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At least two more years left in this growth cycle, says John McGrath
Topic Started: 28 Aug 2014, 11:35 AM (2,265 Views)
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Test looms for Sydney, Melbourne real estate

The underlying strength of Melbourne and Sydney’s property markets will get its first true test this weekend with a lift in auction numbers heading into spring.

Just under 600 auctions are scheduled in Sydney and more than 700 in Melbourne, according to Fairfax-owned Australian Property Monitors (APM).

Numbers will continue to build over spring and summer, culminating in multiple “super Saturday” weekends – with more than 1000 auctions each in Sydney and Melbourne – between late October and the week before Christmas.

Last year, there were six super Saturdays in a row over this period.

“We’ve averaged 80 per cent clearance rates in Sydney over the past three weekends, with Melbourne around 75 per cent,” said APM senior economist An­drew Wilson.

“But that’s off lower winter numbers. The higher auction numbers this weekend will give more insight into the strength of the market and will be a good foreteller for spring and summer.

“Sellers will be feeling pretty good about their auction prospects, though significant price growth is unlikely.”

Auctions account for around 30 per cent of total Melbourne sales and 20 per cent of Sydney sales, and those numbers are rising. Over the first eight months of the year, total auction numbers were up 38 per cent on last year across the capital cities, according to RP Data. Rising property prices (up 16.3 per cent in Sydney and 12.3 per cent in Melbourne on an annualised basis) have encouraged more vendors to choose auctions over private sales.

“Winter auction volumes have looked like spring at times,” said RP Data’s Robert Larocca. “The signs are there of a strong and healthy Melbourne market, but one that is not booming.”

The outlook among estate agents and buyers’ agents is for a strong spring auction season, particularly in Sydney, after a busier than usual winter period.

Sydney estate agent John McGrath, CEO of McGrath Estate Agents, said he did not expect the market to change much in spring and summer, after it showed strength over winter, “with good clearance rates and many auctions being hotly contested”.

“The indicators remain positive, with record-low interest rates, a solid economic growth cycle in play and renewed demand from both local investors and overseas buyers,” Mr McGrath said.

“I believe this market has at least two years left in its growth cycle before we see a plateauing.” However, Mr McGrath said Sydney’s current rate of growth would moderate to a more sustainable 5 per cent to 10 per cent per annum over the next two years.

Read more: http://www.afr.com/p/business/property/test_looms_for_sydney_melbourne_GZX3kMDbvQpyRxm7FWK4aP
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madhu
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His comments relate to the Sydney average. I'd be expecting above average growth in Western Sydney over the same period.
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goldbug
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:lol This thread is exactly what he bulls rant about but it's 3 bloody days old and they haven't even bothered to come on and discuss it.
The property investors here on APF are clearly closet bears now gentleman. They will spin some positive stories in the face of all the economic deterioration but they won't entertain the thought of growth as actually occuring.

Your silence speaks volumes.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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McGrath bullish on prices despite bubble chatter

September 25, 2014
Lucy Macken, Anna Anderson

Sydney is only half way through the current up-tick in the property cycle and can expect 5-10 per cent growth per year for the next two years.

"We've seen about 15 per cent growth in the last 12 months in this city. I don't wish to see another 15 per cent increase, but I think we'll see a single-digit increase in the next two to three years," Mr McGrath said at a client breakfast on Thursday.

A combination of record low interest rates, increased number of investors, housing shortages and government initiatives to crank up infrastructure projects around Sydney are all fuelling the current market.

Mr McGrath said investor demand among baby boomers was one of the major factors driving the market.

"Investors are in the market at the moment because many of them have been burnt by the share market and they want to get into something that has sustainable growth, a reliable income and doesn't have the ability to halve or vanish overnight, which of course we saw shares do during the global financial crisis," Mr McGrath said.

"The wealth of this country is in the main controlled by baby boomers. This is not a group of people who generally want to take too many risks with their capital."

While Mr McGrath acknowledged the strong demand by foreign investors for Australian real estate, he said it wasn't one of the main drivers of the current market.

The foreign focus on Sydney and Melbourne set those cities apart from the rest of Australia.

"In fact last year in Sydney 18 per cent of new off-the-plan properties sold to Chinese buyers, and 14 per cent in Melbourne." He predicts the next major foreign investors of Sydney real estate to come from India.

"Sydney really is now an international city, and comparisons with it should come from London and New York, rather than Adelaide and Perth."

Read more: http://smh.domain.com.au/real-estate-news/mcgrath-bullish-on-prices-despite-bubble-chatter-20140925-10lttg.html
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Black Panther
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No doubt about it.

AT LEAST another 2 years.

This guy knows his stuff.

Edited by Black Panther, 27 Sep 2014, 02:39 PM.
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Black Panther
27 Sep 2014, 02:39 PM
No doubt about it.

AT LEAST another 2 years.

This guy knows his stuff.

And loving it. It's a shame our cuddly bear friends can't see it.
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knightm
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I can't see the evidence for a Sydney crash with vacancies so low and demand continuing, no fast rising IR's likely.

Its definitely more than halfway through though.

What is really interesting is how the ripple effect will move out, as it always does.
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goldbug
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knightm
28 Sep 2014, 09:48 PM
I can't see the evidence for a Sydney crash with vacancies so low and demand continuing... blah de blah
Shadow?
These bull sox are so fu*king obvious by the way they front up on their first post.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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Black Panther
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goldbug
28 Sep 2014, 10:26 PM
Shadow?
These bull sox are so fu*king obvious by the way they front up on their first post.
McGrath a Sox ?
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Black Panther
27 Sep 2014, 02:39 PM
No doubt about it.

AT LEAST another 2 years.

This guy knows his stuff.

The clowns a real estate agent and knows nothing at all of the bigger picture here.

No doubt about it, the party is already over for most states, with rents dropping, massive overbuilding, record vacancy rates, record jobs losses, all set to continue and while rates are at record levels and have not even risen yet.

Rents in ALL capitals are now dropping, did the expert mention that too, or simply forget to mention it or not even know.

The fun is just beggining for Australia, but that is what happens when you bubble your wages to a point they are simply unable to compete with ANY other economy on ANY level. :bye:
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