Tower&London_PropertyReview_Preview 2016 Winter

nicolez

THE PROPERTY REVIEW

SPRING QUARTER 2016

www.towerlondon.com


Spring Quarter 2016

Message From John Tower:

Challenging Times

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Residential Sales

Residential Leasing

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Esquires regarding to this magazine should be made to:

138 Walker Street North Sydney NSW 2060

Phone: (61) 2 9460 0551 Fax (61) 2 9929 2312

Email: reception@towerlondon.com

THE PROPERTY REVIEW

A quarterly magazine

published by

Tower & London

Disclaimer:

The information contained in this publication is for general information purposes only. Readers are advised that while an earnest effort has

been taken to ensure the information in this document was obtained from reliable sources, Tower & London gives no guarantees or warranties,

written or implied, over the accuracy of the information provided. Tower & London Pty Limited disclaims all responsibility for any loss or damage

suffered as a result of the use of the contents of this publication. The views expressed in this publication are those of the writers and do not

necessarily reflect the views of the publisher.

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John Tower

M.D. Tower & London

Licensed Real Estate Agent

Registered Property Valuer

Challenging Times

In my previous

articles in past issues

of The Property

Review, I have often

stated that property

value fluctuations are

a function of the

cyclical nature of

property market;

in fact, of almost all types of

investments. One of the great drivers of

property cycles, is the fine balance, of

the supply and demand equation at any

given market segment.

Buying a house is largely associated

with fulfilling the great Australian dream of

owning your own home; yet buying an

apartment is often considered as an

investment in property; but not all as many

buyers make apartments their homes; a large

proportion are rental properties; some for

retirement, often for tax offsets, many should

not be doing it at all.

Investors buying apartments, in newer

buildings, not only benefit from negative

gearing but with larger depreciation of fixtures

and fittings and of the buildings’ mechanical

infrastructure such as lifts and air-conditioning

plants.

When deciding to purchase or sell

property, the obvious question must be asked:

is it a good market to do so?

Well, this is when one has take into consideration

the cyclical nature of the property market; with a

skeptical mind, relying on the trusted advice from

someone with empirical experience. Only



This article is largely written for the benefit

of property investors in the Lower North Shore;

some of the figures and statements made herewith

are obtained from sources we trust and rely on for

accuracy; we always attribute the source.

with a skeptical mind, relying on the

trusted advice from someone with

empirical experience

The two graphs shown in this article have been

collated by Tower & London: every quarter we scan

all the sales of apartments for the Lower North

Shore: arriving at median values and the number of

sale transactions; showing the preceding three

years. Note that all new apartment sales are

discarded as the time of exchange of contracts is

well before the time of settlement; and when

recorded: hundreds can come in in one month

skewing the median price and number of sales; for

this: we rely on sales between a willing buyer and a

willing seller in an open market, unhinged from the

volume sales that are promoted by Developers’

agents through mass marketing tactics.

Moreover, over the past few years many cashed up

foreign buyers purchased multiple apartments,

sometimes whole floors in one line with little regard

to their intrinsic value.

Sydney Unit Market

Everyone knows there are currently

many more residential apartment buildings

under construction than usual: Saturday’s SMH

Domain is dominated by advertisements of new

developments, from Liverpool to Penrith,

Hornsby down to Hurstville and of course the

prime areas of the North Shore and Eastern

Suburbs.

Most, in my view, are asking higher prices than

intrinsic values; too much for the internal size of

the apartments offered. A two bedroom unit

used to be about 100 square meters, now some

are just 65 square meters, with a price tag of

about $15,000 per square meter, and more in

prime areas.

They may be able keep them there

of a couple of years, but eventually

costs will catch up and Owners’

Corporations will be forced to

drastically increase levies

The other intriguing development is the

advertised “estimated Strata Levies” often well

below realistic levels, they may be able keep

them there of a couple of years, but eventually

costs will catch up and Owners’ Corporations

will be forced to drastically increase levies,

particularly when these buildings are frequently

marketed as resort-like with swimming pools,

gyms, rooftop lounges; and the most expensive

of all: 24 hour concierge.

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According to the property website,

onthehoue.com.au/market analysis: median

value for apartments in Sydney has increased

by 1.8% in the June quarter 2016; and 6.4%

for the past 12 months to $704,000.

Rents are a good signal of

change in the swing of supply and

demand

Median rents have remained the same for the

past year at $550 per week. Rents are a good

signal of change in the swing of supply and

demand: it is interesting that for many years

rents have been increasing, yet, they are now

static. This is because of the massive supply of

apartments bought by investors overwhelming

the rental market, diminishing returns.


Sydney’s Lower North Shore

The two graphs mentioned and shown below are the main focus of this section.

These simple graphs, devoid of the mass sales of new apartment blocks, are a good

snapshot of the number of transactions and at what price.

A) Median apartment Sale

Price for the last three years in

the Lower North Shore measured

quarterly has increased from

728,000 to 902,000; an increase

of 24%, averaged at 8% per

annum; however, this graph

shows a leveling off of values for

the past four quarters; therefore

we can more accurately attribute

the increases over the first two

years of about 12% in each year.

This picture is different from the

median Sydney Apartment Sales

for the past 12 months, showing

an increase of 6.4%. The prices

of this category of property in the

Lower North Shore appear to

have leveled whilst Sydney’s

overall apartment sales kept

increasing in value.

Raw Figure for this graph have be obtained from EAC, Red Square

Conclusion

As investors, what do we

do? We see that rents have

leveled: they could fall as

more new properties are

completed; our negative

gearing is intact; interest rates

have just dipped again and

values appear to be at or

near peak levels for this

cycle. For my money: if I had

a small property portfolio, I

would now sell what is not

performing well, while there is

still a shortage of used

properties on the market. If I

was buying: I would wait to

purchase a near new

apartment at a reasonable

price from someone that

bought it off the plan.

B) Number of Apartment Sales:

For the past three years, sales

have largely fluctuated on

seasonal basis; but it is clear that

transactions have continuously

slowed over the past three

quarters. From the end of last

year fewer people offered their

properties for sale. As

mentioned, these figures do not

take into account the sales of

new apartments off the plan.

Raw Figure for this graph have be obtained from EAC, Red Square

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Residential Sales

Lot 2, 20 Wonga Rd Cremorne

Lot 2, 20 Wonga Rd Cremorne

Residential Sales

Enjoy a breathtaking waterfront location and the flexibility to redesign

your brand new home to create a highly personalized

bespoke residence. Showcasing flawless architecture on a deep waterfront

parcel of land with zoning to add your own private jetty, this property will rival

any on the harbour as a truly elite address. You’ll have absolute flexibility with

the option to work closely with our renowned design team or bring in your

own designer to recreate the layout and customize any interior finishes to your

exact specifications.

4 3 2

The home has been meticulously designed for minimum maintenance, optimum yearround

sunlight and maximum enjoyment of the spectacular outlook.

Elegant natural materials create warmth and texture, including timber and stone

flooring, stone benchtops and elegant marble bathrooms, though these details may be

amended to suit your taste and make the space your own.

Floor to ceiling, wall to wall windows and glass surrounds on the terraces allow the view

to take centre stage. Additional luxuries include C-Bus lighting, zoned ducted air

conditioning, a gas fire and state-of-the-art security with CCTV cameras.

4 3 2 9

SOLD

Details and Viewing:

John Tower

Phone: 0408 216 979

Email:

john@towerlondon.com


Residential Lease

508/1 Kirribilli Avenue Kirribilli

$2,500/PW

13/187 West Street, Crows Nest

Residential Lease

Completely redesigned one bedroom apartment with quality

fixtures and fittings, timber floors throughout, eat-in and semi open

and fully equipped kitchen, a delightfully fresh bathroom; built ins in

the bedroom and balcony off the living area.

1 1 $520/pw

LEASED

14/187 West Street, Crows Nest

Older style yet immaculately presented and fully furnished

apartment in a security three storey building. Timber floors

throughout opening onto a pleasant balcony hovering above

gardens.he apartment comes complete with modern easy furniture

and electrical appliances. Well positioned in front of a bus stop to all

major destinations.

1 1 $460/PW

LEASED

Main Harbour front property in prime Sydney viewing

position

No other position will encompass such close and yet panoramic views of prime Sydney Harbour

directly opposite this sparking city, framed by the Opera House and the iconic Harbour bridge. Not

only in this superb location, this luxurious apartment is situated in the most private building, right

at the waterfront with resort style facilities and impeccable quality of classical design. Four

bedrooms or three with a full study, three bathrooms, double garage; balconies and more, all in

first class condition.

$2,500 per week

Available now

Flexible lease terms!

LEASED

1801/30 Glen Street, Milsons Point

Apartment 1801 is set high and away from noise overlooking the

tranquil Lavender Bay and glorious sunsets. Solid wide timber

floor boards throughout are framed by floor to ceiling glass walls;

two bedrooms with built ins, and two good bathrooms, an

open style fully equipped kitchen.

2 2 2 $930pw

1109/138 Walker Street, North Sydney

LEASED

This near new two bedroom apartment is of clever design, filled

with light and good space. Quietly positioned yet in the heart of

North Sydney. Both bedrooms with built-ins, the main with an

ensuite. The belvedere is a delightful building with roof top

swimming and gym facilities; this apartment comes with security

parking…not to be missed.

4 3 2 10

Details and Viewing:

Nicole Zheng

Phone: 9460 0551

Email: nicole@towerlondon.com

www.towerlondon.com

2 2 1 $850/pw

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Our Offices

138 Walker Street

North Sydney, NSW 2060

Sydney, Australia

Phone: (612) 9560 0551

Fax: (612) 9929 2312

•Executive Leasing

•Property Sales

•Property Management

•Property Refurbishment

•Valuations

www.towerlondon.com

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