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Market Report January 2016

By Ian Campbell

Happy New Year, we wish you all the best for 2016!

Twenty years in the Eastern Inner City Market

Ray White Elizabeth Bay has some good news for local investors!

To kick off the year, we commissioned a special report to analyse property sales in our market over the past 15 years and, using this information, to predict market movements over the next five years.

Not only did we feel this comprehensive study would be of vital interest to our office, but also to our clients with property investments in the area. The good news is that property values have increased dramatically over the past 15 years and demand trends dictate that values are set to climb higher.

The study examined the following five year periods: 2001-2005, 2006-2010 and 2011-2015 for strata title properties in the suburbs of Elizabeth Bay, Potts Point, Rushcutters Bay, Darlinghurst and Woolloomooloo.

Trends

The years 2001-2005 showed extremely strong capital growth with Woolloomooloo and particularly Potts Point leading the charge. 2006-2010 was a period of bearish activity for the area generally, but Rushcutters Bay and Darlinghurst defied this trend to record capital growth of more the 40% over five years.

As expected, over the last five years in total, we have seen average capital growth of almost 50% across these suburbs, with Rushcutters Bay and Potts Point leading the trend and Woolloomooloo showing the least growth over this period. Overall, the market was bullish from 2001-2005, steadied and levelled in
2006 -2010, before surging ahead over the past 5 years.

Forecast 2016-2020

If the market follows the pattern of the past, the next five years are likely to be a period of steady price growth as the market consolidates after the last five years of extremely strong price inflation.

One of the interesting factors to emerge from the study is the impact previous developments – including hotel conversions into apartments – had on the level of sales transactions in our area. The marketing of developments such as Encore, Gazebo, Manhattan and IKON saw a spike in sales in 2001-2005 and a lack of new developments on the horizon for our study suburbs ensures properties offered in this area will be in high demand.

This is good news for investors considering selling. The shortage of stock should mitigate any sudden jolts to the economy and ensure steady price growth regardless of what happens in the wider Sydney market and the overall Australian economy.

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