Last week I gave you the highlights of our newly-released Autumn 2013 McGrath Report. We went over the macro factors affecting the market – including a stabilising global economy, China, improving business and consumer confidence, falling mortgage rates and low unemployment and inflation.
Over the next couple of weeks, I thought we’d drill down into the local trends in NSW, ACT and QLD and I’ll also give you my tips on the best suburbs to buy in for future capital growth and why.
By John McGrath.
Let’s start with Sydney, Canberra and Regional NSW.
Sydney
Sydney is once again leading the national recovery. We’re seeing more investors, particularly those buying through SMSFs; a long-awaited change in the prestige market and the slow return of downsizers and retirees.
People want to ‘get on with it’ after hesitating in 2012. At the lower end of the market, the retreat of first home buyers is giving investors more room; while at the upper end, new activity is being driven by the share market, downsizers and the Chinese. Prestige property prices are still 10%-plus off their 2007 peaks and deleveraged buyers are in an excellent position to take advantage of this.
As shares continue to rise, so does individual wealth, and this will have a particular impact on downsizers. Would-be downsizers and retirees lost substantial savings in the GFC and many put off retirement as a result. Things are better now and downsizers are getting back into the game.
My top suburb picks
Erskineville (and surrounds): The cheaper alternative Surry Hills, it’s adjacent to the thriving King Street retail and café strip with the university and hospital precincts supporting strong rental demand.
St Ives: A leafy upper north shore area where $1M buys a great family home that would be $1.6M in the trendier east. Forestville: One of a few forgotten suburbs wedged between the northern beaches and the north shore. Ticks all the boxes for a great lifestyle and capital growth.
ACT – Canberra
Last year was a tough year for Canberra, with sales volumes 47% down on the five year average, according to RP Data.
Last year, people were happy to sit on their hands as the market continued its correction and an oversupply became evident in the apartment sector. People were also mindful that a Federal Election was around the corner and this always makes the locals nervous about their jobs.
Now that we have a firm poll date, locals are seeing an opportunity to buy or sell now before the inevitable slowdown mid-year. Prices remain soft-ish and with interest rates so low, we’re seeing more people at opens and solid prices being achieved for quality homes.
My top suburb picks
Wanniassa: This family suburb is likely to benefit from the proposed master re-development plan for the nearby Erindale Centre and Erindale Drive precinct. People are keen to buy now for future gains.
O’Connor: Close to the CBD, it offers older homes on larger than average blocks. Young couples and families are targeting O’Connor with the intention of renovating or building $1M-plus homes.
Downer: Downer’s business park is being re-developed and there’s the possibility of a light rail passing by the suburb to connect the CBD with Gungahlin. Great value for families and renovators.
Regional NSW
Many key regional markets were relatively strong in 2012, while others showed signs of improvement but not to any great extent. This year, sales are up across the board and there’s an optimistic air in the marketplace.
Senior executives are a growing force. Some are buying retirement homes now to use as investments or weekenders while others are making a lifestyle change and telecommuting. In areas such as Port Macquarie, Bowral, Byron Bay and the Central Coast, there have been a number of sales above $1M to investors and/or future retirees in recent months.
City investors are looking to regional areas for affordability and strong yields. Fewer first home buyers and an increasing number of sea/tree change families choosing to ‘try before they buy’ means rents are likely to continue to rise and vacancies will remain low.
My top suburb picks
Bowral: One of Sydney’s traditional outer regions for weekenders and family homes. There’s great value available, with future retirees looking to buy now at today’s low prices.
Ocean Shores: A fast-growing community close to Byron Bay with great buying opportunities. Buyers are a mixture of retirees seeking sun and lifestyle and young families looking for a great place to raise their kids.
Eleebana: This is a top location – close enough to Newcastle’s CBD and walking distance to Warners Bay cafés and shops. It has an excellent primary school and a strong community feel.
To read the full Autumn 2013 McGrath report visit www.mcgrath.com.au
By John McGrath
