Market Update | Winter 2022 Northern Beaches (Mackellar)

We are almost exactly halfway through 2022 and are in the midst of short days and cold winter mornings here on the Northern Beaches. I must say, I’m looking forward to the turning point of the winter solstice on June 21st!

The real estate industry on the Northern Beaches has had an interesting year so far with a busy yet changing market to work within. This quarter has had some disruptions:  public holiday long weekends; an interest rate rise; an ongoing election campaign; a new government formed; and, a slowing of previous exceptional growth. Here at Cunninghams, we have experienced a more balanced market, with an increase in listings which has stabilised the environment for buyers to transact in.

Here’s my winter snapshot to help keep you up to date with the property market on the Upper Northern Beaches.

How Australia’s Property Market Is Faring?

I thought we could step back and have a look at the Australian property market as a whole, considering that this year there have been external factors such as inflation, rising interest rates, economic stresses and the federal election, all of which have affected the market on a macro level.

The REA Proptrack Home Price Index reports that national price growth fell for the first time since the start of the pandemic. Though housing prices across the country have slowed considerably in 2022 with a decline of 0.11% over the last month, this follows the third-fastest growth episode in Australia’s history, with prices still up 14.2% in the year to May.

If we zoom out and look at the data of the long-run house price growth over the last 100 years, we can see a consistent cycle of rises and falls. The graph below from PropTrack makes visible the market’s growth and decline cycle, with peaks and troughs over the decades, showing there is nothing too abnormal about the current state of affairs.

Markets are often referred to as ‘Bull and Bear’, they oscillate between the swipe up of the bull and the swipe down of the bear, and the bear market is where we are at. There have been predictions (even scaremongering) around dramatic house price drops, however, if we look at the pattern from the last fifty years in the graph above, we can see there hasn’t been a time where the house price growth percentage dipped below double digits. If we are then to analyse the current market within the context of historical highs and lows, the imminent downturn is likely to be a decline of growth within single digits. Considering also Australian property prices went up on average by around 30% between 2019-2021, a 4-6% drop this year is a correction not a catastrophe in the grand scheme. The other thing to remember is investing in property is a long term gain and even if you bought at the peak of the boom several months ago, in years to come your property should have increased in value.

To look at the market cycle from a long term perspective like this is helpful as it normalises our current position resulting in the diffusion of anxiety and indecision.

Mackellar’s Real Estate Micro Climate

Leading up to this year’s federal election Mackellar has been in the spotlight. Mackellar is the electorate that constitutes the northern region of the Northern Beaches, from Dee Why to Palm Beach and west to Terry Hills.

According to the most recent census from the ABS Mackellar has a population just shy of 150,000, with a median age of 42 years. The majority of our properties are separate houses being 64.2% of all dwellings, with the remaining 35.8% being apartments or semi-detached homes. Mackellar’s home ownership was recorded at 73.6% which stands above NSW’s average of 64.5% and Australia’s average of 65.5%. Half of Mackellar’s homeowners own their homes outright and half have a mortgage.

What is interesting and reassuring about Mackellar’s property values is that according to Realestate.com we are in the top ten most expensive electorates in the country and as far as percentage price growth since the last federal election three years ago we have made it to the top of the list at 69.6% growth in home prices.

These figures show how exclusive the Mackellar micro-market is. With just a few access roads from the south and the west, water locked land to the east and the north, the reality is the insular peninsula will always be that! Unlike other city and country regions, new land is very rarely released or developed. We also have an unrivalled nature-rich, beachside lifestyle and the demand for it never waivers. So, the good news for local homeowners is, our property prices tend to remain strong regardless of macro-market volatility.

Let’s take a quick look at the current median house sale price in key suburbs of Mackellar –

(Figures Realestate.com as of June 6, 2022)

In 2021 we saw groundbreaking growth and a peak between November 2021 – January 2022. Let’s take Avalon Beach for example, which had increases of over 60% in median house values in 2021 and then a slowdown and slight decrease across the last two quarters to May 31 2022.

Visible on this graph from RPData –

If you were to only look at the past 6 months you would think we are in a rapid decline but to step back and look at the past 12 months you would see that house values are still in positive growth.

The Mood on the Ground and Buyer Demand

Activity and transactions remain consistent in the Northern Beaches real estate market. Both new buyers and new listings are entering the marketplace which is bringing equilibrium to the playing field and a price alignment. Generally, we are seeing buyers being more considered and in some cases holding back as they assess the market conditions and their increase in choice. Strong results are still occurring on the Northern Beaches, especially with properties that tick buyers’ criteria boxes and offer a compelling emotional appeal.

Here at Cunninghams, in the month of May 2022 we sold 32 properties across the Northern Beaches; the average sale price was $2,166,484; the average days on market being 22; and our team undertook 170 market appraisals… proving a very busy month for us with consistently strong results within the current shifting market.

If you are looking to buy in the Northern Beaches and would like help finding the right property you can contact me on 0424 053 355 or on email.

If you’d like to track the value of your home, compare recent sales and find out how much your property is worth in the current market, you can get your free estimate here.