News

Salt air licks downturn

Author: Susan Wellings Date: November 22, 2008 Publication:Sydney Morning Herald (subscribe)

PHOTO: Spanish charm . . . this Edward Street apartment in Bondi Beach is expected to fetch more than $750,000 at auction. Eastern beachside apartments are on the up and up, despite the suburban price plateau. If you bought down by the beach one day, you're in for a big surprise. While apartment prices have fallen generally across Sydney, one of the strongest markets has turned out to be the beaches of the eastern suburbs. So while we've always known that living by the beach, with all that fresh sea air, salt water and soft sandy walks is good for your health, we now also suspect it's good for your wallet too. "Anything within a sniff of the ocean has held up quite well and is still attracting a lot of interest," says Century 21 agent Tony Moses, who has been inundated with inquiries about

one particular unit he has for sale, a 1-2 bedroom 1930s Spanish Mission-style apartment at Bondi Beach, which is expected to fetch more than $750,000 at auction on December 4.

"And the charm of these beaches isn't only apparent to Sydneysiders," he says. "We're also getting interest from people in Melbourne, expats and people living overseas.

"Everyone loves a good beach!"

Awash with increases

The figures generally back that up. According to RP Data, prices of apartments at Tamarama, for instance, have gone up a staggering 25 per cent in the past year and 8 per cent on the past quarter alone, to reach a median of $840,000. Bronte, similarly, has shown exceptionally strong growth, rising 16 per cent during the year, to hit a median of $620,000.

North Bondi has also fared well, with prices increasing 7.6 per cent to $554,000, while cheaper Maroubra has gone up 5.7 per cent to $480,000, pricier Clovelly 4.2 per cent to $645,000, South Coogee 4.4 per cent to $532,000 and Coogee itself 3.6 per cent to $570,000. These all compare well with the average 2.2 per cent rise in median unit prices across the eastern suburbs generally.

Only Bondi Beach has bucked the trend, slipping 1.2 per cent to $518,750, probably because it has a much higher percentage of investment units whose owners may be feeling the economic strain.

"But there will always be a strong demand for beachfront units and the closer to the beach, the better," says RP Data's Cameron Kusher.

"The eastern beaches are good places for investment property, as rents are high and young people particularly love the lifestyle, but generally residents in those areas tend to be more cashed up, so they have lower mortgage stress."

There are also few big development sites coming up - with the exception, perhaps, of the Prince Henry site at Little Bay - so there aren't generally too many new apartments around to undercut the existing market, says Mathew Tiller, of PRDnationwide.

"As a result, they've proved to be among the most resilient areas," he says. "They probably have a more affluent population and rental yields are healthy."

In Randwick, for instance, a two-bedroom apartment will attract a median rent of $450 a week, up 13 per cent in the past year, while Waverley, which includes Bondi, attracts a median rent of $493, up 17 per cent in the same period.

Growth rolls on

Those growth rates have stood up well for the past five years, according to analysis by PRDnationwide. Bronte unit prices, for example, have grown by an average 12 per cent a year since 2003; North Bondi by 9.7 per cent and Dover Heights by 6 per cent. Prices in the area of Waverley have risen 9 per cent a year for the past five years.

"They'll probably always be strong because people buy the lifestyle but the population changes quite a lot," says Debbie Donnelley of goodyerDonnelley Real Estate.

"Younger people often come here. Then when they marry and have kids they might move out to the suburbs. But when the kids leave home, often those people will come back again."

Affordability for these areas is an issue. Young couples wanting more space for a growing family often simply don't have the kind of money needed to move to a bigger unit or a house in an eastern beach area.

That's true for primary school teacher turned full-time mum Zoe Flanagan, who's selling her top-floor art-deco apartment at 4 Division Street, Coogee. She, her husband and toddler Ruby are planning to move out to the Blue Mountains where their dollars will buy a great deal more.

"It's been great being so close to the beach but we hope to have more children and we need more room for a growing family," says Flanagan, who's hoping their spacious two-bedroom unit will fetch more than $500,000.

"We've bought a huge house with my parents in the mountains where it's so much cheaper."

Her agent, Ray White Bondi Junction's Simon Platt, says demand for property at Coogee and Clovelly is very strong at the moment, while some of the heat has gone off Bondi.

"But quality stuff is still selling well, although we're generally dealing with a smaller number of buyers, so it's taking longer to sell," he says.

Testing the waters

Many of those buyers are taking longer to commit to a purchase because they're hesitant about the economic conditions. Mark McPherson, of N G Farah at Coogee, believes that's often unwarranted.

"I think some people may be unqualified to really understand what they're taking on board," he says. "They don't understand the market and with a bit of positivity, sales will improve."

But generally the first home-buyers' market is thriving in beach areas, buoyed by the increases in the first home-owner grants, low interest rates and the expectation of further falls.

"The 5 per cent yields on investment property are also bringing investors back into the market," says McGrath's eastern suburbs specialist Adrian Bo. "We're seeing strong demand for anything up to $1 million at the moment.

"At the higher end of the market, we're seeing a lot of inquiries from empty-nesters who are often downsizing from larger houses and are looking for the lifestyle and good, small, boutique buildings with quality finishes, lower maintenance costs and proximity to shops and cafes."

And any potential fall-off in demand certainly won't be long-term, believes RP Data's Kusher. "Property in the eastern suburbs remains strong because of its position close to the inner city, good public transport and great infrastructure. Of all those areas, the beaches are likely to be the strongest."

"Over the medium to long-term, value growth is expected to return due to the desirability of these beachside residential locations," he says. "People just love living close to the beach."