Sydney real estate: Crumbling wrecks fuel new worry for home prices
Aidan Devine, Property Journalist
First published 14 July 2024, 05:00 AM
Agents have reported a “severe” shortage of ready-to-move-into houses across the Greater Sydney area as uncertainty over rate rises discourages would-be sellers of turnkey homes from listing.
These shortages have been particularly severe in Sydney’s well-connected inner- and middle-ring suburbs, where housing demand has historically been higher.
This fire-damaged home in Colyton was listed for sale this week.
Among the only three freestanding houses for sale in the inner west suburb of Dulwich Hill is an uninhabitable two-bedroom terrace for sale with a price guide of $1.3m.
The ceiling in the kitchen of the Denison Rd home is currently being propped by a metal rod to prevent it from collapsing, while one of the upstairs bedrooms has a hole in the floor.
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In nearby Erskineville, a similar terrace described as “not for the faint hearted” was put up for sale this week, with the listing warning the rundown home had been “untouched for decades”.
And further west, a fire-damaged house this week came up for sale in Colyton, among the few houses for sale in the area. Much of the roof is a shell of charred timber beams.
This Annandale home sold for $1.35m.
The listings have come on the back of multiple sales of derelict homes for lofty prices – often in front of packed out crowds at auctions.
A rotting timber house in Enfield described as an uninhabitable “shack” recently sold at auction for $2.41m. The selling agent involved estimated the home needed at least $500,000 in repairs.
The auction attracted 25 bidders – about eight times more than the current Sydney average for an auction sale.
A week prior to that sale, a dishevelled two-bedroom home on Barker St in Kingsford sold for $2.6m, $800,000 over reserve.
This Paddington house needing $1m in repairs sold for $1.56m.
In Paddington, a neglected terrace with an interior of tree branches, splintering plaster and loose bricks sold for $1.56m, with builders estimating the property needed at least $1m in repairs.
Adrian William agent Joseph Lombardo, who is selling the Dulwich Hill house, said the shortage of renovated houses for sale made fixer uppers an appealing option for many.
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“We’ve been getting a lot of interest on these properties,” he said. “With the (Dulwich Hill) property, the inquiries are coming from lots of different buyer types.
“It used to be properties like this would only attract builders and developers, but we’re getting interest from families, even though building costs have become very high.”
Agent Joseph Lombardo unlocks a rundown Dulwich Hill home listed for $1.3m. Picture by Max Mason-Hubers
The Dulwich Hill home has a hole in the floor. It’s one of only three houses listed for sale in the suburb. Picture: Max Mason-Hubers
There is a metal rod holding up the kitchen ceiling.
PropTrack figures indicated total Sydney listings have actually been rising this year and are 17.7 higher than last year, but Mr Lombardo said houses with decent backyard space were still hard to come by.
Menck and White auctioneer Clarence White said much of the housing that became available across many areas is “investor stock”.
These properties were mostly two-bedroom apartments – some of which were on busier roads and other locations that were not always appealing for those seeking a permanent home, he said.
“We’ve seen a huge increase in investor sales,” he said. “Often they’re not something a typical home buyer who is looking for something that ticks all the boxes wants.
106 Edgeware Road, Enmore is up for sale.
The interior of the Enmore home.
“You’ll find that investors don’t look at properties the same way home buyers do. For investors, it’s about the return so they will often buy properties home buyers wouldn’t.”
Inner west sales agent Joseph Ferreira said some of the investors selling homes had been hoping for an early interest rate cut but decided to cash out of their investments when they realised this wouldn’t materialise for some time.
“Now that the talk is of a possible rate rise, the investment apartments are being sold while the good quality (family) houses are being tightly held,” he said.
Auctioneer Damien Cooley, director of property group Cooley, said “A-grade” housing was rare in the present market as the owners of these homes were reluctant to sell.
22 Clara St, Erskineville was listed this week.
“It can be a real struggle to find turnkey houses where you don’t need to do anything to them. They’re normally in short supply in any market, but they’re particularly scarce now,” he said.
Even the few “A-grade” properties that did come up for sale often sold rapidly and attracted multiple bidders. “The market for those types of homes is extremely competitive,” Mr Cooley said.
SQM Research director Louis Christopher said home seekers banking on a rise in distressed sales giving them more choice of housing would likely be disappointed.
This Enfield home recently sold for $2.41m.
76 Barker St, Kingsford sold for $2.6m.
The Kingsford home viewed from inside.
“Homeowners who are struggling with their repayments are doing everything they can to avoid selling. For most families, it’s the last thing they want to do,” Mr Christopher said.
“We can see that in the numbers because even though distressed sales have been rising in NSW it’s coming off a very low base. The volume is lower than it was pre-Covid.”
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