What lockdown did to the real estate market

STILL HIGH: The northern beaches is still seen as a dream destination. Picture: Dallas Kilponen
STILL HIGH: The northern beaches is still seen as a dream destination. Picture: Dallas Kilponen

The real estate market traditionally quietens down over the new year period but it was also plunged into uncertainty as a result of the recent COVID-19 outbreak in the northern beaches. Instead of pools, pantries and powder rooms occupying people's attention, we obsessed over test results, travel restrictions and, again, toilet paper.

So does that mean the dream run is over for the real estate market in the northern beaches?

Strand Property Group buyer's agent Michael Ossitt says the recent outbreak has coincided with a time that the property market goes into hibernation over the new year holidays anyway.

"Normally, activity doesn't kick into gear until about the second or third week of January in terms of open homes. And the earliest auctions aren't until the end of January or beginning of February," says Ossitt, who specialises in northern beaches homes.

"If we can get the outbreak under control before the end of January then I don't foresee it having a big impact on the market. But if it blows out of control, then it could have an impact on market sentiment."

There's no doubt that uncertainty can cause some inertia, with both buyers and sellers sitting on their hands for a while, but if the first wave of COVID is anything to go by, people's appetite for properties in the northern beaches will bounce back.

Bridesmaid suburbs win

While popular suburbs like Manly and Seaforth will always be in demand, Michael says it's the "bridesmaid suburbs" that are seeing growth. "Standouts include Curl Curl and Narrabeen," he says. "You get a great lifestyle but you're not paying Manly prices."

However, not everyone is vying to be that close to the water. Ossitt says the suburb most requested by his clients is Allambie Heights.

BRIDESMAIDS: Homes in Allambie Heights, like 30 Lyly Road, are proving popular and seeing good growth.

BRIDESMAIDS: Homes in Allambie Heights, like 30 Lyly Road, are proving popular and seeing good growth.

"It's clearly number one," he says. "People who are priced out of Seaforth and Manly are looking at Allambie Heights. It's relatively close to Queenscliff but just on the west side of Pittwater Road. It has a really nice village atmosphere around the shops and the properties are quite tightly held. Not many come up for sale."

It comes as no surprise then that Etch Real Estate's Hugo Ortega says he's been fielding considerable interest for 30 Lyly Road, Allambie Heights, featuring five bedrooms, five bathrooms and an elevator. It's up for auction on January 16 with a price guide of $2.8 million.

"It's built above the general specs of the local area," says Ortega. "We've pulled in buyers from Mosman, the eastern suburbs and the upper north shore. Some have arrived following their GPS, having never heard of Allambie Heights before, but they have fallen in love with the area. It's an area in demand because prices in Manly and the upper northern beaches have gone crazy. Some people can't afford to buy in Manly, Balgowlah Heights, Seaforth and Clontarf so they are pushing into these external suburbs."

Cunninghams Real Estate agent Georgi Bates also agreed that the popularity of Allambie Heights has increased but also says Freshwater has seen a surge in demand. "In Freshwater, average days on market are low and properties are being snapped up quickly," she says. "People are coming from the eastern suburbs and outpaying the locals. They no longer need to commute into the city, they get more bang for buck and it's a desirable lifestyle that's more relaxed than the eastern suburbs."

While the market for freestanding family homes is strong, Bates says the market for apartments has softened. "They are not selling as strongly," she says. "This is probably because more apartments have come on the market but there hasn't been the influx of foreigners hitting our shores. We don't have all the Brazilians and English who tend to come to the beaches. So rents aren't as high and investors are not as active in the unit market."

What's pushing up prices?

Residents may attribute the recent hike in property prices to the idea that our beautiful beaches, outdoor lifestyle and engaged communities are worth the millions that people are paying for homes in the area.

However, the real reason is, quite simply, a lack of vendors keen to put their houses on the market coupled with the high demand for homes.

First, there are those who are keen to move into the northern beaches from other suburbs. Ortega adds: "We have this massive push from the landlocked wealth from places like Chatswood, Roseville, Kensington and Randwick. They can't afford Bondi or Mosman, so they're all pushing into the northern beaches. We've seen a 25 per cent jump in prices just during COVID, especially if there is an ocean view or water access."

Apart from those migrating into the area, there are also families already on the peninsula who are keen for a change. The intra-peninsula movements are a new trend, according to Ortega. "We used to see people buy locally into a suburb and then staying put," he says. "But now people are more willing to move up and down the northern beaches. They are expanding their search criteria."

All this demand has not been met with an equivalent supply of homes. Ossitt says: "There has been a stubborn lack of properties for sale on the market. Vendor sentiment often lags behind buyer demand. Vendors who are considering a sale typically don't take action until they see prices rising, which we're starting to see now."

This confidence can result in unrealistic expectations from some vendors who are hoping for a massive pay day and a handful of vendors have listed their homes with eye-watering prices. When you compare the asking price of these properties with their final, much lower, sale price, it's clear these vendors may have convinced themselves they were being optimistic with their price hopes - but, in reality, they were delusional. "When the market starts to move higher, vendor expectations tend to jump quicker than the market," says Ossitt.

Beating out the competition

This shortage in the supply of homes means that buyers need to be proactive. Some turn to buyer's agents like Ossitt in the hopes they will get access to off market opportunities. Ossitt also says that buyers can make costly mistakes. "I see buyers who do not do their due diligence properly," he says.

"They look at the prices that are being listed on houses that are for sale, but they should be looking the final sale prices of homes that have recently been sold. That's the price that determines market value, not the advertised price.

"Buyers really need to do their homework. Many spend longer researching a holiday than they do researching a $2 million house. So make sure you get a building and pest inspection, check out if there are any development applications proposed in the area that may affect your property."

While the recent COVID-19 outbreak may put the brakes on what has been a very hot market, Ossitt says this could present an opportunity for those who time their move right. "We've learnt from what's happened before [the first COVID wave]," he says. "Things will bounce back very quickly. It will actually create an opportunity for some buyers because if there are other buyers who have lost some confidence and aren't going to take action, that's a good chance for buyers who are ready to move forward. There will be less competition for them."

Georgi Bates also says the northern beaches bounces back quick from most downturns. "It almost feels safe to invest in the northern beaches because it always performs well and recovers very quickly. When the market drops, the northern beaches doesn't suffer for long."

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