YOUR NEW-LOOK PROPERTY GUIDE Wel<strong>com</strong>e to the <strong>2009</strong> Sun-Herald <strong>Domain</strong> Property Guide, which offers an insight into what your suburb is worth, along with projections for the year ahead. New editorial features include a houses and apartments overview on the opening pages. More than 600 Sydney suburbs are grouped into nine regions — Lower North Shore, Upper North Shore, Northern Beaches, City and East, South, West, Inner West, South West and Canterbury Bankstown. Compared with the previous year, overall, Sydney median prices for both houses and apartments dropped 3 per cent in 2008. A median (see page 12 for definition) is based on a minimum of 10 sales records. Where there are less than 10 sales, it will be denoted as ‘‘n/a’’ (statistically reliable information not available). For example, the 2007 median for Point Piper houses was $6 million. However, bec<strong>au</strong>se of the decline in sales activities in 2008, less than 10 house sales were recorded, resulting in ‘‘n/a’’ for the 2008 house median. Projections of house and unit prices are based on internal Australian Property Monitors data and external data, including shortterm interest rates, NSW in<strong>com</strong>e per capita, building approvals and unemployment rates over the past 20 years. In arriving at a projection, APM considers forward estimates of these variables. Projections should be used as a <strong>guide</strong> only. Projections are not available for suburbs where there is insufficient median price data. Most suburbs received a ranking for the <strong>com</strong>bined value of house and unit sales, from one (highest) to 537. Suburbs which did not record adequate turnover for a median value in 2008 are not ranked. INSIDE HOUSES 8-9 APARTMENTS 10-11 HOW TO READ TABLES 12 LOWER NORTH SHORE 13 UPPER NORTH SHORE 17 NORTHERN BEACHES 24 EAST & INNER CITY 27 INNER WEST 33 WEST 38 SOUTH-WEST 50 SOUTH 56 CANTERBURY- BANKSTOWN 61 <strong>Domain</strong> editor Stephen Nicholls snicholls@fairfaxmedia.<strong>com</strong>.<strong>au</strong> 9282 3273 Writers Susan Wellings, Alex Brooks Production Matthew Odlum, Peter Jones Design Ann Loveday Advertising Linda Chan 9282 3506 Cover Rebecca and Andrew Broughton with d<strong>au</strong>ghter Taylor in Surry Hills. Photo: Janie Barrett A YEAR OF OPPORTUNITY AN INTERESTING TIME Liam O’Hara Uncertainty, trepidation and opportunity are key words in <strong>2009</strong>. Property prices have fallen and will continue to fall modestly in some areas of Sydney bec<strong>au</strong>se national in<strong>com</strong>e (or GDP) is substantially weakening, unemployment is expected to jump and everyone seems to be borrowing less while many are deleveraging by selling assets. During the past eight to 10 years, many areas have risen by up to 150 per cent. Clearly, these price increases are unsustainable. As in<strong>com</strong>es fall and borrowing winds back, it is expected that prices will fall dramatically in those areas where prices have risen the most. Opportunities will occur. Areas of Sydney that are cheaper be<strong>com</strong>e more so in a downturn. This is where the deep cuts to interest rates and the first home buyer grant will likely have their biggest effects in <strong>2009</strong>. Whatever way you look at it, especially if you’re cashed up, <strong>2009</strong> represents an interesting time. Liam O’Hara is a senior economist with Fairfax-owned Australian Property Monitors. JOBS THE KEY Louis Christopher The first home buyer grant, the housing price falls we have already had and the significant cuts in interest rates have made Sydney housing far more affordable than 12 months ago. However the threat of higher unemployment will make most investors and home buyers c<strong>au</strong>tious. It is very clear that the Reserve Bank and the Rudd Government do not want a housing price crash. And, for better or worse, these two entities have the means to stop one. And so, while I will be closely watching the usual reliable housing indicators such as housing finance approvals and <strong>au</strong>ction clearance rates, I will also be paying special attention to unemployment, Australia’s trading activity and most of all, the speed at which the Reserve Bank of Australia prints money. These indicators suggest the Sydney housing market will continue to be weak for at least the first quarter. We should see a seasonal rise in <strong>au</strong>ction clearance rates starting in March, however this should not be mistaken for a recovery. For a recovery to occur, history has indicated that clearance rates need to be consistently recording 60 per cent or more. Louis Christopher is managing director of SQM Research and head of <strong>property</strong> with Adviser Edge. INVESTORSTORETURN Mark Armstrong The Sydney <strong>property</strong> market has been the country’s worst performer in the past five years but <strong>2009</strong> will be the year the sleeping giant begins to stir. Not all markets will grow, however. The first home buyer market will suffer from rising unemployment and the top end will continue to be affected by low business confidence. Property investment strongholds in the inner city will be the exception. Investors who have been spooked by last year’s sharemarket crash will begin to search for the next emerging market. They will discover a <strong>property</strong> market that has grown by less than 1 per cent each year since 2003, rental vacancy rates of about 1 per cent and interest rates falling to record lows. It does not get much better for <strong>property</strong> investors. 2008 will be remembered as the year <strong>property</strong> once again became a viable investment. <strong>2009</strong> will see the penny drop. Mark Armstrong is a director of Property Planning Australia, www.<strong>property</strong>planning.<strong>com</strong>.<strong>au</strong>, and The Property School, the<strong>property</strong>school.<strong>com</strong>.<strong>au</strong>. PRICES FALL AT UPPER END Rod Cornish The domestic economy will be an overriding influence on Sydney’s housing market at a time when other cyclical drivers, including affordability, be<strong>com</strong>e more positive. Trends for detached houses and apartments will be quite similar with some further falls likely in Sydney’s overall median price in the first half of the year as the economy and employment weaken. The middle and outer-ring areas of Sydney have been in a downturn for almost five years. Price falls in <strong>2009</strong> will be more pronounced at the upper end, with some recent evidence of more first home buyer activity. We really need to see the domestic economy stabilise before investors return. Following nearterm weakness, we believe Sydney will be the first Australian housing market to recover, with affordability improving to 1998 levels later this year, new supply at 30-year lows and the strongest uplift in inward migration in seven years. But that will be a story for 2010-plus. Rod Cornish is the division director of Macquarie Capital Advisers. A MUCH-NEEDED STIMULUS Cameron Kusher The Federal Government’s stimulus package for first home buyers has sparked interest in this market. By limiting the availability of the grants until the end of the financial year, the Government has created a sense of urgency and much-needed stimulus. This means <strong>2009</strong> is likely to be the year of the first and second-home buyer and the market for more affordable properties (those priced at less than $500,000 to $600,000) will see the greatest activity. When looking to purchase in this market, buyers must have a clear strategy. In order to achieve the best future capital growth out<strong>com</strong>es, they need to target strategically located properties. The year may also see the return of investors, finally. A number of areas are showing positive cash flow. Inner city units and outer, more affordable, houses in particular are showing some of the best average gross rental yields and these are likely to improve further. Cameron Kusher is a senior analyst with RP Data. 6 THE SUN-HERALD PROPERTY GUIDE <strong>2009</strong> DOMAIN.COM.AU
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