Prestige Property market unaffected by uncertainty

Rising interest rates and political uncertainty may have the mortgage belt in a panic with the local real estate mid-market suffering but 2007 has been a great year for the top end of the market with prestige property sales continuing to show growth.

Tim Andrews, Principal LJ Hooker Terrigal, says that interest rates are not affecting the this end of the market. “The stockmarket has made people a lot of money and with prices coming down there are more buyers around. After a reasonably tough 2005/2006, 2007 has seen some more positive movement,” he said.
The positive movement he describes has seen more than 13 local residential sales make their mark on Australia’s ‘ultra premium’ segment (sales above $4 million) in 2007. Nationally, there were 570 sales in this segment. That the Central Coast can achieve this number of sales is indicative of a continuing interest on the part of the Sydney buyers who account for the majority of these sales.
During 2007 LJ Hooker Terrigal negotiated the sales of 24 properties over $1 million, mainly in the beachside suburbs from MacMasters Beach through to The Entrance and a few valley acreages.
Where do these cashed-up buyers hail from? Tim Andrews says 47% of his buyers are from Sydney – chasing a better lifestyle in which to raise families or seeking the perfect holiday home only an hour from Sydney.
In 2007 sales figures for the Central Coast suburbs which saw most of the prestige property sales, showed the number of sales were down on 2006 figures but the median price had increased for the same period. The trend was similar for properties in both Gosford and Wyong Local Government Areas.
Commenting on the Hinterland areas of the Coast, Wayne Ballard from Capital 1 Real Estate said that properties in the Yarramalong and Dooralong Valleys have been affected by the bad publicity surrounding gas exploration and coal mining.
“Generally the trend has moved away from properties that are just acres to those with views. Two sales in Ravensdale were at the top end with prices at $1.56 million and $1.65 million, both had fantastic views.”
Mr Ballard said that in the Valleys during 2007 there were 10 sales averaging $1.3 million. These were in the prestige rural market and do not include properties with development potential.
The outlook for the prestige property market in 2008 looks very promising. Australia’s RP Data service says that profits from the booming share market are flowing into the top end real estate market and the wave of baby boomers and empty nesters looking for a lifestyle upgrade is building in size and fuelling demand. Affordability pressures or worries about another interest rate rise have little bearing on a purchase decision in this market segment.
Anecdotally, RP Data notes that fewer top end properties are hitting the market as owners position themselves for maximum growth. With demand apparently outstripping supply, and bar any catastrophic downturns in the economy or share market, the top end is set for a long ride. For those that can afford to buy in, it appears that now is as good a time as any, as prices keep going up.

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