$5m property boom: Easter to egg on sales - In the press

Greg BrownThe Australian Saturday, 28 March 2015

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Momentum is expected to build in the luxury housing market this Easter, with analysts saying cashed-up investors will start shifting their money from the sharemarket into property.

There will be more buying and selling of $5 million-plus homes in Sydney, while the luxury markets of Melbourne and Brisbane will produce sales activity in the $3m-plus range. Perth is expected to be the odd one out, with the slashing of commodity prices driving wealth out of the state and the value of homes priced at more than $3m set to drop.

One Sydney couple, Paul and Sarah Tobin, are selling their five-bedroom, four-bathroom home in the opulent eastern suburb of Vaucluse, with a price tag of more than $5m, through LJ Hooker and Sotheby’s

Paul Tobin says he and Sarah chose to sell the home, at 6 The Crescent, because Sydney’s luxury market is strong. “We are going to make a lifestyle change sometime so we thought it was a good time overall; we are ­either going to go back to California where I am from, or we are going to go to one of the local beaches,” he says.

The resort-style home has Sydney Harbour views, a pool and was recently renovated.

LJ Hooker associate director Alain Waitsman says activity in the luxury space in Sydney’s eastern suburbs picked up last year, after a tough few years following the global financial crisis.

“Most of the real estate that we have had on the market in excess of $5m in the last 12 months has been sold, and a lot of it was above expectation,” he says.

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Despite the increase in selling, MacroPlan chief economist Jason Anderson says price growth in the luxury end has lagged the broader housing market in the past two years.

“However, I think that the shackles might come off over the next few weeks,” he says. “There are signs that the sharemarket rally that we had (over the past six months) is petering out and there is not as much momentum there and you might get a process where pretty wealthy people start cashing in.

“The Reserve Bank is saying it is a shaky economic position so I think that’s an environment where we will get some flattening out of shares and in that world you go for liquidity. You don’t want to hold cash and you don’t want to sit with shares moving sideways, so it could be a springboard for luxury sales.”

Anderson says Melbourne has performed more strongly than Sydney during the past year because the luxury end is not as pricey.

“The price points that you get in Sydney are so much higher that the depth of demand is not as strong,” he says. “To get into that high tier, which is South Yarra, Toorak, and Kew, there is probably a more gradual trading process that happens. It’s not like Sydney where you jump up into those areas and get a massive jump in prices.”

On the Gold Coast, where prices have lagged since 2008, Ray White’s Larry Malan says interstate investors have been active in the past month because of low interest rates.

“We are definitely seeing them coming back in, over this past month we have had a number of more top end homes (sell) and all the buyers are saying it’s time to purchase a quality asset because money is cheap and it’s here to stay for the next couple of years,” he says.

“Where they were holding off they are now feeling more confident because of money supply.”

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About the author:

Jason Anderson Chief Economist E: anderson@macroplan.com.au 
Jason Anderson is MacroPlan’s Chief Economist.  Jason joined the MacroPlan team in 2010 after working as a Senior Economist for a Property Market Research Company, and prior to that as a senior researcher with both the private sector and Federal Government.   Jason possesses extensive quantitative and research experience in the fields of residential analysis and commercial property and development.  Jason’s views on the property and development sectors are regularly sought by the national media.  Jason has considerable experience in the analysis and development of the residential development policy environment and has undertaken several major reports for a number of industry associations, designed to achieve productive policy reform.
About MacroPlan: MacroPlan's experienced and qualified economists align their understanding of macro-economic forces with micro-economic variables such as geographic and industrial characteristics, demographics, labour market shifts, resource demand and commercial realities.  Contact Jason Anderson - Chief Economist today to discuss your property research requirements.