This article is from the Australian Property Journal archive
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AFTER launching into the prestige residential property market with gusto, Chinese buyers’ interest is cooling. The latest Australian Property Institute and Herron Todd White Prestige Property Mid-Year Perspective 2016 reveals offshore interest is levelling off and local buyers have stepped in to fill the slack.
Herron Todd White Director and API Prestige Property Spokesperson Perron King said the prestige residential market in Melbourne had a very strong 2015, before a dip in the December quarter.
“It was out of the blocks again in 2016, particularly around February and March. We are now seeing a more level market typical for the winter conditions. Purchasers now who haven’t found a property will probably take a pause and come back into the market in spring,” he added.
King said the current cycle is unusual in that the market has not seeing a downturn in around three and a half years, with the last softening occurring in 2012.
“A-grade prestige properties that tick all the boxes are in strong demand, particularly through the Stonnington markets of Toorak, Malvern and Armadale, and to a lesser extent Brighton, and through Boroondara in Hawthorn.
“We are seeing continued good activity through the elite top-end of properties over $10 million, as recently seen with the top end sale of a property in Toorak for over $24 million, which sold within three weeks to a local purchaser,”
“A-grade property through Hawthorn and Kew is still in strong demand, typically from local purchasers given that Chinese and Australian-Chinese buyers have left the market.
“However, through the Chinese and Australian-Chinese driven markets of Balwyn, Balwyn North, Deepdene and Canterbury, we’ve seen some softening,” he added.
Perron King
Renovated and extended dwellings in Malvern East’s Gascoigne Estate that present as a move-straight-in basis are still commanding very strong prices, with properties typically fetching in the high-$3 million range last year now starting to push up in the high-$4 million range and touching on $5 million.
“Carrying on from 2015, Toorak land continues to be hugely popular, particularly around sought after streets in and around St Georges Rd, Hopetoun Rd, Albany Rd, and Lansell Rd. Sites are showing for a typical knock-down job of 700sqm say, rates are between $6,000 and $7,500 per sqm,” he continued.
Boutique high-end apartment complexes through Stonnington remain in demand, particularly to local purchasers, and “empty nesters”.
Popular locations include around retail strips in Toorak and Malvern, along Clarendon Street in East Melbourne.
“There’s limited established stock entering the market, which certainly helps to keep that market buoyed.
“There’s moderate demand for the high-rise prestige apartments along St Kilda Rd, particularly for sought-after developments such as Melburnian and Royal Domain Towers,”
King said there’s still quite strong demand for blue-chip property through Sydney’s upper and lower North Shore and the eastern suburbs, include the beachside locations of Tamarama and Bronte.
“We’ve seen through 2016 the prestige market normalise somewhat after a blistering hot 2015, again this was driven by Chinese buyers and also domestically by the “FOMO” – “fear of missing out” effect,” King said.
Last week in Sydney, Chinese property developer and businessman Wang Zhijun put his Altona mansion in Point Piper on the market. Wang he acquired the waterfront mansion from publisher Deke Miskin three years ago for $52 million, which was a record price.
Wang had carved up the property already and sold the adjacent block of land for more than $18 million. The remaining waterfront mansion is expected to fetch around $35 million.
At the lower end of the prestige market there is strong demand for the former state housing stock found around the Rocks, Dawes Point and Miller’s Point.
Brisbane saw plenty of activity at the top end throughout 2014 and 2015, although King said that as in Melbourne and Sydney 2016 has seen activity cool off,
“Brisbane was heavily influenced by the mining influence so we’ve seen the exit of mining executives as a purchaser through the market and now consider the current cycle to be just past the peak and heading into a plateau phase,” he said. “The traditional blue-chip suburbs of Ascot and Hamilton are still in demand, and we’re starting to see the emergence of suburbs such as New Farm play catch-up, as seen with the recent sale that achieved $10 million,”
King said a void of demand throughout the $3 million to $5 million segment is creating some subdued results.
The Perth prestige market cycle is considered to be at the bottom, with Mosman Park experiencing the highest amount of activity currently, particularly in the lower $1 million to $2 million bracket with purchasers looking to jump in from neighbouring suburbs and further afield in Perth.
“Further up the scale, $2 million-plus is struggling to gain traction and we are seeing a few signs that market is recognising that we may be at the bottom of the cycle; there have been a handful of high-end transactions through Peppermint Grove and Swanbourne, and we’re now finding we’re moving past that cycle of bargain hunters who are looking to hurt the vendor on price and it’s becoming somewhat more of a level playing field,” King said.
Australian Property Journal
