Betting on a prestige market price recovery: John McGrath
Not too much has been happening at the top end of Sydney’s market, estate agent John McGrath candidly advised last week.
But things could be about to change, he suggests joining the long queue of forecasts following the global financial crisis that took a swath through toppy prices across Sydney.
"I’m betting the prestige market will perform very well in 2015, thanks to increasing money coming in from overseas, the continued strengthening of the financial services and banking sectors, returning ex-pats, and the declining Australian dollar," he summed up.
Anecdotal evidence can be seen in sales data, with McGrath Mosman, on Sydney’s Lower North Shore, recording $60.3 million in sales in December last year, a 167% increase when compared to December 2013.
He widens his blue-chip popularity prospects - especially with wealthy Chinese buyers - to Sydney's eastern suburbs.
"Chinese interest in Australian property remains high but the next big trend is going to be India.
"Like China, it has a rising middle class and trade is increasing between our two countries," he noted on his Switzer blog.
One in five migrants entering Australia in FY13 were from India, according to the Department of Immigration; and private business investment from India has actually increased at a faster rate than China. (
"It is up 75.8% 2008-2013 compared to China 41.7%," McGrath indicated.
McGrath's migration outlook is a little more bullish than Macquarie Wealth Management research which suggest after a stellar run up, there are some early signs of moderation in net overseas migration, with the latest figures easing slightly back to an annual pace of 231,500, down 3% from its mid-2013 peak.
Macquarie noted the pace of migration remains high by historical standards, being 74% above the 30-year trend of around 133,000.
"These firm levels of net overseas migration continue to be the dominant driver of demand, as newly arrived immigrants tend to have more urgent housing needs than other forms of population growth, such as a new birth," Macquarie noted.
While 2014 saw more transactions, there was no noticeable price growth, McGrath conceded. Records show the group sold 27 properties above $7 million in 2014, or 42 properties above $6 million.
In 2013, the group sold 18 properties above $7 million, or 34 properties above $6 million.
"An increase in transactions is always a positive sign that growth is on the way."
Property Observer notes the two recent Point Piper listings that come after a busy year last year, and a $28 million sale already this year.
David Trew, the former Australian chief executive of CFD providers CMC Markets and City Index, has put his harbour front trophy home up for sale. The three-level 1920s Hardy Wilson-designed cosy cove home was bought by Trew’s wife paid $25 million on Wolseley Road in 2009. It has been listed by Elliott Placks, of Ray White, who has been telling inspectees that there had been five sales above $30 million in Point Piper in the past year.
The one with gun barrel views is by McWilliam family who have listed their hillside offering through Brad Pillinger (pictured above), seemingly with plans to move elsewhere on the peninsula.
In late December 2014, RP Data released a report showing the highest median value suburbs in every capital city for the year to September 2014. These are the prestige markets where the big money was being spent last year.
Here are the top three suburbs in each state and territory for median house prices in 2014.
Sydney
1. Centennial Park - $5.494 million
2. Point Piper - $5.427 million
3. Elizabeth Bay - $4.834 million
1. Toorak - $2.922 million
2. Kooyong - $2.104 million
3. Canterbury - $2.100 million
Brisbane
1. Teneriffe - $1.520 million
2. New Farm - $1.259 million
3. Ascot - $1.235 million
Canberra
1. Forrest - $2.151 million
2. Red Hill - $1.372 million
3. Yarralumla - $1.320 million
Perth
1. Peppermint Grove - $3.741 million
2. Dalkeith - $2.551 million
3. Cottesloe - $1.867 million
Adelaide
1. Springfield - $1.642 million
2. Medindie - $1.486 million
3. College Park - $1.476 million
Hobart
1. Battery Point - $818,000
2. Sandy Bay - $659,000
3. Tolmans Hill - $622,000
Darwin
1. Larrakeyah - $1.289 million
2. Fannie Bay - $1.125 million
3. Bayview - $1.089 million
Source: RP Data
"When activity in prestige property increases, it bodes well for the whole market," he concluded.