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Wednesday, September 26, 2012 

If proof was required that  rather than being a single market, Sydney's so called prestige residential property market  is really a series of sub markets operating in the same geographic area as each other, one need look no further than the activity which occurred last month.

In what may come as a surprise given the down beat impression conveyed by most mainstream commentary, top end buyers buoyed by the absence of headlines sensationalising the European debt crisis and a steadying of the local bourse stormed out of hibernation last month to notch up at least 117 reported and unreported purchases over $1.5 million throughout the Sydney metropolitan area. That equates to  an average of 26 such sales per week. Unsurprisingly, the $1.5 to $ 2 million bracket accounted for almost half of those 117 purchases.

Proving that property buying is risky but can be rewarding, the following analysis of 34 of those transactions for which we have been able to find comparable sales evidence within the past three years exposes some of the winners and losers as well as the unreliability of published movements in median property prices as a guide to what is happening at the coal face.

It also provides an idea of where those sub markets are trending as they head into Spring.

Comments:

• Of those 34 properties:
  • 17 sold for between $1.5 million and $2 million with 12 of those 17 producing gross capital gains for purchasers in the past three years either of comparable properties or the property itself
  • seven sold for between $2 million and $2.5 million with four of those seven producing gross capital gains for purchasers in the past three years either of comparable properties or the property itself
  • six sold for between $2.5 million and $3 million with three of those six producing gross capital gains for purchasers in the past three years either of comparable properties or the property itself
  • the remaining four properties sold for over $3 million with three of those four producing gross capital losses and one a zero return for purchasers  in the past three years either of comparable properties or the property itself
  • only five were purchased for prices in line with published changes in the relevant  suburb's median prices. This article first began commenting on that phenomenon four years ago.Read more
• On this analysis:
  • up to $ 2 million, bargains, especially of quality, will still be hard to find
  • $2 million is the turning point at which buyers will continue to exert the upper hand and
  • over $2 million, that grip will progressively tighten
• Following a long period of buyer enthusiasm in Strathfield (read more), buyers will benefit from a correction taking hold in that suburb
• A similar correction continues in parts of the eastern suburbs (especially Bellevue Hill and Vaucluse), in Birchgrove and East Balmain and on the northern beaches with severe pain being inflicted on owners selling surplus  lifestyle assets
• Other parts of the eastern suburbs, notably North Bondi and Bondi Beach as well as parts of the Canada Bay LGA seem overheated and therefore vulnerable to an imminent correction. Double Bay also seems to be simmering.

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