Sydney’s inner city Alexandria has changed a lot over recent years.
This once industrial suburb has become a wonderful place to live and play, giving residents unparalleled access to amenities and convenience. That fact has been reflected in property prices, which roughly doubled between 2009 and 2017.
But will this change in 2018, when a host of new apartments hit the market, increasing supply at a time when the market is softening? And what does it mean if you have an Alexandria apartment and you’re unsure whether or not to sell?
Where the Alexandria property market is at right now
As the Sydney property market boomed in recent years, Alexandria was right up there with the best performing parts of the city. According to CoreLogic, Alexandria’s average unit price recorded double-digit growth for all but one year between November 2012 and November 2017. And, even in the off year, 2013, it recorded growth of 8.91%.
That began to change last year.
Generally, across the city there was a softening in the market as banks tightened their lending criteria, particularly for investors. At the same time, rapid price growth in previous years had reduced the number of first home buyers in the market, as they became discouraged from buying. This in turn, meant that while houses remained sought after, Alexandria's average unit price fell by 3.05% in the year to November 2017.
What to expect in the short term
We’ll soon see a number of new developments completed, and a whole new range of apartments coming onto the Alexandria market, especially later in 2018 and into 2019. This includes developments such as Arkadia on McEvoy Street, The Bowery and Teneo on Ralph Street, and Teracota on Mitchell Road. Not to mention developments in neighbouring areas such as Erskineville or Green Square.
That means there will be a reasonably dramatic increase in the supply of apartments in our area. Unless demand rises to meet it, buyers will have greater choice and more negotiating power. This could, in turn, affect property prices, causing them to either stagnate or fall further still.
That said, no one can be certain of what will happen between now and then. For instance, don’t be surprised if we see a return of first home buyers into the market to pick up some of the slack left behind by investors. After all, record low-interest rates remain in place and there are still affordable options for first-time buyers in the Alexandria area.
And in the long term…
Longer term, the prospects for Alexandria, and the inner city, remain very promising. The same population growth that has been driving Sydney property prices for some time is expected to continue and the inner city will be one of the main beneficiaries of this. In fact, up to 61,000 residents are expected to live in Green Square alone by 2030 and every one of them will need a place to call home.
At the same time, residents in Alexandria and the surrounding area will be some of the main beneficiaries of Sydney’s current infrastructure boom. Waterloo will receive a new metro station in 2024. There will also be new schools - such as the Alexandria “super school”, new supermarkets and more.
In short, Alexandria and the surrounding area have all the ingredients in place for sustained real estate price growth in the long-term.
But where does that leave you?
If you own an Alexandria apartment and you’re unsure about what to do, I think this ultimately leaves you with two main options.
The first is to sell within the next six months or so, while the market is a known quantity and prices are relatively stable. While you may not achieve the same price you might have 12 months ago, the market is still solid enough and, if you bought a few years ago, you will still see a reasonable capital gain.
The second is hold onto your apartment for some time, to take advantage of the long-term potential of this great area.
If you don’t, and you wait until later this year or 2019 to sell, you could find your property faces stiff competition from newer apartments, giving potential buyers the opportunity to negotiate hard. And that could have a profound effect on the result you achieve.