Waverley Property Watch Q4 2013

The following report investigates the residential property market of the Waverley local government area (LGA). Located in Sydneys Eastern Suburbs the LGA has experienced strong buyer enquiry in the year to August 2013, with all indicators pointing to a continuation of this trend into 2014. Home units experienced a spike in sales, increasing by 16 per cent from August 2012 and reaching levels not seen since August 2010. Most unit enquiry came from investors and downsizers who used the proceeds from the sale of their family home to secure apartments close to the transportation and shopping hub of Bondi Junction.

The median price of a unit in the municipality continued to rise since the start of 2013, climbing to $690,000 in August 2013. The 4.8 per cent rise in median price pointed to a robust market where multiple parties compete over limited stock, and where auction-driven bidding results in record prices.

The Unit Price Point chart (on the next page) highlighted growth in the $1,000,000 plus price bracket while the number of units selling for $500,000 or less declined; the decline saw this price bracket contract from 39 per cent of transactions in August 2008 to 13 per cent for the corresponding period in 2013. Most units transacted in the $600,000 to $699,999 price point, accounting for more than one quarter (26 per cent) of sales.

PRD Research conducted a resale analysis to ascertain the capital growth achieved by vendors who sold their units in the past five years. The analysis revealed growth of over five per cent per annum since 2008, with a record 6.4 per cent per annum in August 2010. Recently the area recorded an average growth of 5.1 per cent per annum in the six months to August 2013.

House activity increased in the August 2013 half year, registering 279 transactions for the period. Demand from young families and a diminishing supply of non-strata dwellings produced record prices for the area since the start of 2013. The median house price increased by 6.4 per cent since August 2012, closing the period at $1,680,000.

The house price points exhibited a similar trend to units, with the share of sales under $1,200,000 declining from 31 per cent or transactions in 2008 to 15 per cent in the six months to August 2013. Sales were varied and included substantial beachside dwellings and small terraces, creating a near-even spread of sales across the different price points. That said, the largest number of transactions were recorded in the $2,400,000 plus price point, accounting for 18 per cent of sales. At the top end of the market a house on Hastings Parade, North Bondi sold for $5,500,000 in May, while toward the bottom end a semi-detached house on Lawson Street, Bondi Junction sold for $780,000.

The average capital growth for a house exceeded that of a unit over the past five years. The House and Unit Capital Growth graph points to strong gains for vendors who sold during the August 2008 and August 2010 periods. However, the graph also points to a decline in average capital growth in the past five years, with only a 0.7 per cent spread between unit and house capital growth in August 2013.

The rental market remained steady as vacancies created by tenants moving out were offset in the short term by new tenants moving in for summer. In the 12 months to August 2013 the median rent price for a two-bedroom unit increased by 4.8 per cent while the median rent of a house climbed by 9.1 per cent. Despite some tenants turning into owner-occupiers the regions rental vacancy remained low, with most parts of the council area recording a vacancy rate of 1.4 per cent or less (vacancy below three per cent is considered tight).

Residential developments concentrated in Bondi Junction and Bondi Beach. The most substantial development the redevelopment of the Swiss Grand Hotel; two apartments in this project have sold off-the-plan for $21,000,000 earlier in the year, setting a new record for a unit price in Sydney. High demand from downsizers and investors in Bondi Junction led to strong sales results for off-the-plan stock, with the Capitol building about to start construction and at least two more high-rise developments awaiting.