Well known real estate agent and CEO of McGrath Estate Agents, John McGrath, is predicting Sydney prices will boom over the next 12 months. He says low interest rates, a rising sharemarket, strong auction clearance rates combined with Chinese buyers arriving in force and self-managed super funds becoming more popular are all adding to the frenzy. However, McGrath predicts Sydney will be the stellar performer over the next 12 months but Southeast Queensland will be the strongest corridor over the next three to five years and the good news is, Southeast Queensland hasn’t taken off the way Sydney has yet, so perhaps a good time to get into the market.
And with growth in the Sydney market, investors are returning, but the problem is they’re pricing first homebuyers out of the market. About half of all new home loans are now for investors, compared with just 11 per cent for first homebuyers. The number of first homebuyers is now below the 20-year average of 15 per cent and the lowest level since 2004 and some investors are spending way over reserve. A two-bedroom, one-bathroom townhouse in Surry Hills recently sold for more than $200,000 over the reserve. Its reserve was $640,000 but it sold for $840,000. The agents say it’s because its street number was ‘88’ which is a lucky number in Chinese culture… but it might have more to do with the fact that the reserve was below market value. So lets not get too carried away with all this talk about a booming market.
A big challenge for agents right now is the fact that many sellers believe the market is about to – or is booming – and they are adjusting up their expectations accordingly. If you are selling – and you want to sell – keep your feet on the ground.