The climb to the peak of the property market has been a little easier thanks to tumbling prices in dress-circle suburbs in Sydney and Melbourne.
But improving sentiment in the wake of the federal election, reduced interest rates and easier credit are tipped to drive a lift in the price of luxury homes, which historically are first to rebound.
CoreLogic head of research Tim Lawless said the rate of falls had been sharpest at the highest echelon of property but it was now stabilising. “If the trend continues that will have levelled out over the next couple of months,” he said.
He expects the spring selling season to be the “real test” for the best homes, but he is not expecting a significant price bounce due to the tight credit environment.
Some vendors are capitalising on the current shortage of stock by bringing their homes to market ahead of the rush.
Richard and Joanna Laferla are selling their home in Sydney’s Mosman as they believe it will stand out in a market lacking competition. “Since the Liberal win at the election my agent has reported an increase in activity on our listing,” Mr Laferla said.
“Coupled with the recent RBA decision to reduce interest rates, I feel as though there is a definite shift towards a more positive market sentiment.”
The Laferlas say they believe the market will soon be on the rise. Buyers are also getting more bang for their bucks as prices have fallen, even though the rate of decline has slowed in recent months.
In Sydney, homes in the top 2 per cent bracket are down 12.1 per cent for the year. In Melbourne the fall has been 14.8 per cent. Buyers can now enter the top “2 per cent club” in Sydney by spending a little under $2.9 million; down from a year ago when it would have taken close to $3.3m.
In Melbourne it now takes almost $2.3m, well down from the near $2.7m buyers would have forked out a year ago to become a top 2 per cent homeowner.
The priciest cities have generally seen larger falls in the market’s premium end, while lower-end values have been supported by a surge in first-home buyers.
But the top end outperforms when the market is rising. CoreLogic says the most expensive homes had stronger capital gains in the growth phase, and in most of these areas values are still running more than 50 per cent higher than 10 years ago.
Sales in the most expensive segment have also fallen sharply as sellers have been reluctant to offer their properties into what had been the previously cautious buyer pool.
In the first quarter of this year, activity in the top 2 per cent dived, according to CoreLogic, with the number of house sales above $2.899m in Sydney plunging 72 per cent over the year, and sales in this bracket off by 81 per cent over the year in Melbourne.
Vendors are hoping that the rise in auction clearance rates and reports of above reserve sales will again spark the luxury market.
Etch Real Estate agent Hugo Ortega said the surge in interest was coming from astute buyers trying to get in ahead of the market rising again.
“They are out in droves,” the Mosman agent said.
Originally appeared in The Australian
By BEN WILMOT
JUNE 24, 2019