Owners of unit blocks call a peak in the Sydney property market

Nick Tuxworth, from Savills Australia, said the big prices seen last year, including a block of 11 units in Edgecliff which sold for a record $33.25 million, are spurring property owners to jump on board.

“We’ve come from so much growth in the last two, three years, I think owners are realising we’re hitting the top,” he said.

Yields for this asset class generally range from 3 per cent to 5 per cent – though the Edgecliff site sold on a 2.07 per cent yield.

Mr Tuxworth pointed out that investors seeking unit blocks did not mind the lower yields and prioritised the stability of a long-term income stream.

“People love them for (their potential to) add value, so they look for rundown blocks, buy them, add value and make good profits,” he said.

“If it’s already refurbished, just park money and take the rents.

“They’re very sought-after investments, they’re recession-proof and we can’t get enough of them to be honest.”

One of Mr Tuxworth’s listings, 70 Wigram Road, Glebe, which is estimated to be worth between $7 million and $9 million, received 80 enquiries in the first three days, co-agent David Hickey said.

CBRE’s recent 2018 Real Estate Market Outlook noted that the market is at the bottom of the yield cycle with the decompression process expected to be “gradual” – an environment which suited long-term investors.

“With commercial yields falling across assets classes, there is now greater focus on income stability and steady growth while limiting capital risk,” CBRE Research associate director Bradley Speers said.

“The lower yields typically associated with residential assets provide a stable, long-term income stream that will meet investor demand for longer-duration liabilities.”

Another unit block, 12 Dine Street, Randwick, sold under the hammer on Tuesday for $7.75 million on a 3.9-per-cent yield through CBRE’s Nicholas Heaton.

Mr Heaton is selling another one in Vaucluse, at 8 Marne Street, with Gemma Isgro and Paul Grasso, and he said the low vacancy rates in the eastern suburbs made it a safe investment.

A red-brick block in Kingsford at 42 Borrodale Road was snapped up at auction for $6.52 million on Tuesday – exceeding the reserve by $1.5 million. That hadn’t been on the market in 50 years, agent NG Farah’s Martin Farah said.

“Investors want to put their money in good solid bricks and mortar, and rental returns are quite strong at the moment,” he said, adding that educated buyers were after long-term, safe investments like these.

Richardson and Wrench Marrickville agent Aris Dendrinos said some people who had been sitting on the sidelines watching the market had decided that there was little room for unit block prices to go up further in the next two or three years.