By Ingrid Fuary-Wagner, Financial Review
Updated Feb 21, 2019 — 9.43am,first published at Feb 20, 2019 — 11.00pm
Last year cemented the doom and gloom for homeowners in Sydney and Melbourne, the two capital cities leading the property market downturn, with property prices falling 9.9 per cent and 8.4 per cent respectively across the 12 months to December.
The perfect storm – a retreat of foreign buyers, tightening of credit by banks, increased supply and affordability constraints – created a significant shift in the market, causing a fall in property prices from their 2017 peak, but some pockets of Melbourne and Sydney have managed to defy the downturn.
In 2018, there were three Sydney suburbs where house prices experienced double-digit growth – Blakehurst, a waterfront suburb in Sydney's south, which grew 11.8 per cent, followed by Cremorne on Sydney's lower north shore with 11.1 per cent growth, and inner-city Surry Hills with a rise of 10.2 per cent, according to Domain Group data.
House prices in Cremorne, on Sydney's lower north shore, defied the downturn in 2018.
Thomas McGlynn, director of sales at The Agency, said all three suburbs had strong lifestyle factors and were very family friendly.
"They have appeal to a very broad cross-section of the market, and it's in those areas where houses have been under supplied, and if supply is down and demand is still relatively OK, good prices will still be achieved," Mr McGlynn said.
A few very big sales in those suburbs, especially those on tightly-held streets overlooking the water, which is the case in Cremorne and Blakehurst, can also skew the numbers, Mr McGlynn added.
Cremorne's median house price has increased in value by 95.4 per cent in the past five years, growing from $1.38 million to $2.7 million.
Sydney's unit market showed pockets of strength, particularly in some suburbs where apartments offered better value relative to houses for sale.
There were five suburbs across the city where apartment prices grew by more than 10 per cent: Kirrawee, which experienced 15.5 per cent growth, followed by Crows Nest (12.9 per cent), Elizabeth Bay (12.5 per cent), Rozelle (12.4 per cent) and North Bondi (12.1 per cent).
Gavin Croft, head auctioneer at Bresic Whitney, said the strength in the Rozelle apartment market came as no surprise.
"What we started to see last year was an influx of buyers that moved from Sydney's eastern suburbs as they saw better value in the apartment market elsewhere. Even though we've only had two weeks of auctions, some of the strongest results have been in the inner west," Mr Croft said.
Meanwhile other suburbs, where there had been an influx of off-the-plan apartments, such as Newtown, Erskineville and Summer Hill had suffered considerably.
The harbourside neighbourhood of Elizabeth Bay, which has a median unit price of $1.1 million, and its Art Deco apartments always generated energy around sales campaigns no matter the strength of the market, Mr Croft said.
"Those quality art deco apartments that you see throughout Elizabeth Bay, they are always well-inspected and that generally translates to good sales. That little enclave has a real rhythm to it, there's a strong connection to the water, and all those features that people love about the Art Deco era can't be replicated now," Mr Croft said.
While many of the more affordable suburbs on Sydney's fringe have suffered in the current downturn, in Melbourne, cheaper up-and-coming suburbs on the city's outskirts held their ground or, in some cases, grew substantially in 2018.
House prices in Kurunjang, 40 kilometres west of the Melbourne CBD, grew by 17.4 per cent over the 12 months to December, followed by the town of Gisborne, a 54-kilometre drive from Melbourne towards Bendigo, where prices increased by 16.9 per cent.
Access to affordable housing was clearly a factor in the areas where house prices grew the most, with all suburbs, except for Middle Park, recording a median price below $770,000.
The threshold for stamp duty concessions for first-home buyers, which are now available for properties under $750,000, were also likely helping to drive up the prices in those particular areas, said buyer's agent Julie DeBondt-Barker, of Property Home Base.
"A lot of those suburbs are on the outskirts – either in the north or west – and some of them like Wallan are nearly rural," Ms DeBondt-Barker said.
"There are a lot of first-home buyers in those areas as well as new Australians who have immigrated here and are hoping to get their toe in the market," she said.
"The reason [for the demand] would be the low prices and a lot of those places have pretty good infrastructure now ... some are newer suburbs like Truganina that have really boomed since infrastructure was put in there," Ms DeBondt-Barker said.
Many of the suburbs where apartment prices grew the most in 2018 were still close to the CBD, but traditionally unappealing neighbourhoods that first-home buyers were beginning to gentrify.
The median apartment price in St Albans grew 17.2 per cent to $422,000 followed by Frankston (14.1 per cent), Pascoe Vale (12.7 per cent), Bentleigh East (12 per cent), Carrum Downs (11 per cent) and Werribee (10.6 per cent).
"St Albans is still very close to the city but missed the growth at the time of the boom," Ms DeBondt-Barker said. "It had a stigma attached to it, but some some first-home buyers are saying they will move in and make it nicer.
"Frankston also has a lot of stigma still attached and Pascoe Vale is a suburb that seemed to remain invisible during the boom and kept under the radar."
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