Where do we go to from here?
Australia’s scorching property market has made traditional valuation methods seem almost obsolete. We asked a panel of experts for their insights into the current state of the market around the country – and where we go from here.
When property prices leave even the most seasoned real estate professionals shaking their heads in disbelief, you know you need to pay attention to what’s going on. So, we went straight to the source. AltX hosted a webinar with some of the country’s leading valuation and property experts to discuss what’s happening across the Australian market – and find out what’s next.
Gavin Rubinstein, Principal, Ray White, The Rubinstein Group, Mark Wridgway, Director and Auctioneer, RT Edgar, Hamish Bowman, Director, Ray White Projects and Licensed Real Estate Agent, Jason Matigan, Director, JPM Valuers and Neal Ellis, National Director, Preston Rowe Paterson Australasia articulated what many of us already suspected – the Australian property market is defying logic.
“Mid-2020 prices are just not relevant in the current climate,” says Matigan. “We did a recent valuation in Manly, where the house next door sold for $4.1 million in May or June 2020, so we put our thinking around $4 million on the property, which was similar. It sold for $6.3 million! We see this across the eastern seaboard in Sydney and even once we go to the middle and the outer rings.”
Wridgway sees similar scenarios in Victoria, where dollar per square metre rates is no longer applicable.
“From September 2020 to now, some places across the peninsula have experienced an average of probably 30% to 40% growth. And in some of those key assets, those generational properties on the cliff top… some of those have grown 50% to 60%.”
What’s powering the price growth?
Rubinstein says favourable buying conditions and a newfound appreciation for more space have fuelled property price growth.
“It’s just gotten more bullish and more aggressive because of low-interest rates and lack of supply,” he says. “And with a lack of lifestyle assets – something with a view or close to the beach where you can really improve your lifestyle – the numbers people are paying are insane.”
Bowman says the tens of thousands of people who migrated north have also rejuvenated Queensland property values.
“Growth had been quite moderate in last five years, but the last 18 months [have been different]. We sold a property 18 months ago, a very entry-level house in New Farm. It had traded for $1.1 million then and it just traded, just with a house DA plans, for $1.8 million.”
The increased focus on space and lifestyle has helped regional markets across Australia grow by 25% year on year after a decade of trading at the same price – with more room to grow, according to Matigan.
Meanwhile, Ellis says it’s not just the residential market that’s heating up. “We recently assessed a retail property with eight tenants. They had fallen somewhat behind on their rent. The asset was in a secondary location with a historic building on it – and it sold on a 3% yield for $12 million! If you look at the strength of the tenant and a 3% yield, it just defies logic. But people still have the confidence to invest. There’s a lot of money out there.”
What’s next for property sales prices in Australia?
With the prospect of more expats coming home and skilled migrants returning, residential markets are likely to keep growing well into next year.
“There are people buying properties, getting ready to come back next year,” shares Matigan. “I think in the middle of next year there’s going to be a decent influx of people coming over and going to Sydney and Melbourne. [At the same time], people will cash out of Sydney and Melbourne, and probably continue to move into the Queensland market. So, I think there’ll be a bit more pressure on pricing as the market continues next year.”
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