Property Prices Down in North Arm Cove
A recent report released by Real Estate Institute of NSW found that North Arm Cove was one of the worst performing suburbs for property investment in NSW. The median price fell 41% in the first half of 2019.
Residents however should be careful in declaring that house prices in the Cove are dropping based on this data. Median is not the average, it is the mid point of the data between the highest and lowest prices for property sold in the last 6 months.The median fell compared to the previous six months and there are a number of factors influencing this data. Such as there were more properties sold in the lower range for example under $500000 than in the higher range over $500,000.
Does this data mean the property prices are falling in the Cove?
I asked Ivy Stevenson – Director Century 21 and Cove Resident for advice and she provides more clarification.
"Whenever bodies such as the REI publish such figures they do so on the premise that the area and the data they are collecting is much the same as anywhere else. Therefore they ask the computer to look over a particular period and add up all the sales in the suburb (North Arm Cove) and spit out the average without really looking at the area and understanding the subtlety that may apply to a particular area.
North Arm Cove has one particular anomoly that will always skew figures particularly given the relative number of units that sell. It is a small area and as such the ‘average’ or median can be widely effected by one large or conversely a couple of smaller dollar sales. The anomaly referred to is the sales of Non urban lots in the area. Non urban lots seem to sell in fits and starts. In our office we can go months with little or no activity around these lots; and then like the last 4-6 months a surge in interest leads to lots of inquiry and a spike in sales. So my assertion would be that the first half of 2019 probably had a higher than normal sale rate of non urbans with a few other sales of non waterfronts and land being compared against another time frame where there was a number of higher unit cost properties sell such as waterfronts coupled with few if any non urbans being sold.
I can certainly state that sales of homes in the village area of North Arm Cove have performed well over the last 12 months and certainly not deteriorated to the extent suggested in this so called research. Always remember that with the low numbers of residences in the suburb of North Arm Cove median prices will always be an inaccurate barometer."
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| Ivy Stevenson
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Maria Pickles
This real estate report is
This real estate report is indeed complete nonsense. Just four years ago, the media was busy telling us that North Arm Cove was #1 in terms of growth over the previous ten years! (See https://northarmcove.nsw.au/nacra/wow-cove-1-real-estate-boom-really) That report was utter nonsense too. The authors of both of these reports have little grasp of how to properly interpret statistics.
Median actually means the middle value or, if there are an even number of values, an average of the two in the middle. "The median" is often a better indicator than "the average" of what is "typical". This is particularly true of skewed distributions like household income. The few extremely high incomes boost the average way above the median; way above what is typical.
However, as Ivy says, using the median with North Arm Cove sale prices is quite meaningless. Firstly, the number of sales if far too small to be truly indicative of anything. Secondly the North Arm Cove real estate market is bimodal; that is, we have a cluster of higher prices and a cluster of lower prices. The median, that middle value, can jump between one cluster and the other depending on which group had the most sales. Just one sale difference could change the median by several hundred of thousands. Median is never a useful measure to describe what is happening with bimodal distributions.
Mini Building Boom in North
Mini Building Boom in North Arm Cove - I agree with Maria, in fact I think that the Cove is experiencing a bit of a mini buidling boom at present. Driving around one can see that eight homes are currently under construction in the Cove and I am personally aware of another 3 locations where building approvals have been granted and construction will commence shortly.
As stated the sale of Non-Urban Land will always lower the meridian price in the Cove but I personally have enjoyed a steady increase in my property value over the past six years which I am quite pleased with.
I believe that real estate (discounting non urban land) is about 20% to 30% undervalued in the Cove and at some point there will be a market adjustment. I have seen it happen in other areas such as the islands in Moreton Bay in Queensland.
North Arm Cove is a little slice of paradise, absolutely unique and still a well kept secret. When the secret gets out, it will be too late and there is little land left to build on now and the value of existing properties will increase accordingly.
Your perceptions are correct
Your perceptions are correct Jim. The Cove is indeed experiencing a growth spurt. Since the beginning of 2017, Council has received 21 Development Applications for new dwellings within the village precinct. In addition, in the same period there have also been 30 applications for improvements to existing properties.
Fourteen of those 21 new dwelling applications have been submitted since August 2018. This is a marked difference to the slow growth we experienced between the 2011 and 2016 censuses where, in five years, the number of houses in the village only grew by nine - from 308 to 317. If the past year's rate of development were to continue, in about four years time there would be no vacant blocks left in the village.
Twenty two of the 30 applications for additional work on existing properties were also made since August 2018. So the recent building boom in the Cove is certainly not limited to new houses.