Looking back at the property year - three important takeouts from 2013: He said/She said

Looking back at the year in property, our property commentators Jonathan Chancellor and Margie Blok select their important takeouts from 2013.

jc-silhouette-5HE SAID:

1) The strength in the spring and early summer sales success means there's not going to be as many listing leftovers languishing on the early 2014 market. And many of the recently listed forthcoming February auction stock will unquestionably get sold well ahead of their scheduled auction.

It bodes well for a quick clean start to the year, but you never know sometimes just how the market psychology can change over the summer break given particularly any arising economic factors.

I sense Sydney will record a slight moderation in price growth during early 2014. I note John McGrath expects, at some point next year, people will take their foot off the pedal and there will be less of the frenzied activity of 2013  – but he forecasts that’s not going to happen until after the Autumn selling season. He says people are really excited to see property prices moving after four sluggish years adding there's a now a new market cycle where the run on prices will continue for a few years now.

But while in broad agreement with John I warn there will be dips and peaks along the way, so timing will ensure the difference between over paying and buying well.

2) Yes the Chinese surge continued, but only in select metropolitian suburbs. They are cherry picking the trophy opportunities - especially those close to secondary and tertiary campuses - in the likes of Brighton, Toorak, Balwyn, Box Hill, Clayton and Glen Waverley, in Melbourne and Mosman, Vaucluse, Haymarket, Eastwood and Hurstville in Sydney. Mainland China buyer have snapped up $50 million worth of property transactions in Mosman including a $10 million Carrington Avenue sale this week through Belle Property. The vendors wanted $13 million on its initial 2010 listing.

If the Chinese/Australian buying interest hasn't shown up in your suburb, then your suburb will at best enjoy the ripple effect of outbid locals forced to buy in adjacent suburbs. 

3) Normally price rise momentum begins at either the top end or the cheapest buying suburbs, but this current fillip arose in the professional middle class suburbs. The middle end of the market has been the strongest while the prices in the upper brackets have barely started to improve, despite what is being often gushingly reported.

One or two prestige sales, including Altona, of which Margie broke the news in May, and the Bang & Olufsen House, in Point Piper were worthy of excitement, but most top end sales were ordinary, with many more are still languishing unsold. Upgrading to the top end therefore makes sense in 2014.

Investors are snapping up the cheapest offerings given the absence of the first home buyer brigade. Sometimes at prices below their last sale price especially in Sydney's south west and the NSW Central Coast. This will be the most interesting trend to follow in 2014.

 

mb-silhouette-4SHE SAID:

1) There was a degree of sensationalism about the market “booming” in the mainstream weekend press reportage.

Certainly, the market was robust for properties in the low to medium price brackets of capital cities, largely due to heightened investor demand and lower interest rates.

Sydney showed a year of meaningful growth which resulted in many real estate agencies reaping rewards with increased sales turnover compared with the previous year. But the rate of growth this year was less than the real booms I've seen. Residex's John Edwards has Sydney house prices up 10% over the past year and it's worth remembering that for the year ending June 2010, Sydney house price growth was 17%; growth for the year ending July 2002 was 23% and growth in 1989 was 38%. A little research helps puts the latest scenario in context.

Also it’s most important to note suburbs vary greatly when it comes to the state of the market, and within those suburbs some properties perform better than others. In our capital cities, there are thousands of local markets moving in in various directions and at different speeds.

 A handful of strong sale prices within a suburb does not translate to a booming market. It was wrong to conclude that the high auction clearance rates were necessarily accompanied by an across the board price surge.

 I agree with Hotspotting’s Terry Ryder who sagely reported in Property Observer last week that there is no such entity as “the Australian property market”.

From my observant point of view - both anecdotally and data driven - 2013 shaped up short of the "boom" speciously reported by much of the metropolitan newspaper industry.

2) Buyers were price sensitive about properties in the top price brackets.

During the year, and particularly for the past four months, real estate agents have been stressing in their weekly newsletters that this top section of the market is not experiencing the same strength as the lower end.

I agree with the opinion of Double Bay agent Bob Guth, a principal of Bradfield Cleary, who late last month shared his insightful view about the market saying the lower to middle sector of the market in the Eastern Suburbs, up to $3,000,000, was strong with the possibility of the upward swing of 2013 continuing next year.  However he noted the top end was "very much confidence driven and any sustainable improvement will depend on the overall economy – which may be problematical.”

3) Lifestyle property sales continue to drag the chain. Whether it be the Southern Highlands, Port Douglas or Mornington Peninsula, these discretionary purchase properties have lingered on the market for months due to a dearth of buyers.

Perhaps the occasional spurt in activity but the appetite for expensive lifestyle properties (which also are expensive to maintain) remains diminished following the global financial crisis with the professional classes worried about job security. Merchant bankers, who no longer reap big bonuses, are not splurging on luxury weekenders.

Also, people find that they cannot spare the time to constantly visit lifestyle properties which are a nice dream, but can become an albatross.

It seems travel is the easier lifestyle option being cheaper and more convenient.

One suburb which bucked the trend in terms of activity this year was Palm Beach on Sydney’s northern beaches peninsula where 72 properties traded during 2013, according to RP Data. The suburb’s top 2013 price was the Nankervis family’s Sunrise Road property which traded for $10.6 million in August. Listed in January, the trophy residence stands on an 1891 square metre block with uninterrupted and never-to-be-built-out northerly views - a Susan Rothwell house in Will Dangar gardens. The price recovery wasn't there as this one came on initial listing with $14 million hopes.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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