“As the economy begins to show signs of further recovery and business confidence improves, as has already been the case in Australia, we anticipate demand to strengthen further and market activity at the top end to increase,” Laing + Simmons Double Bay principal Danny Doff tells City & Country in an email interview.
Savills Australia divisional director of New South Wales in charge of residential sales, Shayne Harris, concurs. He, however, says 1H2010 will be key in providing a clearer picture of the market direction.
The return of market confidence has not only translated into more sales for both Doff and Harris, but lure back to the market property owners who had adopted a wait-and-see attitude in selling their homes.
Harris points out that an eastern suburb house is now going for A$23 million (RM72 million) at an auction.
Luxury homes in the northern and eastern suburbs of Sydney are sought after. Doff says luxury homes in the prime eastern suburbs achieve close to 100% success at Laing+Simmons Double Bay’s auctions. Sellers are also regularly getting offers above the reserve price.
Among the prestigious addresses he has identified are Double Bay, Rose Bay, Vaucluse, Woollahra, Darling Point, Bellevue Hill and Palm Beach on Sydney’s northern beaches.
There is no doubt that houses commanding a view of Sydney Harbour fetch a huge price premium. Harris says a decent home in the eastern suburbs, with a view of the harbour, may sell for about A$5 million, while those along the harbour can cost A$10 million to A$40 million.
Proximity to world-class beaches, Doff says, is another great selling point, with the beaches in eastern Sydney being some of the world’s finest.
While the profile of buyers features mostly Australians or foreign high net-worth individuals, others are those seeking investment opportunities.
Buyers generally comprise owner-occupiers, with families taking advantage of the lowered prices to upgrade to more luxurious homes located close to the central business district, according to Doff.
Sydney’s housing market is generating strong interest in Asian countries like Hong Kong, China, Malaysia and Singapore, according to a statement released recently by Savills Research Australia in its first premium residential property report.
Savills attributes the interest to a recognition of Sydney’s prestige properties as sound investments. Harris also finds Chinese buyers going for harbour-front properties as a long-term investment.
“The feedback from prospective purchasers throughout Savill’s Asian network is that they see value in the Sydney luxury market,” said Savills New South Wales director of project marketing Peter Coulton.
It must be noted that generally there is a caveat for foreign property investors in Australia. According to the Foreign Investment Review Board’s website, foreign property owners are not allowed to buy dwellings for investment purposes (that is, for rental or holiday property).
In another development, the Australian central bank recently raised the benchmark interest rate to 3.5% but this move, Doff and Harris say, will have minimal impact on the top end of the market.
It’s important to recognise that rates are still at historical lows, Doff points out. “Demand from buyers, particularly for property in the A$1 million to A$3 million price bracket, remains strong and has not been affected by a forecast of a further rise in rates,” Doff says.
The increases, Harris says, have been minimal so far. However, the next half percentage basis point rise, if and when it occurs, will have an impact on the market.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 781, Nov 16 – 22, 2009.
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