Last week, Nathan Wood moved into his first home. The 33-year-old Avalon-raised personal trainer spent months looking for the right apartment and, after countless inspections, was finally successful in securing a two-bedroom unit in a small block in Dee Why.
When he eventually buys a house, Mr Wood plans to keep the unit for investment income. "You're within reach of everything like restaurants, beaches, and access to the city," he said. "Dee Why is also a lot nicer now than it used to be. When I was a kid, the Dee Why bus stop was considered a dodgy place!"
It may seem like a run-of-the-mill purchase, but it seems he's bagged a winner. According to Ben Plohl from BFP Property Buyers, units in Dee Why are the pick of the crop for those looking for capital growth. "It's hard to get into the market because there are low supply levels," he said, recommending smaller boutique blocks of fewer than 15 units. "Dee Why is desirable because there is the beach on one side and the village on the other. It's still relatively affordable and a popular market from a rental perspective."
Strand Property Group's Michael Ossitt specialises in the northern beaches and agrees with the unit appeal of Dee Why. "According to SQM Research, there was only a 1.1 per cent vacancy rate for Dee Why in December 2020. Dee Why does have one of the lowest vacancy rates on the northern beaches, which is one indicator of the strength of an investment market."
Stories abound about landlords in other areas, such as the CBD, having to slash rents as a result of COVID-19. However, Dee Why units are bucking this trend.
Mr Ossitt said other in-demand unit rental suburbs included Freshwater, Narrabeen, Balgowlah, Manly Vale and Collaroy, with the lowest vacancy rates on the beaches (under 2%). "Anything under three per cent generally represents a landlord's market where there are more tenants looking than available rental properties," he said.
Away from the coastline
Those looking for houses have a different list of hot suburbs, with beachside often out of reach. According to Eliza Owen, CoreLogic's head of research in Australia,the highest overall market value growth in the northern beaches for the past couple of years was in Belrose, where dwelling increased 19 per cent, followed by Cromer (16.9%), and Wheeler Heights (16.8%). But, while waterfront suburbs such as Manly and Curl Curl had among the lowest suburb growth rates, they still increased six per cent.
Associate director at property valuation and advisory group Herron Todd White, Matt Greenland said he expected the northern beaches market to continue trending up for 2021. "We expect it to be one of the stronger performing markets as local market and economic drivers all point to demand continuing to outstrip supply," he added.
The resilience of the property market in the beaches is a double-edged sword. "Essentially, the market is strong, things are selling fast, usually above asking price," said Mr Greenland. "People are moving further away from the city. The majority of these buyers are cashed up and they are paying over the asking price to secure property due to the lack of stock available, which is also driving up prices."
There's always one
The prices that are giving some locals a payday are leaving others disappointed when they miss out. Property adviser Brooke Flint of Flint Property said we're seeing the start of a change in the demographics of the northern beaches. "When you go to an auction, I find that there are a number of local bidders who are willing to bid up to a similar price point as each other. But then there is always one out-of-area buyer who will go higher. Then the locals get annoyed because they have missed out and they think the successful buyer has overpaid."
This is particularly the case in houses priced at $1.7 to $2 million. "In this range, there is always someone who is prepared to pay higher," Ms Flint said. "These buyers just can't get a house in the eastern suburbs at that price point. They are willing to pay more because they are driven by FOMO."
Apart from the work-from-home phenomenon, she said there are societal pressures in play. "There is a comparison mentality in the eastern suburbs. How big is your house? What school do your kids go to? If you can't afford that lifestyle, some of these people are moving to the northern beaches because they don't want to keep up with the Joneses."
In these cases, buyers are looking for family homes, often at the northern end of the peninsula. Eliza Owen said: "More exclusive, low density suburbs like Palm Beach and Avalon Beach have seen strong value increases, as people may have sought more remote, lifestyle property through the pandemic."
It's a trend dominating dinner party conversation in the area. We saw locals leave an auction for a five-bedroom home in Wandeen Road, Avalon Beach in disbelief at the result. In 2019, the home sold for $2.4 million. Those owners then auctioned it in December 2020 and the successful bid was close to $3.4 million.
As Brooke Flint says: "There's always one." But for those who are looking to cash in, one keen buyer is all it takes.