Experts at property agency BuyersBuyers are encouraging buyers to take extra precautions when looking at properties in some of Sydney’s prime markets.
BuyersBuyers co-founder Pete Wargent said buyers should be wary of overpaying in some popular areas particularly at this stage in the market cycle.
"People tend to lose sight of the bigger picture. A property boom cannot dispel the risk of capital losses, as we have seen at the peak of previous market cycles," he said.
"It may seem hard to imagine in the current market conditions, but even in prime markets such as Noosa we saw half a decade of poor property price performance following the onset of the financial crisis."
Mr Wargent said many off-the-plan units in Sydney purchased during the construction frenzy around seven to 10 years ago were not able to produce meaningful capital gains.
"Many popular markets in prime locations in Sydney have experienced a huge boom in prices over the past 18 months, and buyers need to recognise that these conditions can’t be sustained once price growth decelerates and there are ‘normal’ market conditions," he said.
The nine prime markets below have shown boom conditions so far in the year, with prices surging by as much as 61%.
Booming prime markets in Sydney |
|||
|
Area Name |
Region |
Median Price |
12-month price gain |
|
Bondi Beach – North Bondi |
Eastern Suburbs |
4.08m |
45.0% |
|
Dover Heights |
Eastern Suburbs |
4.94m |
44.6% |
|
Maroubra – South |
Eastern Suburbs |
2.81m |
49.6% |
|
Strathfield South |
Inner West |
1.96m |
55.7% |
|
Mosman |
North Sydney and Hornsby |
5.32m |
41.8% |
|
Neutral Bay – Kirribilli |
North Sydney and Hornsby |
3.54m |
52.2% |
|
Balgowlah – Clontarf – Seaforth |
Northern Beaches |
3.83m |
51.6% |
|
Manly – Fairlight |
Northern Beaches |
4.06m |
51.7% |
|
Avalon – Palm Beach |
Northern Beaches |
3.29m |
61.0% |
RiskWise Property Research founder Doron Peleg said buyers should beware of the risk of overbidding, especially when buying lower quality property.
"As the market was booming over the past year with sizeable percentage price increases, the combination of overbidding and purchasing lower-quality assets had few adverse consequences, as the market tide took almost every property up," Mr Peleg said.
While overpaying a year ago in Sydney would have resulted in a profit this year, doing so in the current market conditions might be risky.
"With decelerated price growth in 2022, and potentially a stagnant market - or even small price reductions - in 2023, the consequences of overbidding will be more significant," Mr Peleg said.
"Naturally, properties with sub-optimal qualities will experience lower demand as the market cycle moves on and will be more sensitive to price reductions in such conditions."
—
Photo by Halley Tian on Unsplash.
Collections: Mortgage News
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