Thursday, 31 October 2013

Agents brace for rush in prestige end of market

     Agents brace for rush in prestige end of market

A run of strong high-end property sales and more trophy homes being offered to the market has put a spring in the step of prestige real estate agents. And exclusive properties are starting to fetch higher prices than when they were sold three years ago.

Last year, the highest recorded sale price was $22 million for the Palm Beach estate Kalua. This year a handful of houses in the eastern suburbs have sold for well above that level.

''The market is dramatically stronger,'' said Ken Jacobs, of Christie's. ''The buyers with the money to buy these properties were always there but they're no longer sitting on the fence.''

McGrath chief executive John McGrath agrees, saying there's also improvement in the troubled ''middle market''. ''I think the market right now is the strongest I've seen it since the last real estate boom,'' he said.
''We've had clearance rates in the 80 and 90 per cent range and the demand has really deepened across all price ranges … even the upper ranges we're starting to see a lot more transactions, even $5 and $10 million property sales over the last six months."

The latest big-ticket transaction is a four-bedroom house in Point Piper belonging to Sydney FC chairman Scott Barlow that sold for well over $14 million.

That sale, rumoured to be to a local buyer although neither agent would comment, shows a gain of more than $2.25 million since Mr Barlow bought it in 2010 for $11,750,000 without any renovations except DA-approved plans by architect Alex Tzannes.

The more sales there are, the more confident buyers and vendors become, said Michael Pallier, of Sotheby's International. ''It's a herd mentality that drives real estate.''

The strength of the waterfront market has prompted Woolwich resident Lynette Watkins to list her 1300 square metre home of almost 20 years with Hunters Hill agent Tracey Dixon, of McGrath, with hopes of more than $6.3 million at the October 26 auction.

Following the sale of the Barlow's Point Piper property, the waterfront residence next door at the centre of an outstanding loan dispute between property developer Ron Medich and finance broker Adam Tilley is set to hit the market next week before an October 26 auction.

That property was firebombed in 2008, allegedly by businessman Michael McGurk a year before he was murdered outside his Cremorne home, and is now part of an insolvency arrangement, of whom the main creditor is Mr Medich. It was listed off-market for much of this year with an asking price $16 million, but now has hopes of more than $12.5 million through McGrath's James Dack.

Fears have been growing that Sydney's property market is moving ahead too quickly - one commentator even suggested a 20 per cent increase in prices next year, not seen since the 2002 boom.
But others said concerns over the economy would prevent this occurring. The International Monetary Fund also sounded a note of caution last week when it called for a tougher rules globally to prevent risky lending.

But AMP Capital chief economist Shane Oliver said the Sydney housing market was a long way from becoming a bubble. ''Prices have picked up, but growth is quite modest compared with past levels of strength,'' Dr Oliver said.
His comments echo those from a Reserve Bank assistant governor, Malcolm Edey, on Wednesday, who said talk of a bubble forming was ''unrealistically alarmist''.

Dr Andrew Wilson, senior economist at Australian Property Monitors, said despite there being more confidence and enthusiasm from buyers, there was not the ''financial framework'' to get the type of prices growth in previous strong price cycles.
Even if house prices rose 10 per cent this year they would only be 8 per cent above their previous highest peak three years ago. ''So really that's 8 per cent [growth] over three years,'' Dr Wilson said.
''Talk of a bubble is not just premature, it's nonsense.''