Last week we released our annual McGrath Report, which covers in detail aspects of the Australian property market as it stands today, including the major themes at play, the local trends in each marketplace and my predictions for price growth in Sydney, Brisbane & surrounds, Regional NSW and the Australian Capital Territory.
Taking a broad view, the national residential real estate recovery continues with Sydney as always the stand-out performer. The national recovery began in January this year when every capital city recorded a quarter of positive capital growth simultaneously – the first time this has happened since the GFC.
For me, this was an important milestone that suggested we wouldn’t be turning back – and ain’t that the truth! The Australian real estate market has officially recorded its strongest Winter season in seven years, largely fuelled by price growth in Sydney and Melbourne; and Spring is likely to produce further price growth across many markets before the usual Christmas break.
My prediction at the time of last year’s McGrath Report was a 10%-15% price increase. This eventuated with Sydney prices lifting 14.8% in the 12 months to August 2014.
The post-GFC recovery started with first home buyers under $600,000 and escalated above the
$1 million mark soon after, as upgraders benefited from the surge of activity. The market strength has now moved up to and above the $2 million range in Sydney. Even the prestige market has seen some price movement and increased transactions. While we are yet to see the luxury end of the market show its true colours, I believe this will happen in the next 12 months.
This year’s McGrath Report identifies the four major themes that we believe will drive demand and prices, plus the hottest of hot spots on the East Coast. Over coming weeks, I’ll delve into these themes one by one to give you a clear picture of where the market is headed so you can make informed decisions over the next 12 months.
To give you a taste, the major themes are as follows:
- Ongoing growth in the Chinese market, impacting both the prestige sector and helping to drive the new apartment boom we are seeing in Sydney, Brisbane and the Gold Coast today
- Investors and first home buyers, with investment activity at sky high levels in Sydney (and increasing in Brisbane), boosted by what we believe is a growing trend in would-be first home buyers purchasing first investments instead
- The beginnings of a full resurgence in the prestige market, where we are expecting material price rises above $2M this year.
- The emergence of major urban hubs across Sydney, with aggressive infrastructure plans in the west and south-west set to create massive new employment and lifestyle centres away from the CBD
There’s a lot going on in Australian real estate today and it’s truly exciting times. I’ve been in the game for more than 30 years and this market recovery is shaping up to be one of sustained growth. There is so much opportunity available to owner-occupiers and investors today, so take a look at McGrath Report on mcgrath.com.au or continue reading my columns over the next few weeks for a detailed summary.
Lastly, my predictions. I’m thinking between 5%-10% growth across the board in Sydney values this year, with potentially higher growth in the prestige market as it makes up for lost time.
The real mover in Australian real estate for the next 3-5 years will undoubtedly be South East Queensland, where I believe we can expect at least double the growth of Sydney values.