If you’re a market watcher, you’ll have seen much talk about the strengthening Sydney sales market, with some even heralding a new boom. Fairfax media, in particular, publishes articles almost daily talking up the Sydney market and making much of changes to visa regulations that ease immigration to Australia for wealthy foreigners.
Here at Hart, we are cautiously optimistic. Confidence in the global economy is improving, Wall Street is in record territory, our share market is performing well, and our fundamentals continue to be strong. Early auction clearance rates are solid in the mid-70s. Numbers at our open for inspections have been consistently up on last year despite some terrible weather.
The federal government has eased visa requirements for foreigners prepared to spend $5 million in approved investments. Some would have you believe that this is causing Chinese buyers to queue at the border with suitcases full of money. We are slightly more circumspect. No doubt, there are wealthy foreigners who will want to buy up, but not that many and not that quickly.
It is very early days. The number of properties going under the hammer remains fairly low, and is not yet at levels high enough properly to test the market. Buyers are also unusually impatient, having endured several months of inactivity and continuing low stock levels. The real test will come over the next few months as more properties become available.
Underlying Australian economic fundamentals have been and look like they will continue to be strong. The major factor in market performance is the perception of those involved. We’re seeing growing confidence in the market from both vendors and purchasers, and a sense among many that the market has bottomed out and that values will improve this year. In a sense, that perception is becoming self-fulfilling.
We asked several leading industry professionals for their views on market performance. Jeremy Fisher, founder and Director of 1st Street Home Loans thinks that “confidence is growing”. He says that, up until late last year, 1st Street had been arranging a lot of refinancing for clients undertaking renovations, but more recently clients are more inclined to upgrade their homes by selling and buying. He has also noticed that home sales, both by auction and private treaty, have been occurring at a fast pace than in recent times past.
Auctioneer Damian Cooley of Cooley Auctions says that strong February auction results indicate growing buyer confidence and increased competition. “Our February residential results are extremely promising. We witnessed an increase in registered bidders, which played a major role in ensuring that well over half our properties sold above reserve.” He’s expecting the momentum to build in the lead up to Easter, and then continue throughout autumn and into winter.
Tony Breuer, Managing Director of Gresham Funds Management Group, has also noticed Fairfax’s enthusiasm:
“From reading the SMH one would think there is an impending invasion of Chinese buyers here to capitalise on the new visa rules. Whether this is true or not, there is certainly an improvement in general investment sentiment and good sharemarket gains. These factors should lead to increased buyer demand for upmarket real estate, although the September election may delay buyer decisions.”Find out more about Alex Hart.
Read more of of what Alex has to say here.
Sign up to get real estate news and advice straight to your inbox.
