John McGrath, CEO of McGrath Real Estate, has reported strong buying enquiry numbers in January and February, particularly for properties worth up to $1 million, although he predicted price growth in NSW and South East Queensland is unlikely until the economic uncertainty in Europe and the US is resolved.
“We are seeing buying enquiry up significantly,” Mr McGrath said in his Autumn Market Review.
“The under $1 million market is still the strongest segment but there’s new interest up to $2 million and even beyond in Sydney and Melbourne where higher end buyers weren’t around as much in 2011. While it’s too early to tell whether this new enquiry will translate into sales, it’s logical to think that if enquiry is up and new mortgages are up then we will see a good start to the first quarter.”
“We’re in a state of flux with ongoing uncertainty over the European debt crisis, job losses here at home and the banks signaling that the days of routinely following the Reserve Bank’s moves on interest rates may be over.”
Yet Mr McGrath pointed to a 40 per cent rise in national mortgage sales in January - as reported by Australia’s largest mortgage broker AFG – as a signal that the property market may be improving.
“Fuelling buyer interest are the two interest rate cuts last year and vendors more aligned to the current market,” he continued.
“There’s also a sense among buyers that after waiting it out in 2011, now is the time to buy when lower rates allow greater borrowing power and excellent value remains on offer.
“While this show of confidence is encouraging, there are competitive forces at play. I believe the market won’t have significant price increases until the Europe is resolved and we see further signs of recovery in the US.”
Mr McGrath, whose 44-office company now operates in NSW, the ACT and South East Queensland, said concerns over unemployment, with several big companies announcing job cuts in recent weeks, and the banks’ campaign to separate themselves from the RBA were likely to cause some insecurity among borrowers.
He said residential real estate within 10km of the CBD in Sydney is an excellent choice, and he added that investors might also want to look to South-East Queensland this year.
“We’re already seeing more activity on the Gold Coast, with investors coming from the local area, as well as Sydney, Brisbane and Melbourne.
“Markets like the Gold Coast and Sunshine Coast were significantly oversold during the GFC and depending on the level of mortgage sales over the next 12 months, should have very strong upside when they begin a real recovery either this year or in 2013.”
He added that the Byron Bay region was another market that “we’re cautiously optimistic” about.
“The Ballina bypass is now complete, removing 1,500 trucks and 6,500 cars per day from local streets, according to NSW government figures. This provides excellent scope for property price rises. We’re seeing more buyers particularly in Byron Bay and Ballina, and instead of playing ‘wait and see’ like in 2011, they’re making firm decisions.”
The Blue Mountains and Newcastle were also singled out as regional markets that were doing well.