Prices cooling but buyers beware of holding out for a better deal

Given that we’ve kicked off a new financial year, it seems like a prudent time to look back over the past 12 months and see how our office has performed. During FY21/22 Ballard sold 180 properties for a total of $720M with an average sale price of $4M, up from 159 sales totalling $555M and an average price of $3.49M for FY20/21, which gives you an indication of how Eastern Suburbs prices have escalated.

We also set a number of records along the way, including an oceanfront apartment block at 9 Kenneth Street, Tamarama which set an Australian coastal record and a luxury home at 453 Bronte Road, Bronte which set a new Bronte suburb record. A meticulously revived Mediterranean-style mansion on 1291sqm at 24 Albert Street, Edgecliff set a new suburb benchmark for Edgecliff while a gracious bungalow at 10 Day Avenue, Kensington set a new high for Kensington, a record which we had already broken three times prior in the same financial year.

During the month of June we transacted a number of noteworthy sales, including 11 Donovan Street, Maroubra. The luxury five-bedroom family home set a new street record when it sold prior to auction after 19 days on the market for $5M. A five-bedroom Federation home at 16 Powell Street, Coogee also set a street record when it sold at auction for $5.711M. After languishing on the market for more than six months with two other agencies, we also sold a two-bedroom apartment at 2/130 Old South Head Road, Bellevue Hill off-market for $860,000 within 24 hours of listing, which really highlights the strength of our network and market knowledge.

It’s no secret that property prices are cooling, fuelled largely by rising interest rates. However, while the media loves to play up the doom and gloom, it’s important to remember that this correction is coming off the back of one of the sharpest property price increases in Sydney’s history, and it’s all part of the real estate market cycle. Domain research shows that price downturns in Sydney are generally short-lived, lasting 12 months or less. Worth noting too is that the Eastern Suburbs market has inherent strength and is more resilient than most.

When property prices fall, buyers often have a real fear of overpaying and their inclination is to hold off purchasing in the hope of securing a better deal in the future. However, trying to pick the bottom of the market has risks. There’s the distinct possibility that you’ll have less choice as prices drop because owners who don't have a compelling reason to sell might hold onto their properties until the market bounces back. Our advice is to focus less on what the market will be doing in a few months and more on securing an asset that will sell well in any market based on its location and desirable features.

A notable market trend at the moment is rising rental rates. According to CoreLogic’s Home Value Index, the annual growth in rents is now tracking at 8.8% across the combined capital cities, and unit rents are rising at a faster pace than houses. After a two-year hiatus, our softening sales prices and rising yields are now encouraging foreign buyers back into the market and they’re eagerly purchasing residential property, thanks to Australia’s reputation as a property safe-haven.

As always, we’re here to help you navigate the current real estate climate. Contact us today.