Should I Be Worried If My Home’s Value Is On The Slide? The Key Factors To Understanding Local Hurstville Real Estate Market

Every page you turn to in the local papers or seen on TV news is all about what is happening in the real estate market in Sydney. Real estate and its market has its cycles, so don’t rely solely on your local newspaper or TV network to tell you whether now is a good time to buy or sell. On issues that matter most, helped by our interconnected world, most people are not shy to express his or her opinion. Even in sport, a great example is football/soccer. Everyone has their views about it, on how the game should be played, administered, operated, and so on. It is a ‘grey’ area, it all depends on who you talk to, to get the ‘best’ advice.

You have to go straight to the source, and that means talking to your local real estate sales agent in your local market, in this article, Hurstville.

In real estate, you always hear “the three most important factors are: location, location, location” and “all real estate is local.” Some national factors, such as mortgage rates, impact our local real estate market; but more often it is local issues — like job growth, unemployment rates, and cultural lifestyle — that truly influence the value of homes.

To use a very simple example of “real estate is local,” take a look at home ownership rates according to the most recent census information. When you go from one suburb to another like Hurstville, there are some 60.1% of the local population home owners, and if you go to a neighbouring suburb like Kingsgrove there are 71% home owners. As you can clearly see, it’s all about location, location, location.

So what’s happening in Sydney’s Hurstville real estate, and how do you find that information? If you’re thinking of buying or selling, a real estate sales agent is your best source of information. But, as homeowner, you may just be interested in “what’s been going on” in the real estate market so you know about the trends and factors that may eventually impact your own home should you decide to buy or sell. And that’s where I come in.

At the time of writing (11 July 2017), real estate agents in the Hurstville are reporting a tough ‘buyers’ market. However, depending on the street and price range, now could be a good time to buy or sell. Overall we consider this a “balanced market.” Typical characteristics of a balanced market include the same number inventory of homes for sale, to demand from home buyers, and availability of newly built properties.

Despite the recent good news and continued optimism from realtors and consumers, there are always concerns and issues that can negatively affect the market. Right now (taking seasons and timing out), some of the biggest concerns for realtors and vendors are, new policies and regulations, such as tightening lending credit to investors and higher rates imposed on them. Other regulatory issues, such as fire levy insurance requirements, strata management, local council policy changes could also become an issue.

On a macroeconomic level it is very difficult to predict major shifts. Typically, you can gain a reasonable understanding of your local market and use what you’ve experienced to make judgments and forecasts on what the real estate market will do over the next one to three years. Here I would like to share how to better understand Hurstville’s real estate market.

Disclaimer: The factors depicted in this article are not complete or exhaustive! These are helpful local market factors and tips for those looking to purchase a property, whether as an investment or a home occupier, and want to know what the local market is going to do in the next few years. Detailed macroeconomic factors have been purposely omitted due to the simplistic arguments outlined in this article.

Factor 1: Local Employment

People move to or close to where there are jobs, because that’s where income is generated, and most people don’t want to take long commutes to their job. When a location experiences an increase in employment, there will typically be an increase in the amount of people moving there, which will obviously improve the local real estate market. As too where major infrastructure projects/programs by Government are investing and committing, you will see a change in the market.

For example, after completion of the M5 Motorway house prices near the motorway have risen. It is a major arterial route to and from the CBD and Sydney’ International airport.

On the flip side, you have areas that have suffered massive workforce layoffs, business closures, and other economic hardships, that have caused a downturn real estate just like we are seeing in parts of Perth and Darwin today. Therefore employment and those employed elsewhere and living in the area plays a tremendous role in the local real estate market.

Here are some facts from the 2015/2016 ‘Economic-indicators.id.com.au’ for Hurstville:

  • Hurstville (is 1 of 168 local government areas in NSW),
  • In Hurstville there are some 8894 local businesses actively trading, it is ranked 26 out of 168.
  • In addition there are 26, 277 local jobs with a population of just over 87,000, ranked 50.
  • Building approvals are at $346 million value ranked 34.
  • Unemployment was 3.92%, ranked 51 compared to Sydney’s Woollahra which was ranked 2 at 1.56%.

Overall, the economic snapshot of Hurstville for 2015/2016 is very good and on the up.

Factor 2: Supply

Supply is the total amount of houses or units for sale available on the market right now in Hurstville. As with fresh food produce, today’s prices are dictated by supply and demand.

Segmenting Supply by Price Range
Look at supply specifically in a price range. If you look around your local area, you’ll see the majority of developers are not building lower end price range homes for first home buyers. They’re typically building homes for the medium to premium markets which is causing a shortage of new first time houses on the market.

It is possible for there to be a shortage of starter homes in your local area, but also a massive surplus of premium homes on the market. This is where you have to base the total supply of housing in your market. What is interesting is that this trend makes it easier for people who plan on owning a house long term and reselling years from now. Because there is lower supply, it is going to be more of a seller’s market as opposed to a buyer’s market down the road.

Current trend (graph below) in Hurstville house supply is steady. Over a 10 year period, about 152 houses per 12 month period on average have seen some slight ups and downs.

Hurstville Price Range 2017:
Number in 12 Month Period => Price Range Sold
13 => $800k – 1M
89 => $1-2 M
19 => greater than $2 M

As can be seen in the above table, out of 121 houses sold so far in 2017 (12 month period), only 13 homes were sold between $800,000 to $1,000,000.

Factor 3: Affordability

Simply put, Hurstville’s real estate market is going to be predicted on people’s ability to afford homes. You could live in absolute heaven, but if people can’t afford the homes, there’s a problem.

3 Components to Affordability
House Price:

As we discussed, house price is largely due to supply. As supply drops house prices go up, and as supply increases, most times the house prices either stay the same or slightly decrease. It is safe to say with confidence, with unlimited supply, property demand for Sydney and Hurstville for that matter is always in demand.

Household Income:

This is the amount of money people are earning, which is closely tied to employment. In Hurstville, those home occupiers have an average $1800-2400 month mortgage.

Interest Rates:

Current interest rates are published daily by lenders, however forecasting interest rates are more difficult. The Reserve Bank of Australia themselves, who set interest rates, predict that rates will rise slowly overtime in order to curb inflation and the consistently hot housing market in major cities.

Calculating Affordability
You can seek advice from a mortgage broker to assist or use an online tool to find out how much a you can afford based on your household income and the current interest rate. This entails estimating your other debts, number of supporting children, monthly utility bills, grocery bills, and so on. Typically, as a rule of thumb, no more than 30% of your income should be used toward paying off your mortgage. The real stressor here is a rise in interest rate, where mortgage stress can come into the equation.

Evaluating the 3 Factors Together

Combine these three factors, you are able to much better understand your local real estate market. For investors or homeowners that are buying right now, what you’re looking for is:
(1) Strong employment with more jobs on the way;
(2) Steady supply of houses as compared to previous months;
(3) Household incomes that can afford the median house price;

So if Hurstville real estate market has an employment rate that is dropping, a housing supply that is rising, and the average household income can no longer afford the median house price; then you know it is heading south!

However, the truth is that no matter how wise or prepared you are, who you know, there are also other factors you simply can’t control when it comes to the real estate market. Here are some things to consider at the property level when evaluating real estate, whether it is buying a home or an investment: internal and structural condition, size, amenities, features, abrupt local council changes to zoning, improvements and upgrades, macroeconomic conditions, and ‘acts of god’.

Kit Manivong is Sales Consultant at Century 21 Specialist Realty.

Leave a Reply

Your email address will not be published. Required fields are marked *