Research

Third Quarter 2010 Sydney Lower North Shore IN BRIEF  Sydney’s Lower North Shore shows strong population growth compared to the Sydney metropolitan area.  The region's median house price increased by 24.2% for houses and 18.8% for units over the six month period to March 2010.  A trend toward stronger unit sales in the higher end of the market has become evident. Scope This report analyses the residential property market of Sydney’s Lower North Shore. It highlights the area’s characteristics, demographics and performance of the real estate market within the Lane Cove and Willoughby Local Government Areas (LGAs). Area Characteristics Sydney's Lower North Shore is known for its peaceful and leafy suburbs. The Lane Cove and Willoughby LGAs are bordered by Sydney Harbour in the south and Lane Cove River in the west. To the east lies Middle Harbour and to the north is the council of Ku- Ring-Gai. The area is located six kilometres north of the Sydney CBD. The Lower North Shore has a mix of detached houses, as well as apartments, mainly around Chatswood and the Pacific Highway. The majority of amenities can be found in the town centres of Chatswood and Lane Cove village, while recreational facilities can be found around the Lane Cove River and Middle Harbour. The area is supported by good transportation infrastructure including the North Shore and Northern train lines, as well as major arterial roads such as Warringah Freeway and Pacific Lane Highway. Willoughby Demographic Snapshot Cove LGA Demographics Snapshot LGA Average household income in Sydney’s Lower North Shore is Population 2009 32,501 69,269 significantly higher than the Sydney metropolitan average. Both Population 2008 31,638 68,008 Lane Cove and Willoughby LGAs have approximately 35 per cent Population growth rate 2008 to 2009 2.7% 1.9% of households earning over $2,500 per week, compared with only Proportion of people aged 65 years and over 13% 12% 18 per cent of households across the Sydney metro area. The Lower North Shore has a relatively dispersed population with Proportion of people aged 15 years and younger 18% 18% nuclear families (couples with children) representing only 34 per Average age 37 36 cent of all household types. The rest of the population is largely Average weekly household income $1,729 $1,667 made of couples without children, representing 26 per cent of the Average weekly individual income $811 $728 population, and non family households accounting for approximately 30 per cent of all households. Between 2008 to Average number of people per household 2.4 2.5 2009, Lane Cove LGA’s population grew by 2.7 per cent, while Prepared by PRDnationwide Research. Source: ABS Willoughby LGA recorded a population growth rate of 1.9 per cent. These figures represent strong growth for the region compared to the average of 1.3 per cent population growth across the Sydney metropolitan area during the same period. Rental Market The rental market across the Sydney metro area is growing in Median Weekly Rents – June 2010 response to recent increases in house values. Many residents are Lane Cove Willoughby now left with little choice but to rent, leading to an increase in rental prices. This has seen the Willoughby LGA record an annual rental LGA LGA increase of 17.6 per cent for a three bedroom house, to record a median rent of $800 per week. Units have seen a rental increase of 3 Bedroom Separate House $800 $520 four per cent, to record a median rent of $520 per week for a two 2 Bedroom Flat / Unit $700 $410 bedroom unit. The Lane Cove LGA has seen the median unit rent increase by 7.9 per cent, to $410 per week, while the median rent Prepared by PRDnationwide Research. Source: NSW Housing for houses was $700 per week.

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House Market Lower North Shore - House Sales Cycle 900 $1,600,000 The location of the Lane Cove and Willoughby LGAs, coupled Number of sales Median

with the housing shortage in Sydney, has led to a consistent 800 $1,348,000 $1,400,000 increase in median house price over the past ten years. The 700 average annual growth in the Lower North Shore was 5.6 per $1,200,000 600 cent per annum for the past five years, compared with only three $1,000,000 per cent per annum for the Sydney metro area. The house sales 500 $800,000 cycle graph shows that for the six months ending in March 2010, 400 . $600,000 the median price of a house in the Lower North Shore was 300

$1,348,000. This represents a 24.2 per cent increase from the Number salesof $400,000 200 same period in 2009, where the median house price was Median sale price $1,085,000. The house price points chart for the six months 100 $200,000

ending March 2010 shows decreasing market activity for houses 0 $0

SEP SEP SEP SEP SEP SEP SEP SEP SEP SEP

MAR MAR MAR MAR MAR MAR MAR

under $1,000,000, representing only 25 per cent of the region’s MAR

2000 2000 2003 SEP 2006 2009 1999 1999 2001 2002 2004 2005 2007 2008

2001 2001 2004 MAR 2007 2010 2002 2002 MAR 2003 MAR 2005 2006 2008 2009 total house sales activity, compared with 43 per cent for the same 2000 period in 2009. The graph also indicates a strengthening at the Half year period Prepared by PRDnationwide Research. Source: PDS Live higher end of the market, with properties selling in excess of $2,200,000 representing 11 per cent of the total house market, compared with only seven per cent for the same period in 2009. House Price Points for the Six Months to March 2010 A capital growth analysis reveals that for the six months to March At least $2,200,000 2010, properties selling for less than $1,000,000 showed growth 11% $2,000,000 to of only 1.8 per cent, while properties in the $1,000,000 to $2,199,999 $1,600,000 price bracket averaged 9.4 per cent capital growth. 3% Less than $1,000,000 25% The holding period between resales for houses in Sydney’s $1,800,000 to Lower North Shore averaged just under five years. There is a $1,999,999 downward trend in the holding period of houses, from an average 5% of 5.5 years between resales for houses in the lowest price $1,600,000 to bracket, to an average holding period of 4.6 years for houses in $1,799,999 the highest price bracket of over $2,200,000. 11%

$,1000,000 to Unit Market $1,199,999 14% There has been an increase in demand for higher density living in $1,400,000 to the Lower North Shore over the past ten years, with units and $1,599,999 townhouses now averaging 48 per cent of the region’s total 15% $1,200,000 to $1,399,999 dwellings. The unit sales cycle graph shows the median price 16% increased during the six month period to March 2010, possibly in Prepared by PRDnationwide Research. Source: PDS Live response to Government incentives. This trend has seen median unit price for Sydney’s Lower North Shore reaching $550,540 in March 2010, representing a growth of 18.8 per cent from the corresponding period in 2009. This figure represents a significant departure from the compounding growth rate of 3.7 per cent in Lower North Shore - Unit Sales Cycle 1,400 $600,000 median unit price during the past five years. The recent increase Number of sales $550,540 in median price is not uniform, with the lower end of the market Median 1,200 (units under $400,000) showing a low capital growth of 1.2 per $500,000

cent, while at the top end properties over $800,000 showed a 1,000 NUMBER OF SALES $400,000 healthy growth of nine per cent. For the six month period ending DECREASED WHILE MEDIAN PRICE 800 March 2010, the number of units sold in the highest price bracket INCREASED $300,000

of over $700,000 increased 2.7 times, while sales of units in the 600

lower price bracket of below $400,000 decreased by 70 per cent. $200,000

400 Number salesof

This explains the higher median price being recorded, despite a Median sale price

lower number of sales. $100,000 200

The analysis may suggest that first home buyers activity has 0 $0

diminished at the lower end of the market, while existing

2000 SEP 2000 SEP 2003 SEP 2006 SEP 2009 1999 SEP 1999 SEP 2001 SEP 2002 SEP 2004 SEP 2005 SEP 2007 SEP 2008

2001 MAR 2001 MAR 2004 MAR 2007 MAR 2010 2002 MAR 2002 MAR 2003 MAR 2005 MAR 2006 MAR 2008 MAR 2009 homeowners have upgraded to high end properties. MAR 2000 Half year period Prepared by PRDnationwide Research. Source: PDS Live

Prepared by PRDnationwide Research. Source: RP Data and the ABS. For further details contact: Oded Reuveni Etzioni, Research Analyst Ph: (02) 9257 0254 or Email: [email protected] or visit our website at www.prdnationwide.com.au/research.

PRDnationwide does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by s. We have no belief one way or the other in relation to the accuracy of such information, figures and projections. PRDnationwide will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information that you rely upon that is contained in the material. Prepared by PRDnationwide Research © All medians and volumes are calculated by PRDnationwide Research. Use with written permission only. All other responsibilities disclaimed. © 2010