Buyers are trading up on the back of a prestige home surge.
Price growth in Melbourne’s $1 million-plus housing range is starting to bring flow-on benefits to the wider market. The prestige property sector has moved up a gear this year, mainly because more ”trade-up” buyers are chasing opportunities to upgrade their standard of housing.
Real estate commentators say that Melbourne’s top-end market is in much better shape than Sydney’s, and that strengthening demand for $1 million-plus homes here is rubbing off on sales of lower-priced property.
The senior economist at Australian Property Monitors, Dr Andrew Wilson, said on Saturday that Sydney’s residential market had recouped all the price losses it had incurred since capital city house prices began to fall in 2010.
By contrast, Melbourne’s median house price was still 4 per cent below its peak in June 2010.
Data collected by the Fairfax-owned Australian Property Monitors (APM) shows there are 30 Melbourne suburbs with a median house price of $1 million or more. Sydney has 110 million-dollar suburbs. ”We have seen very strong and rising auction clearance rates since Easter in both Sydney and Melbourne, with different segments within those two markets operating at different levels,” Dr Wilson said.
”We have a quieter prestige market in Sydney at the moment, but a more active prestige market in Melbourne.”
He said Sydney’s housing recovery was being fuelled by improving sales in the entry-level and mid-priced segments.
”In Melbourne, it has been the top end of the market that has lifted the wider market out of its correction phase and put it into a recovery phase,” he said.
”That has been driven by the fact that the Melbourne prestige market was up to 15 per cent below its previous price peaks. People started to see there was a lot of value in the prestige market.”
Since April, Abercromby’s has sold 38 Melbourne properties at an average selling price of $2.4 million. About 45 per cent were private or off-market sales and 15 per cent of properties were snapped up by overseas buyers.
Melbourne’s prestige market has three segments – $1 million to $2 million, a $2 million to $4 million mid-level top-end, and $4 million-plus.
Buyer’s advocate Mal James said $2 million to $4 million sales were strong. He believed the price falls seen since 2010 in the wealthy Stonnington and Boroondara municipalities had now been made up. ”Stonnington has been the big mover,” he said. ”Sales in Stonnington this year compared to last year are just chalk and cheese.”
Marshall White, which handles many $1 million to $5 million sales, is seeing more trade-up purchasers. Director John Bongiorno said buyers who owned lower-end prestige homes were trying to upgrade but some were being frustrated by a lack of stock. At many auctions of $1 million to $5 million properties there were now two to five bidders.
Dr Wilson said trading up made sense in this market. ”If you’re in the bottom end of the prestige market, a trade-up scenario works for you. Even though you have to discount your property, you are getting the higher-value property at a discount rate.”
Saturday’s auction clearance rate was 71 per cent, from the 632 auctions reported to according to the Real Estate Institute of Victoria. There are 680 auctions scheduled next weekend.
Source : Domain
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