Properties on the Northern Beaches of Sydney have paid dividends to investors over the 12 months to June this year, according to PRDnationwide NSW research analyst Mathew Tiller.
Median property prices in the area increased from $802,500 in June 2007 to $852,000 in June 2008 - a healthy 6.1% capital growth. Demand for top-level houses above $1m has been the key driver of growth in the area, said Tiller.
"Instead of seeing demand for the cheaper properties around $700,000-800,000, the houses that have sold well throughout the turmoil have been the higher priced, beachside properties overlooking the surf, those $1m-plus houses," he said.
Despite the rise in property prices, there were fewer properties put up for sale.
"The total number of houses sold in the six months to June 2008 declined to a record low of just 945 sales - down from 1,291 during the previous six-month period," Tiller said. "We have seen a reduction in the demand for lower priced houses, because buyers have re-assessed their affordability and are putting their money into more affordable apartments instead of houses."
Sales volumes for the Northern Beaches unit market remain strong, and thanks to 1.6% capital growth for the year to June 2008, the median unit price has remained steady at $475,000.
Tiller says high demand from overseas visitors and local renters wanting to live in a beachside location has increased rents and continues to provide good rental yields for investors.
"Local tourism is strong, especially in the Manly market, and this is bringing investors into the Manly apartment market. Long-term tourists push up the rental market and investors are looking here for the better yields," Tiller explained.
The median weekly rent for a three-bedroom house in Manly now sits at $710, compared to $600 a week in both Pittwater and Warringah. The median weekly rent for a two-bedroom unit in Manly is now at $500.
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