John McGrath says property market 'breather' the start of long-term growth
Estate agent John McGrath expects the recent economic events that have caused a heightened level of uncertainty will prove problematic for high-end property during the spring quarter.
However he expects most markets are at the beginning of a long-term growth cycle.
“Currently the market appears to be taking a breather,” McGrath says.
“A pause in any growth cycle should always be considered a positive. People are very conscious about debt and are acting cautiously, demand is greatest for the most affordable properties sub -$750,000.
“They are experiencing great buying opportunities,” he says.
McGrath, who has been selling real estate since the early 1980s, says affordability was a key issue for buyers in his spring review.
He notes there have been “green shoots” in increased property demand in many regional areas.
“Some of the hardest-hit markets such as Bowral, Ballina and the Gold Coast are receiving more new buyer enquiry than they have for several years – a good sign that smart buyers are picking the bottom.
“Buyers continue to look for value, however they are now starting to purchase when they see it.
“The backlog of buyers is starting to create activity in markets such as Bowral where demand has increased noticeably over the last quarter, where our office reports significant new interest from Sydney investors seeking long term capital growth,” McGrath says.
“Newcastle has become a popular regional market as it undergoes a fundamental change from its working class heritage to a fast growth business community with young Sydney families realising the lifestyle and better value for money in Newcastle, as a very appealing sea change.
“Another strengthening market is the Blue Mountains, where 70% of our buyers are coming from Sydney or outside the locality,” he says.
“The main Blue Mountain buyers are downsizing empty-nesters and young couples from Sydney seeking excellent value with strong prospects for capital gains.”
McGrath notes with people less confident about taking on large amounts of debt, his offices are finding higher competition on the more affordable homes.
“Buyer demand, although weaker across the board, still outweighs the lessening supply. Upgraders and investors are still active.”
His agencies have noticed an increasing number of young people choosing to buy an investment property ahead of their first home.
“People still want to enter the market and if they can’t afford it, they will stay at home longer, save for a bigger deposit, or buy with family or friends.”
He says strong rents were driving investor demand.
“Many more people are using self-managed super funds to buy property – latest tax office figures show a 13% increase in property investment via SMSFs over the past year.”
In July the McGrath Estate Agents group reported the sale of 5,993 properties over the financial year that yielded $5.7 billion in transactions.
The three-state McGrath group tally eclipsed the previous financial year, when 5,095 properties were sold for a $5 billion tally.
The agency had opened four new offices to bring the company’s tally to 39.
Its average sale price eased from $981,000 to $951,000 between the two financial years.
“Property remains an excellent asset class for long term investment and definitely offers more stability than the volatile share market,” McGrath says.
“Once confidence returns Australia will be in good shape.
“Buyers have been concerned about interest rates moving upwards and we really need to see a rate reduction that puts the steep rises of the past 18 months behind us,” McGrath adds.
John McGrath’s Top Regional Picks
- Balgownie
- Broadbeach Waters (Gold Coast)
- Burleigh
- Waters Caves Beach
- Ettalong
- Hamilton
- Katoomba
- Kingston (ACT)
- Lennox Head
- Town Beach
John McGrath’s Top Metro Suburb Picks (Houses)
- Abbotsford
- Breakfast Point
- Frenchs Forest
- Freshwater
- Haberfield
- Northbridge
- Palm Beach
- Queenscliff
- Seaforth
- Sylvania Waters
John McGrath’s Top Metro Suburb Picks (Units)
