Sydney Property Bubble

[greengiraffe]

Sydney housing recovery not confined to CBD

Robert Harley
451 words
9 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Sydney's housing recovery is under way across the metropolitan area – and not just in high-profile inner-city ­apartments.

The City of Sydney – the CBD and its surrounds – led the way in 2013-14 with 2578 new homes completed, more than in any other Sydney municipality.

But the chief executive of the Urban Taskforce, Chris Johnson, noted that more than 8300 homes had been completed in six leading Western Sydney local government areas.

"Clearly western Sydney is where the housing action is, along with some of the inner-city councils," he said.

Over 1000 new homes were completed in each of the traditional outer suburban, high-growth, local government municipalities of Camden, ­Penrith and The Hills according to the NSW Department of Planning.

Another 3000 new homes were completed in Blacktown and Liverpool, local government areas that were once on the fringe but are now experiencing a substantial apartment development.

In Parramatta, the city's second CBD and a market where prices have risen more than in the inner city, more than 1500 new apartments were finished.

Sydney's middle ring local government areas of Ryde, Botany, and Marrickville delivered 2386 apartments.

All up the number of new homes across the city rose by 23 per cent in 2013-14, to 22,750.

According to Mr Johnson, it's still not enough. "While the increase is ­welcomed, the number of homes ­completed is still more than 10,000 less than the NSW government's targets of 33,200 a year," he said.

The building approvals in 2013-14 do point to significant further increases in housing across Sydney.

During the year, 37,860 new homes and apartments were approved, 36 per cent above the approvals of 2012-13.

Leading the way on approvals was Blacktown City Council, followed by the City of Sydney and the City of ­Liverpool.

All up, seven local government areas in Sydney's west, from Bankstown to Camden and The Hills, accounted for over 13000 new housing approvals in 2013-14.

And because many of those are for detached houses rather than apartments, they will be built and occupied far quicker than the apartments.

Nevertheless, the housing approvals in the City of Sydney, and the local ­government areas of Botany, Parramatta and Bankstown, are dominated by apartments.

Mr Johnson noted that near 70 per cent of building approvals in 2013-14 were for apartments.

"This is clearly becoming the dominant form of new housing," he said.

"Sydney is moving from having around 30 per cent currently as ­apartments to becoming a 50:50 city within a few decades composed of half detached houses and half ­apartments."


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[greengiraffe]

Sydney housing undersupply to continue
EVAN SCHWARTEN AAP SEPTEMBER 17, 2014 2:53PM

THE lack of available housing in Sydney will take up to five years to correct, according to one of Australia's largest property developers.

STOCKLAND chief executive Mark Steinhart said despite efforts to release land for housing and the construction of new apartment blocks in the nation's biggest city, it would take a long time to correct the undersupply in the market.

"It will take probably four or five years to address the undersupply in Sydney," he told a property forum on Wednesday.
"The only way you can do it is through the release of land and through densification, and that's certainly the approach governments are taking, but it takes time."
Mr Steinhart's comments follow federal Treasurer Joe Hockey's dismissal of claims Australia was in the midst of a property bubble.
The treasurer said talk of a bubble in the property market was "lazy analysis" and ignored supply issues.
House prices have risen more than 10 per cent in the past year, according to property research business RP Data, while Sydney prices have jumped almost 24 per cent in two years.
Former treasurer Peter Costello told the property forum in Sydney that he believed it was state government taxes on the release and transfer of land that were restricting supply.
"Building a house is comparatively cheap," he said.
"What is expensive in Australia is land.
"So we have an increasing demand but we have quite a restrictive supply of land."
Mr Steinhart said each of Australia's major metropolitan cities faced supply issues, though the situation was most pronounced in Sydney.
But he said Australians shouldn't expect the recent housing market boom to continue and prices would grow at much more moderate rates in the next few years.
He expects Sydney prices to rise by about five per cent a year, while Brisbane and Melbourne are likely looking at growth of around 4.5 and 3.5 per cent, respectively.
But prices were likely to remain flat in Perth due to the slowdown in mining investment.

[greengiraffe]

Queues for Greenland's Lucent

Su-Lin Tan
482 words
22 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
The long line of investors waiting to buy prominent Chinese developer Greenland Group's new luxury residential units in north Sydney on Sat­urday was just one more sign of another buoyant property weekend in Sydney.

Before the crowd control barriers had been removed, more than 50 per cent of the 211-apartment Lucent project at 225 Pacific Highway, set to be completed in 2016, had been sold in simultaneous sales in Sydney, Hong Kong and Shanghai.

Most buyers were local and overseas Asian investors. Fifteen per cent had been approved by the Foreign Investment Review Board for sale to overseas buyers, and all were snapped up.

Half of the two-bedroom apartments in the 17-storey development, which boasts views of the Sydney Harbour, were bought by owner-occupiers.

Greenland's development and ­marketing director, Kang Xue, said the company was not worried about Sydney's property market. "We believe there is no bubble. Demand exceeds supply at the moment. And that is local demand," he said.

Mr Xue said overseas investors were also no concern.

"We believe FIRB is doing very well in regulating foreign investment."

But Commonwealth Bank of ­Australia chief economist Michael Blyth has criticised FIRB for failing to adequately monitor and keep records of overseas investments in the Australian property market, amid ­concerns that foreign buyers are ­inflating prices.

Mr Blythe told Channel Nine's ­Financial Review Sunday program that ­foreign investors, particularly from Asia, were adding an "extra layer of froth to an already bubbly" property market. "The problem is, of course, the data that we do get is quite dated. There are some questions there about how accurate and reliable it is.

"So the answer is that we don't really know. It does come down to ­anecdotes in terms of what's happening in the housing story at the moment."

Since entering the Australian ­market to build Sydney's tallest apartment tower, the 67-storey Greenland Centre, Greenland has launched more residential projects including Lucent.

"We can't say exactly how many more projects we have but there will definitely be more in the ­Sydney CBD and its fringes next year," Mr Xue said.

He said Asian investors buy in Australia because of its education system, and social and political stability.

The Lucent apartments range from $528,000 for a studio to $1.75 million for a three-bedroom property.

The Cheungs, a local family from Eastwood, bought a one-bedroom, ­one-study apartment for $838,000 as an investment. "Was it on the top floor? "God, no. Our friends in Shanghai tell us it's good quality so we are prepared to pay top price," Mr Cheung said.

He said competition for investment properties in Sydney is high. "Buying apartments is like buying iPhones. You have to fight for it."

With Bianca Hartge-Hazelman


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[greengiraffe]

Spring auctions fire up housing market

Samantha Hutchinson
505 words
24 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

A weeknight auction in Sydney's ­eastern suburbs delivered more than $56 million in sales, with agents saying spring selling activity is heating up.

A two-bedroom unrenovated ­apartment in Guilfoyle Avenue, Double Bay, netted $826,000, 16 months after a neighbouring, renovated apartment on the same floor sold for $704,000.

"In this case, we know that 12 months ago the home would've sold in the early $700 [thousands], but demand for ­two-bedroom apartments is just getting stronger and stronger," Bradfield Cleary agent Georgia Cleary told The Australian Financial Review.

He believes apartments, particularly with two bedrooms, represent the most sought-after class of property on the market, with young and first-home buyers and investors driving demand.

"The unit market is definitely driven by investors, but they're not the only ones who want these apartments. You've also got young ones in the mix, but the combination of the two is ­driving prices higher and higher."

The action comes as Sydney house prices pull away from Melbourne gains. Sydney house values have climbed 14.1 per cent in the past 12 months, compared with 7.3 per cent in Melbourne.Sydney short of stock

Some agents put the differential down to a stock level disparity. They say Sydney is starved of stock while ­Melbourne appears to have more.

There were 1218 auctions held on the weekend in Melbourne, recording a clearance rate of 69.3 per cent according to RP Data. That compares with 892 auctions in Sydney, with a clearance rate of 76.9 per cent.

"Certainly the biggest driver in ­Sydney's prices has been the shortage of stock during the winter months," Cobden Hayson agent Danny Cobden said.

"We've seen a lot more property come on to market in the past month, but I doubt there will be any significant difference in volumes on last year . . . competition will stay strong."

Bradfield Cleary, a Double Bay agency, had a clearance rate of 100 per cent at auction on Tuesday night, in which the agency alone accounted for $26 million sold at auction.

Standout sales included the Chong family's deep waterfront home on Wolseley Road in Point Piper with four bedrooms and beach access.The home netted $9.4 million.

A dilapidated factory building on Wilson Street in Newtown in Sydney's inner west, was another standout ­performer, selling for $1.725 million.

The two-level former hat factory in past years has been inhabited by ­squatters, but it carries the potential to be redeveloped into a number of ­apartments.

Buyers who sat on the sidelines in summer and waited for prices to ­stabilise were tired of waiting, Mrs Cleary said. "People have realised they still need somewhere to live. They've also realised that in the past six months there have been some serious price rises and they don't know when its going to stop . . . I think they've realised they've been foolish," she said.


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[greengiraffe]

New rules cut car park spaces

Rebecca Thistleton
482 words
24 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

New Sydney apartments built near ­public transport will no longer need a car space, under new rules announced on Tuesday.

The planning guidelines were designed to reduce housing costs and encourage public transport use. Car park values may spike and councils will have more car owners wanting on-street parking permits.

NSW planning minister Pru Goward said draft guidelines would apply for car parking in developments built within 400 metres of a transport hub, such as a bus interchange or railway station around the inner Sydney council areas.

Ms Goward said the cost of a new apartment could be slashed by up to $50,000 under proposed changes.

Reduced car parking provisions are already common internationally and in Melbourne and have been used to cut apartment costs and improve public transport use, while reducing the number of cars in built-up areas.

The development industry backed the cut to mandatory parking levels. Urbis director Stephen White said the change would allowing the market to dictate development and would create more consistent planning rules across the councils.

Councils contacted by The Australian Financial Review were still considering the changes on Tuesday but raised questions about the public transport system's capacity to encourage less car use. Botany Bay City Council has indicated it would oppose changes which limit their capacity to set their own planning rules which were in line with community needs and expectations.

The council has long called for improved public transport to connect council suburbs with the CBD. Real estate agent Sue Shearer said the change was "ludicrous" because it would put more pressure on existing car parking. Ms Shearer is selling a Pyrmont space for $32,000. While demand for car spaces from investors had fallen since councils began charging car parking levies, she expected demand, and therefore prices, to rise if the new rules were adopted.

Other inner-city car spaces are selling for $75,000 to $100,000 in the CBD and circa $50,000 around Potts Point. Urban Taskforce Australia chief executive Chris Johnson said car parking would still be built in the areas where the market supported it.

"We are keen to look in more detail at the issue of above ground car parking due to the excessive cost of below ground parking," he said.

"The government may need to review the impact on floor space ratio requirements in this area."

Pierre Abrahamse, national development director for Crown Group, said the guidelines showed the government recognised the shortage of apartments in Sydney. "These new guidelines are a step in the right direction however more can be done, particularly in relation to restrictions on the number of more affordable studio and one-bedroom apartments," he said.

The Property Council suggested flexible car park requirements be expanded beyond the areas included in the government's guidelines.

Key points


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[greengiraffe]

Full house: price and rate fears hit home
THE AUSTRALIAN SEPTEMBER 26, 2014 12:00AM

Andrew Main

Wealth Editor
Sydney
Andrew Antonas
Andrew Antonas says Sydney house prices are high and the RBA has been slow to act. Picture: Sam Mooy Source: News Limited
ANDREW Antonas is a real ­estate agent and he’s just bought an investment property in Sydney’s lower north shore — but it’s a retail shop.

“Residential real estate around this area is at a price that can only be described as full,’’ he said, speaking of the North Sydney-St Leonards area, where he specialises in commercial real estate development.

And he feels a bit like the proverbial merchant in the gold rush who sticks to selling pickaxes and shovels, rather than trying his luck at the diggings.

“There’s very good value in commercial retail property,’’ he said, noting that around the property he’s bought on the Pacific Highway there are no fewer than 1000 units under construction.

And while he agrees that residential prices are running hot, he is scathing about the Reserve Bank’s timing in mulling over whether to put some sort of dampener on bank lending for some types of property.

“The problem started to arise six or eight months ago but once again we’re tampering with markets when we’re reaching the upper limits of activity,’’ he said.

“It’s like the mining tax.

“The RBA always seems to be 6-12 months behind, perhaps because they have junior people doing the research.”

He was reacting to the RBA’s concerns about what it believes could be “unbalanced’’ lending, coming after months of soothing noises from the central bank about how there was nothing to worry about.

Charley Tarbey, chairman of Century 21 Australasia, said the RBA noises were “a wonderful cautionary note’’ on the way into the spring buying season.

“I love real estate going crazy but in fact I don’t,’’ he said, noting that unrealistic prices don’t help in the long run.

“What I think the RBA is doing is telling people to be prepared for a rise in interest rates, and certainly we’ve been asking first-home buyers how they would manage if rates do rise,’’ he said.

Mark Steinert, managing director and CEO of Stockland, said it was important to make sure potential borrowers were not shut out of the market by any “inadvertent and unnecessary over-­regulation’’.

He said the main problem in housing had been a “structural undersupply over many years’’.

“It is important that any potential changes to prudential regulations around home lending do not lead to unintended consequences, particularly for first-home ­buyers.’’

Coffs Harbour-based independent financial adviser Dacian Moses agreed with Mr Steinert’s comments about the lack of affordable housing, adding that “that shortage gets worse as prices rise’’. He said the global trend to quantitative easing, with artificially low interest rates, was ­inflationary.

“Real estate has historically been a good inflation hedge, but how strong will the housing market look if interest rates and unemployment both increase from here?’’

JPMorgan analyst Ben Jarman indicated the problem may resolve itself as demand drops away in some areas.

He said the owner-occupier market was slowing markedly, with loans that jumped at a 15 per cent annualised rate in the second half of 2013 slowing to a 3 per cent equivalent in the six months to July.

“We think the stall in both loan sizes and volumes signals owner occupiers’ reluctance, or inability, to chase house prices, which impedes further price gains,’’ Mr Jarman said.

He agreed investor activity was “running much hotter’’ than owner-occupier, “driven by local and foreign buyers’’, but noted that taken overall, Australia seemed to have passed the peak in housing market activity for the cycle.

“Dwelling sales volumes are just about flat at 0.6 per cent compared with the previous year equivalent, having run at 20 per cent last year,’’ Mr Jarman said.

“The moderation in housing that we are expecting should alleviate the housing market constraint on monetary policy.’’

[greengiraffe]

Record 700 homes change hands on Sydney’s super Saturday
THE AUSTRALIAN SEPTEMBER 29, 2014 12:00AM

Gina Rushton

Journalist
Sydney
SUPER Saturday lived up to its name when more than 700 properties went under the hammer in Sydney at the weekend.

“It is the highest-ever number of auctions on a Saturday in September for Sydney and the market didn’t struggle at all with those higher numbers,” Australian Property Monitors senior economist Andrew Wilson said.

The clearance rate in the city was 81.9 per cent, up on the 80.2 per cent recorded for the same week last year, according to APM. The median house price sold at the weekend was $1.137 million; in the same week last year it was $920,000.

“The inner west and upper north shore are really seeing ­activity; this weekend, Hurstville in the south and Mosman both had 10 auctions,” Dr Wilson said.

The beachside suburb of ­Maroubra in Sydney’s east was tipped to have the most auctions, with 12 properties set to go under the hammer, but 10 were snapped up before auction.

One of the two that did make it to auction was a four-bedroom house on Brooke Street, which went for $3m — $700,000 more than the reserve.

Dr Wilson said economic factors affecting the housing market had crystallised over the past week, with the US dollar up and the Australian dollar down.

“Prestige property is doing OK but with the stockmarket down last week, that is only going to impact on high-end property. The middle market is buy, buy, buy,” he said.

Population figures released by the Australian Bureau of Statistics revealed why Sydney’s property market remained buoyant, he said. “We’ve had very strong ­migration into NSW over the last 12 months; 70,000 migrants from overseas, and they don’t bring houses with them.”

Just 250 auctions are expected in Sydney next weekend, as the city ­relaxes over the Labour Day long weekend.

Just 44 auctions were held in Melbourne over the weekend, as the city’s property industry took a breather for the AFL grand final. The low number accounted for Melbourne’s high clearance rate of 84.4 per cent. “Melbourne’s next Super Saturday will be the pre-Melbourne Cup weekend, in a month’s time,” Dr Wilson said.

A three-bedroom unit overlooking Hyde Park in Sydney’s inner-city suburb of Darlinghurst was the most expensive home sold over the weekend, fetching $5.7m. In Brisbane, a five-bedroom mansion in New Farm in inner Brisbane fetched $3.15m.

RP Data recorded a prelimin­ary clearance rate of 50 per cent in Brisbane, up on last week’s 38.9 per cent. Adelaide exper­ienced a clearance rate of 67.4 per cent, down from 68.4 per cent last week. In Canberra, a clearance rate of 41.2 per cent was recorded and in Perth it was 52 per cent.

In Canberra’s Red Hill, a five-bedroom, three-bathroom home on exclusive Mugga Way sold for $3.4m under the hammer.

While Brisbane’s auction market has not been making headlines, it is still experiencing significant price growth.

RP Data reported that Brisbane property values were up by almost 7 per cent in the 12 months to ­August 1 and were set to keep inching higher.

[BlueKelah]

Investors flipping properties like flipping burgers. We all know how that is going to end

Gonna be a very very spectacular crash.

[greengiraffe]

Development prices almost double

Samantha Hutchinson
411 words
30 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

Less than four years ago, Galileo Funds Management bought a site in Chatswood in Sydney's north that priced apartments about $117,000 a unit site.

If the same deal happened again today, the group would probably pay nearly twice the price, Galileo portfolio manager Paul Marshall said.

"It was a different world back then compared to today. We were limping out of the GFC, people were still ­nervous about where the market was headed and a number of big players had exited the scene."

Times have changed. Sick of a daily commute on clogged roads, more and more Sydneysiders are choosing the suburbs with good public ­transport to the inner city, and a solid offering of shops, restaurants and entertainment.

"Based on what we're seeing today, for a market in similar proximity to the city as Chatswood, with transport, shops and a lot of amenity, we'd be looking at paying in excess of $200,000 per site as a starter," Mr Marshall said.

Agents across the city have ­witnessed the same meteoric rise in site prices, both with and without ­development approval. They are fuelled by offshore developers, and local developers banking on selling apartments to foreign buyers, first-home buyers and local investors.

"In South Sydney, a site that used to value potential apartments at $150,000, say 18 months ago, is now attracting about $220,000 to $225,000 a unit site," Oxford Commercial partner Steffan Ippolito said. Land shortage drives prices up

"There's no land in Sydney which means prices are always going to move up, but you've also got suburbs close to the city which now have ­better transport links than they've ever had before, and that's what ­people want."

A Chinese developer in July bought a development site with DA approval on Dunning Avenue in Rosebery, for more than $257,000 a unit site.

Local developer Mirvac is understood to have paid about $130,000 a unit site for a residential development site carrying no development approval, bordering Lachlan and O'Dea avenues in nearby Waterloo.

Prices are undeniably steep, but the strength of demand from wealthy Asian families with children at university and working in the inner city, has developers calling the area a safe bet, Mr Ippolito said. "Investors, first- home buyers and offshore buyers just want to be close to the city, and that's what these suburbs offer."


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[greengiraffe]

Fridcorp leaps into Sydney apartment market with plans for 500 units
THE AUSTRALIAN OCTOBER 09, 2014 12:00AM

Greg Brown

Property Reporter
Sydney
SYDNEY’S apartment boom continues to gather pace, with Melbourne-based developer Fridcorp set to pay $100 million for an inner-city development site, with plans for a 500-apartment project.

The deal, which will be Fridcorp’s biggest project, comes as the group secured Hong Kong-listed Beijing Capital Land as a joint venture partner for its 200-unit apartment project in Sydney’s Erskineville.

The Erskineville development will be Beijing Capital Land’s first overseas apartment project as it seeks to expand. More than 140 apartments in the project have been sold off-the-plan.

Fridcorp founder Paul Fridman declined to comment on its joint venture partnership. He confirmed the group was in due diligence on a $100m site in inner-Sydney property, but would not reveal the location.

He said that Fridcorp would favour the inner west and inner south over the next year. “That will be a circa 500-unit development for us. We think that the Sydney market’s got a lot of legs in it. Sites are still scarce and the market has been undersupplied for a while.”

BCL was undertaking 54 projects across 15 Chinese cities as of June 30. The state-owned Capital Group, one of Beijing’s largest ­enterprises, is BCL’s parent.

Elsewhere in Sydney, Chinese developer Dalian Yifang Group has emerged as the buyer of an amalgamation of homes in Sydney’s Lane Cove for about $63m. The Australian revealed in ­August that 17 residents in two Lane Cove streets united to sell their houses to a developer, reaping about $4000 a square metre for their properties.

It is thought that Yifang Group was the company that bought the block after two years of talks.

Yifang Group chairman Sun Xishuang made headlines last week as the largest shareholder in the recently listed ­Dalian Wanda Commercial Properties, with a 6.3 per cent stake.

Mr Xishuang is reportedly a close friend of Wang Jianlin, China’s richest man and the chairman of Wanda.

Wanda and Yifang have developed $US16.3 billion ($19bn) of projects together in China, including the CBC Wanda Square in Beijing in 2004 and an international holiday village on Changbai Mountain, reports say. Yifang and the agents on the deal, Ben Wicks and Matthew Ramsay of CBRE, declined to comment.