No current signs suggesting long term downturn for Sydney prestige market: HTW residential
The prestige market, generally considered to be above $5 million in Sydney, has tended to move differently to the wider market, according to the latest Herron Todd White (HTW) residential report.
The current COVID-19 epidemic is going to have a negative impact on key drivers, so it will be interesting to see what impact this may have on the property market in the short to medium term, the valuation firm said.
"As the wider market bounced back quickly after the GFC on the back of low interest rates and government incentives for first home owners, the prestige market saw significant price declines as share markets and executive bonuses were hit hard.
"On the flip side, the prestige market was generally immune to the recent wider market decline between mid-2017 and mid-2019, with buyers in the prestige market not as susceptible to the tighter lending policies which led to the downturn," the valuation firm said.
Given the GFC experience, there must now be some concern for the prestige market around the current COVID-19 pandemic and its effect on share markets and both local and world economies.
"Prestige agents however are currently observing significant demand in the prestige space, particularly at the lower end, in the $5 to $7 million bracket," the valuation firm said.
The HTW notes that an example of this demand is a property at 466 Bronte Road, Bronte (pictured below) which sold through Phillips Pantzer Donnelley just five days into its auction campaign.
The renovated, three level, semi-detached home on 536 square metres of land sold in early March for $5.48 million.
The selling agent advised that this was a common experience in this price range, with a large proportion of similarly priced homes not even making it to listing, as agents match unsuccessful purchasers to potential sellers of other properties.
Another example of the current buoyancy in the prestige market is the recent sale of 8/41-43 Middle Head Road, Mosman, the report added.
The property reportedly sold for $6.9 million in the middle of February and was only on the market for 22 days (source: RP Data).
This property last transacted on 3 March 2018 for $5.675 million with no obvious improvements made between sales.
"The Sydney property market is considered to be a safe market to invest in compared to others around the world and with the Australian dollar falling significantly over the past month, interest from overseas purchasers and ex-pats is also likely to strengthen.
"Whilst there may be a softening of market conditions over the coming months as the number of COVID-19 cases in Australia increases and (hopefully) peaks, there are no current signs to suggest that there will be any long term downturn for the prestige market."
Note regards COVID-19