While the rest of the country has been reading about falling property prices in recent months, a cooling market is something Northern Beaches residents have been getting used to for more than a year now. The market here started slowing last spring, while other parts of Sydney were still enjoying one of the strongest selling seasons in years.
Pittwater and the Northern Beaches can act as a bellwether for the rest of the Sydney market. In this article I will explain why, and what the outlook is for the short to mid-term.
Why the Pittwater market is unique
Firstly, it is important to note that the supply of homes barely changes here. Hemmed in by the ocean and the national park, the area adds relatively few new dwellings year on year, so supply is relatively flat.
Secondly, due to its unique appeal, much of the demand is from people choosing to move into the area from other parts of Sydney. This effect was amplified during the pandemic, when demand from city buyers wanting space and the beachside lifestyle pushed house prices up almost 40 per cent in under two years, with some suburbs seeing even larger gains.
Those who come are largely moving from the Upper North Shore and Eastern Suburbs. These are families often selling established homes in expensive suburbs and making a lifestyle choice, and that is the type of decision people make when confidence is high.
These factors combine to make our local market more sensitive to certain indicators, which means we are sometimes the first to feel market shifts, good or bad.
What it looks like on the ground right now
With three rate rises already this year and recent data pointing to the likelihood of at least one more before the year is out, buyers are feeling more cautious. Uncertainty about where rates and the wider economy are heading is keeping many people on the sidelines. The usual spring lift in listings is expected to be more subdued than normal this year, but it will still add to supply at a time when demand is thin.
The slowdown shows up in activity more than in price. Over the past year family homes in Newport, Avalon and Narrabeen have typically taken two to four months to sell. Since mid-July, Domain has recorded just 13 house sales in Avalon and four in Newport, with none in Mona Vale since mid-August or Palm Beach since June. Owners who do not need to sell are simply waiting for things to improve, and the homes that do sell are the ones priced for today's market.
The one part of the market still moving normally is apartments, where two-bedroom units from Mona Vale to Avalon at around $1.2 to $1.3 million are still selling in under two months, largely due to their relative affordability.
Where to from here
Buyers are fickle and their behaviour can sometimes defy logic. Typically, they are encouraged by competition. They feel better buying when everyone else is buying, and they fuel higher prices by doing so. Right now the opposite is true. With few homes selling and every headline pointing down, most buyers would rather wait than be the one who paid too much, so the market drifts along on the handful of sales that do happen.
That is worth keeping in perspective. Prices in Pittwater have held up better than the headlines suggest. On Domain's figures, family homes in Newport, Mona Vale and Warriewood were still changing hands at or near their highest levels in the June quarter, even as Sydney's median fell. What has cooled is activity: fewer homes for sale, longer campaigns, and buyers who take their time.
We have seen this before. After the pandemic boom, prices here fell around 15 per cent through 2022 and early 2023, more than Sydney did, and by Christmas 2022 the papers were writing off the northern beaches. Within months the market had turned. By September 2023 the Beaches was clearing 84 per cent of homes at auction while Sydney managed 67, and this area was at the front of Sydney's recovery. The same confidence that drains out of Pittwater early tends to flow back into it early, because the people who put off a move here have not stopped wanting to make it, and there are never enough houses when they do.
If you are looking to buy into the area, currently more choice and less competition presents as an opportunity.
While another rate rise before Christmas would push any recovery further out, when buyers do regain their confidence, we are likely to see signs of it here first.
About the author
Sean Beavis has been a mortgage broker for more than 20 years and launched Mondo Mortgages, based in Newport, in 2022. He has lived on the Northern Beaches since 2012, in Avalon, on Scotland Island, in Lovett Bay and now Newport, and works mainly with local families and business owners on home loans, refinancing and investment lending. Sean Beavis is a credit representative (371052) of QED Credit Services Pty Ltd, Australian Credit Licence 387856. Visit: mondomortgages.com.au
Sean Beavis, Dip. FMB, FBAA Approved Broker
Chart: Domain House Price Report data, Sydney stratified median and Pittwater suburb medians (Avalon Beach, Newport, Mona Vale, North Narrabeen, Warriewood), indexed to September 2019.