Sydney and Melbourne’s heated housing markets will pause next year, with price growth stalling but no crash in sight, according to veteran real estate agent John McGrath.
The drought in listings will break early next year, with owners already sounding out agents ahead of offering their homes in February, Mr McGrath said.
“There will be less or no growth, but not a major correction,” he said of the Sydney and Melbourne housing markets where prices have risen 64 per cent and 44 per cent respectively since 2012 and auction clearance rates have topped 80 per cent.
“It would be dangerous to have another year of double-digit growth. That would not be sustainable.”
Mr McGrath also expects both cities’ markets to “decouple” further from the rest of the country’s markets, mirroring cities such as London and New York where the weight of demand has created separate markets with unbreachable price gaps.
Mr McGrath’s top property pick for next year is the Gold Coast suburb of Mermaid Waters where renovations are lifting values for the area close to exclusive Mermaid Beach.
Southeast Queensland, which has lagged the southern markets, would move to double-digit price growth, with the price gap between Sydney and it at its widest point.
“You can buy a unit on the Gold Coast, a walk from the beach, for $250,000. The same unit in Sydney will cost $750,000,” he said.
Also topping the list are Wheelers Hill near Glen Waverley in Melbourne where the median house price is $250,000; Sydney’s inner west and gentrifying Canterbury; Northcote in inner Melbourne; and Kambah in Canberra.
For the year to June, the McGrath spring report notes Melbourne’s St Kilda East had the highest price growth for houses of any suburb at 35.4 per cent, while Sydney’s Fairlight had the highest
price rise for apartments at 46 per cent.
A housing price index to be released by researcher CoreLogic on Tuesday will show price growth during October for all capitals except Adelaide, with a 0.3 per cent price rise across five capital cities.
Low listing levels have resulted in a rise in off-market sales during the year, Mr McGrath said.
Also keeping a lid on stock has been the trend to “stay put for longer”, with a capital city house now owned for an average 10.7 years, up from 6.7 years in 2005. Affordability and the costs of buying and selling are slowing the rate of
Stamp duty and agents’ fees total about $55,000 on a median priced home in Sydney, the McGrath report notes. It picks the prestige housing market as the next growth area of the residential market underpinned by demand from Chinese buyers, expats and local upgraders.
“Volatility in the sharemarket, which is directly and immediately hit by events such as Brexit and terrorism, might also attract more investment into Australian (prestige) real estate over coming years,” the report found.
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