16,623 apartments and townhouses abandoned or halted as crisis hits sales

[MichaelW]

"]Helloooo
Michael from Monavale are you there???

Any comments on this article?

Hi Giddo,

SeeChange already answered correctly for the most part, but I'll add my 2c...

Firstly, mine is Northern Beaches and not along the Pacific Highway. I also didn't just buy an expensive site with its purchase cost predicated on developing it for a fat margin. I bought a distressed house and land in the heart of Mona Vale for well below the median house price for the postcode. I got the bonus of a MUH zoning. Its now tennanted and cash flow neutral with a nice yield. I'm going to put the rent up again next month.

Also, my price on completion is still only $850K each for two high quality townhouses and one unit. Stuff at that low price point is still in demand in this postcode. In fact, I had an agent call me the other day to ask if I'd commenced as he had an elderly male buyer who just wanted something with lift access at my price point. But it was the block two down from mine that has just commenced so he had the wrong developer. They'll do OK, this whole strip is in very high demand as Mona Vale is the CBD of the Northern Beaches. I won't run the list of all its attributes again, except to say that you need to look at individual markets and not tar them all with the same brush.

Having said that, I'm still not locked into a construction timeline in this stage of the property cycle. I've just suggested to Kay that we get a year's extension on the DA so we can wait another 18 months before we commence if we choose to do so. I'd rather be building into an established boom, than into the beginning of the recovery. Time is on our side! Every month I wait, rents go up and interest rates come down. In 12 months time construction costs are probably going to be a lot better too.

I could probably build it today and do well out of it, but why chance it? Sure, the rental yield on costs at completion is 6.5% and CF+, but that would require three separate groups of tennants which is another potential risk factor. I'm big on risk mitigation, and if a 12 month DA extension works to achieve that, then its something I'll actively pursue. I think delaying your timeline is something you should understand given your own villa build circumstances...

Again, time is on my side...

Cheers,
Michael

 

[farmilor]

Add to all of this, Hornsby council is planning to rezone something like 20 precincts from Thornleigh through Waitara and Hornsby, Asquith, Mt Colah up to Berowra to accommodate their forecast population growth.

Most of these areas are allowing 3-5 storey development, but some around waitara are up to 10 storeys.

 

[BayView]

Not in your mainstream areas, but down here in Dromana there are an alarming number of townhouses still sitting there unsold since we moved back from the USA last April.

One complex in the street we live in - 12 townhouses, still have 8 unsold. According to my local agent mate, they 4 sold are still owned by the developer and a couple of his relatives, so no "real" sales.

Of course, they (the developers) all want the boom prices, and now there are no buyers willing to be stupid and pay too much.

There are also a lot less people wandering around who can afford them than there were a year ago.

Conversely, normal houses and cheaper units as well are still selling down here - but not flying out the door.

 

[Red Car]

Exactly . State Government Came in with jack boots, but to be fair the council had plenty of time to come up with proposals that are better than what's happening.

Personally I think they would have been better to set certain areas aside for more intense development so they could spare some of the piece meal stuff that's going on.

There are certain areas eg , Turramurra between the railway and the H'way - North of the bridge where they could put in 20 Plus storey blocks that wouldn't really impact anyone .

However the temporary oversupply will mean that prices in the area will come down to more realistic levels .

When Mirvac launched their east side development in Lindfield , they had a major rush from people to sign contracts . From what I've heard , when settlement time came in , Bank valuations came in much lower than prices so many people walked away . ( This occured prior to the recent slump in prices )

We've felt most of the blocks we've looked at were over priced in the last 2-3 years , however in the last few months , some seem to be coming in more realistically .

In particular the units in Ada Ave, Wahroonga seemed expensive for what you got.

Coonabarra , is a nice area . Between Coonabarra and the Freeway . Is that the block you're talking about ? For 800 K I'd want something pretty special , though it is an area I'd think about .

Cliff

True, Kuring-gai council resisted any real development but that is what most residents wanted I guess. I also agree there are some decent spots that could have been allocated for higher density buildings that would have been much more suitable and kept everything more integrated. As an example I think the Meriton development at Wahroonga is terrible. Also that small development just after Ravenswood at Gordon looks out of place. Plenty of other examples too.

Interesting info on the Lindfield units, I know the ones you are talking about. I think Lindfield is a great spot for higher density development actually but again some of what is built now looks very out of place. I still keep an eye on this area but had not noticed any drops in prices of units along the upper North Shore. Must have to know the right people I guess.

When I actually looked at the units I mentioned they had not been built. It was off the plan and for sale a few years ago now. Sorry I cant recall the exact details as it was just one among many options I looked at over the years They had a shop at the Wahroonga Village to view all the details, talk prices etc.

 

[Red Car]

Add to all of this, Hornsby council is planning to rezone something like 20 precincts from Thornleigh through Waitara and Hornsby, Asquith, Mt Colah up to Berowra to accommodate their forecast population growth.

Most of these areas are allowing 3-5 storey development, but some around waitara are up to 10 storeys.

Really? Do you have any more info on this?

Thanks

 

[farmilor]

Council sent out information last week outlining it all.

Is up for public display and comment til June 1st.

Check it all out here:

http://www.hornsby.nsw.gov.au/planningdevelopment/index.cfm?NavigationID=2403

 

[chilliaa]

Not in your mainstream areas, but down here in Dromana there are an alarming number of townhouses still sitting there unsold since we moved back from the USA last April.

One complex in the street we live in - 12 townhouses, still have 8 unsold. According to my local agent mate, they 4 sold are still owned by the developer and a couple of his relatives, so no "real" sales.

Of course, they (the developers) all want the boom prices, and now there are no buyers willing to be stupid and pay too much.

There are also a lot less people wandering around who can afford them than there were a year ago.

Conversely, normal houses and cheaper units as well are still selling down here - but not flying out the door.

Yes but you have to consider the underlying intrinsic value of the land. The further away from the cbd you move, the lower the intrinsic value. Hence in my opinion if you want to own units and apartments make sure they are located very close to cbd areas or in very upmarket suburbs (where there is a huge differential between the price of a house and the price of a unit)

 

[MichaelW]

Hi Guys,

Another angle on where the market for good quality units and townhouses is at in Sydney:

Units dodge the gloom

"If you've got a good-quality product in this market, then it will sell," says Tim McKibbin, chief executive of the Real Estate Institute of NSW. "And it isn't only first home buyers taking advantage of the grants. We're seeing a knock-on effect into other markets.

"People with properties attractive to first home buyers are seeing how well they're selling and with interest rates low and prices soft, are putting their places on the market and upgrading to bigger or better properties. So that market is picking up now too."

"The market for any good apartment selling between $500,000 and $1 million is now pretty strong," he says. "Bad properties aren't performing well at all but in good buildings that are well run, keep common property like foyers clean and are well maintained and have parking - we're finding the market is often stronger now than it was a year ago."

Just goes to show that, as always, there's two sides to every story. I'm comfortable with the market for my Mona Vale development but am still letting the next little while play out until I see signs of the back-end of the pending Australian recession. Still, nice to know that this market is resilient and getting a kick along from the lower priced sellers trading up.

Cheers,
Michael

 

[sash]

Agree....plan to go up and see if I can snap up a bargain!

Some of the homes have dual living...so tow incomes....but they are not cheap.

Sash,

There are some damn good buys at Terrigal/Wamberal. Coastal returns have notoriously been bad. How does this compare to the Palm Beach's of Sydney?

Rental Market: Lower ends are going up higher ends coming down. I would say it is consistent everywhere.

Regards Jo