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Market Report April 2016

By Ian Campbell

Investor Report
April 2016
Market Update

A general mood of moderation seems to be pervading the Sydney real estate market, with the east, city and northern beaches far outperforming the west and south.

Stock levels are still low, but vendors and investors are slowly returning to the market in our area after a rollercoaster 2015, which saw prices soar before slumping in the December quarter, leaving many unsure of which way the market would go in 2016.

Domain Group chief economist Andrew Wilson describes the current sober approach to the market as a “hangover from the party of prices growth Sydney had over the past three years”.

“We’re entering a new environment of low and modest growth,” he told the Sydney Morning Herald recently.
“But there’s no sign of a strong fall … Sydney is seeing a natural moderation of prices due to the decamping of investors.”

HSBC chief economist Paul Bloxham said the drop back from the peak of the boom in September last year was a positive factor in a market where house prices have risen “almost 50 per cent in five years”.

“If (the housing market) continues to run at double-digit growth, there would be concerns about over-inflating the market. The pull-back is a positive thing,” he said.

Sydney’s Luxury Properties Top World Study

Sydney’s most expensive properties are proving to be a wise investment, with a recent global report putting the growth of Sydney’s most expensive real estate market way ahead of almost all of its international competitors.

The Knight Frank Prime Residential Property Index reported the priciest 5 per cent of Sydney homes rose 14.8 per cent in value in 2015. This compares with growth of just 1.8 per cent for homes in this category globally.

Only Vancouver outperformed Sydney, where luxury property prices grew 24.5 per cent. Sydney and Vancouver had many similar reasons for winning top honours according to the report. “A lack of prime supply, coupled with foreign demand, spurred on by a weaker Canadian (and Australian) dollar,” were the main reasons.

Locally, the sale of a Potts Point home for $13,000,000 in Challis Avenue produced an Australian record price for a terrace-style house.

Chinese Love Affair with Aussie Property Strengthens

Chinese investors are keener than ever to buy property overseas, with 60 per cent of them choosing Australia
as their most preferred market for property investment.

A poll of China-based real estate agencies found 149 out of 150 agencies expect demand to surpass 2015 levels, according to Investorist, an online platform for off-the-plan sales.

A recent report in The Australian Financial Review also reveals China is now Australia’s largest foreign investor with $46.6 billion in proposed investment in 2015, according to the Foreign Investment Review Board.

Real estate investment comprised the bulk of Chinese investment, with $24 billion spent in 2015, double that of
the previous year.

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