, a lot of off-the-plan type properties and when they were due to complete, unfortunately, evaluations came in low and they couldn’t get them rented because so many of them looked the same. I have a little bit of concern about that particular segment in the market, for sure.

Kevin:  How would you describe investor sentiment right now?

George:  The current low in the property market is creating, in my opinion, a great opportunity for both homebuyers and investors, especially those with a long-term perspective. But you have to be careful; as we know, property selection is critical.

Auction clearance rates are always a pretty good barometer, in my opinion, as far as how people are feeling as far as sentiment is concerned. Since the auction markets kicked in at the beginning of the year, it’s been quite positive. Auction clearance rates have been hovering around that mid-70% band.

Our economy here is strong. The government is spending some serious money on infrastructure. We have strong population growth and low vacancy rates currently. All of that means that some segments of our market here are likely, in my opinion, to revive in the second half of 2016.

Kevin:  Are there any developments or infrastructure projects on the go – in the planning or underway – that you think are going to impact the market in New South Wales?

George:  I’d have to say you need to look at places like the inner west where the state government spent a fortune on that new light rail and what that has actually done for that location there and how easier it’s made it for people to commute in and out of town. I’d be suggesting looking at where the new light rail is going to be servicing the eastern suburbs of Sydney. I think that’s going to impact that particular market big time.

Kevin:  Let’s have a look at what buying opportunities there are right now. What’s the best buying in the capital now – where and what do we get for our money?

George:  I’d still suggest looking at properties in the inner and middle ring, established properties where there is that scarcity and demand. Home buyers are selecting a lot more carefully now, their decisions being driven more by lifestyle. In other words, a lot of them are trading backyards for balconies in well-located apartments in a lot of Sydney’s gentrifying suburbs. They’re the sort of areas that I’d be focusing on, for sure.

Kevin:  What are we going to get for our money in those areas? Are we looking at units or houses?

George:  You’d predominantly be looking at units. Entry level for something in the inner west, you’re talking somewhere in the vicinity of $500,000 and up from there.

Kevin:  At $500,000, that would be single bedroom, or would it be a two-bedder?

George:  In the inner west, that would single bedroom. In some cases, there is still a possibility of getting a two-bedroom apartment.

Kevin:  What sort of rental return would you get on one of those?

George:  I was actually speaking to our property management head the other day, and the rental market has picked up a lot in the sense that vacancies have tightened up a lot, we’re seeing big numbers of people attending open for inspections, rents are starting to creep. I think the next headline that the media might jump on the bandwagon – and this might be a bit of crystal ball gazing – is I think we might hear those two words “rental crisis” again.

Kevin:  Good talking to you. George Raptis from Metropole Properties in Sydney.

George, always good catching up, mate, and thanks for your very valuable time.

George:  Likewise, Kevin. Thanks very much.

 

Tags:
Kevin Turner
kevin@realestatetalk.com.au
No Comments

Post A Comment

Subscribe to Australia’s most listened to podcast now!

Free to join and learn, just subscribe now!

Daily Audio Shows, Video Tips, Commentary and Blogs.