We’re seeing signs of a rebound in Sydney’s prestige property market due to a number of positive macro-economic issues including rising business confidence, a strong share market and increasing overseas demand, particularly from Chinese buyers and Australian ex-pats.
We started seeing a change in Sydney’s prestige market last year, with more transactions but no price growth to speak of. That’s what happens at the start of a new cycle and the trend is continuing this year.
The McGrath group had 22 sales above $5M in the first four months of 2014 alone. Most prestige buyers in the market today are local upgraders but mainland Chinese buyers, other foreign buyers and Australian ex-pats are also having a real impact.
Some examples – we have had $5M-plus sales to local upgraders in Queens Park and Woollahra in the Eastern Suburbs; in Mosman on the Lower North Shore; and in Manly on the Northern Beaches. With the sale in Mosman, our local buyers competed against a Chinese buyer and an ex-pat.
We sold another house in Mosman to an ex-pat returning from Hong Kong; a house in nearby Cammeray to mainland Chinese buyers; and a house in Balgowlah Heights on the Northern Beaches to Chinese buyers relocating from Melbourne, who spend split the year between China and Australia.
We also sold Peter Holmes a Court’s Southern Highlands property in Mittagong to an overseas investor.
Prestige home owners feel a new sense of stability and optimism with the Coalition managing the economy. There is also more confidence in the business community, with NAB’s ASX 300 Business Survey for the March quarter revealing improved business conditions for the second consecutive quarter (up 12 points) and improving confidence (up 11 points). Confidence within larger firms was at its highest level in the three-year history of the survey too.
The stock market is also on the improve, with the ASX 200 up about 20% since June 2013.
The silver lining of the GFC was that Australia was highlighted as a safe haven economy. Now, with the Australian dollar less bullish, real estate is becoming cheaper and therefore even more attractive to overseas buyers.
Latest statistics from the Foreign Investment Review Board show China is our No 1 source of international buyers in residential and commercial real estate with $5.93B invested in FY2013 – up 42% on FY12. But the Chinese aren’t the only foreigners buying. Many agents in Sydney’s east and north are reporting more enquiry from England and the US. The increasing importance of the Asian economy – particularly China, makes Australia an ideal destination for those who want a western lifestyle with greater access to Asian markets.
Ex-pats are coming back into prestige property due to the lower dollar and new momentum in the prestige market itself. There are more properties to choose from now because more people are listing. They’re also noticing more sales happening so ‘fear of missing out’ is coming into play.
All in all, things are changing. I don’t expect much movement in prestige values in 2014, but I do think we’ll continue to see more sales. The green shoots of a new price cycle are definitely there.
Image: Domain
