by Rosalind Scutt, ninemsn Money
As the dark clouds of the global financial crisis disperse over the battered blue-chip end of Australia’s property market, real estate agents are welcoming the first glimpses of a silver lining.
Following two years of lagging interest and an excess of luxury homes on the market, recent economic movement suggests a change on the horizon.
John McGrath, CEO of McGrath Estate Agents, Australia’s largest privately owned real estate group, believes factors such as restored bonuses for bankers and increased confidence in economic and employment outlooks will cause blue-chip property investors to take advantage of the tail end of the GFC and upgrade before the expected market rises occur.
“In 2008-09 we saw executive bonuses that were often the catalyst for property price-pressure virtually disappear,” McGrath says.
“The suburbs that were home to a large percentage of Sydney‘s finance and banking execs suffered tremendously from lack of buyers as well as a large amount of available property offered for sale.”
McGrath expects the year ahead to return market growth of between 5 and 10 percent. Some recent high-profile sales confirm this view.
Gail Kelly, the boss of Westpac, spent about $9 million on a Terrey Hills property recently, trumping the suburb’s previously held $6.8 million record. In another well-reported transaction a London-based Macquarie Europe director, Darren Kehoe, spent about $6 million on a four-bedroom home in Balmoral — without ever inspecting the property in person.
“There’s no doubt there’s more strength in the prestige market now the economy appears to be recovering,” says Michael McNamara, general manager of Australia’s largest independent property valuation company, Herron Todd White.
“A lot of high-end employees are feeling more secure about their position and that should push prices up.”
But if the high-rollers are back, will their deep pockets and cavalier spending push prices up for the rest of us? Not necessarily, McNamara says.
“A valuation is not driven by any one sale. A valuer will certainly look at previous sales in the area but they must look at all the available evidence to establish a baseline or trend,” McNamara says.
“We are cautious that one sale at an unusually high price should not alone affect a valuation. Given that the top-end market is shallow, from time to time, the actual sale price for a unique property is bound to well and truly exceed expectations. That is nature of this market segment.”
For the rest of us, there’s always a harbour side park, a picnic blanket and (if you’re lucky) a bonus bottle of bubbly from the boss.