This was published 1 year ago
‘Went far too high’: The rise and fall of the northern beaches property market
Sydney’s northern beaches has long been nicknamed the ‘Insular Peninsula’ for being an idyllic part of the city that is hard for outsiders to access.
But for a moment during the pandemic that all changed.
The northern beaches was one of the hottest property markets at the height of the pandemic.Credit: Jessica Hromas
Families from across the city were willing to make the leap of faith across the Spit Bridge for a lifestyle change as the difficult commute, once a deterrent, evaporated.
Bigger living spaces became paramount when Sydneysiders’ world was reduced to a five-kilometre radius during lockdown.
Buyers were prepared to stretch budgets and pay premiums for lifestyle homes on the northern beaches, fuelling roaring gains that led Sydney’s property boom.
Two years on, the beaches are now leading the downturn. The region’s house values rose 38.7 per cent from the first lockdown to January this year, then fell 20.1 per cent to a median $2,202,810, on CoreLogic data.
Affordability has begun to bite as borrowing money has become more expensive, especially when servicing near-record property prices. And some pre-pandemic trends have returned, including living close to work and amenities.
Mark McCrindle, a social researcher and demographer, said communities are returning to gathering places such as the CBD or neighbourhoods with a lot of amenities.
“Public transport is back on, walkable communities are back in some level of desirability, and urbanisation,” he said.
He said central business districts have a strong force of gravity that the idyllic lifestyle of the northern beaches can’t displace forever.
Sydneysiders were drawn to the idyllic lifestyle of the beaches.Credit: Roger Stonehouse
This presents challenges the area has not solved, such as the distance to the CBD, lack of public transport, lack of medium and high density and lack of walkable living.
Older, wealthier and more established households can afford to make the move permanently, he said because they have more flexibility over when and how they work.
“They’re not the 9-to-5 commuters generally speaking and that provides more options for them than the emerging generation and the family formers,” he said.
And with the rising cost of living, McCrindle said homeowners are trading lifestyle for affordability again.
“What happened during the pandemic, with a bit more money and a little bit of a flatter market, people were seeking out liveability. But affordability is much more back in vogue.”
Ray White Freshwater selling agent Jacquelynn Watson said COVID-19 put the beaches on the map.
“Everyone decided that if I’m going to be working from home, I may as well be in this area. It shifted everyone’s thought pattern about being close to the city,” Watson said.
She said there was little drive from out-of-area buyers to come to the Beaches prior to the pandemic, but now the area is still popular with workers who can negotiate hybrid work arrangements.
The Northern Beaches is now leading the property downturn in Sydney.Credit: Roger Stonehouse
“Has the market changed? Yes, but that’s more to do with interest rates rather than coming out of the pandemic,” she said.
For the first time in two years, Watson said she has seen the return of first-home buyers, and even investors.
“They were all very concerned they would never be able to afford property. But the last few apartments I’ve opened in the area, they’re excited because for the first time in years they’re in a position to buy something.”
The slowdown has allowed first-home buyer Anika O’Connor to buy her first home in Manly Vale with her partner, when they were unable to crack the market just six months ago when rates had just begun to rise.
Anikea O’Connor and her partner were able to buy in the northern beaches as prices have come off the boil this year.Credit: Rhett Wyman
“The drop in prices did help us get our foot in the door. We do feel relieved. For a while there we thought we’d never be able to buy anything,” said the 28-year-old teacher.
O’Connor, who grew up on the northern beaches, always wanted to stay to be close to family and because of the lifestyle.
“The lockdown really highlighted that if you live in an area where not much is happening and you can only go within 5km of your house you’re a bit stuck,” she said.
“We felt lucky and grateful to be living in such a beautiful place … It made us realise how lucky we were and wanted to maintain that lifestyle.”
Cunninghams’ John Cunningham said northern beaches property prices have fallen dramatically because they skyrocketed during COVID-19 when homeowners were happy to stretch budgets for the lifestyle.
“We just went far too high purely because of where the demand was and when you add affordability into it, you see demand drop again,” Cunningham said.
“All of the growth in 2021 has gone. It’s as if it didn’t happen, we’re back at 2021 [prices]. We’re going to be in a trough for at least the next 12 months.”
He said there are fewer out-of-area buyers because of a return to some normality, while demand is cooling off due to interest rate rises.
Clarke & Humel’s Michael Clarke said there are still home buyers keen to make a permanent move to the area, but not before selling their home.
“There’s a conga line of buyers who will buy their dream home on the northern beaches once their place has sold, which has failed to sell,” Clarke said.
“There’s a hesitancy there at the moment that wasn’t there during COVID.”
James Algar, principal at Mortgage Choice Dee Why, said interest rates have hit borrowers by as much as 25 per cent, slowing down the northern beaches market.
“There are certainly sectors of the market that have got their wings clipped more than others,” Algar said.
“They’ve literally had to find a new level, there are people still willing to buy your property, but they have less money in their pocket.
“We saw the exact polar opposite during COVID, interest rates fell, borrowing power increased and people had more money to spend, and they spent it. We’ve had the reverse happen now”.