Record sums: Sudden rise in Aussie homeowner wealth stuns experts

News.com.au

2 days ago

Panicked home seekers have been splashing out more money than ever before for properties, smashing longstanding price records across multiple suburbs – often by millions.
Record spending has been fuelled by a potent mix of falling interest rates, surging demand and acute listings shortages, especially for quality, well-located homes in Sydney that require no renovations.
These forces have funnelled buyers to the same auctions and created a climate where well-heeled buyers are going toe-to-toe, lifting prices for the most desirable homes into the stratosphere.
It has followed a general uptick in prices across the market as a whole, with PropTrack data published Friday revealing the Greater Sydney median price has risen for sixth successive months.
Prices citywide are also at a new peak, with the median price for a house now at $1.56 million and the median unit price at $860,000.
With about third of Australian households having fully paid off their homes, the price rises have been a strong source of wealth creation.
'Buyers are spending much higher amounts,' said Anne Flaherty, REA Group economist. 'It's quite location dependent, but there is an overall lack of supply that's making prices go up.'
PropTrack noted rises were most aggressive within affluent inner suburbs, more affordable middle-ring suburbs and a range of 'lifestyle' coastal markets like the northern beaches.
Price records have tumbled at an especially rapid pace over the last three months, with the highest-ever sale prices occurring in suburbs from the inner west to St George and up to the north shore.
And records have often been at sums normally seen only in exclusive Harbour suburbs in the city like Vaucluse, Point Piper, Rose Bay, Bellevue Hill and their surrounds.
North Sydney's suburb record was broken with a $13.5 million sale earlier this year. It was $4 million above the previous highest price paid in the popular north shore area.
Nearby hub Chatswood was another suburb where the record house price was smashed, with the suburb getting in April its first $9 million sale for a house on a site without development potential.
It was quickly followed by another $9 million-plus sale the same month. The previous highest price in the suburb for a site without the potential to be turned into high-rise apartments was $7.3 million.
A few kilometres away, the suburb of Naremburn had a record $6.6 million sale in March, about $1 million higher than the previous highest price there.
It was a similar story in a range of suburbs with new records, including Ryde, Brighton Le Sands, Lalor Park, Girraween, Belmore, Georges Hall, Enfield, Strathfield South, Canada Bay and more.
Agents revealed that a fear of renovating has had an extra hand in the record sales as soaring building costs have created uncertainty about how much it will cost to overhaul older housing stock.
Andrew Cooley, the director of auction group Avenue Auctions, said the appetite for wealthier buyers to get architects and builders to put their own personal stamp on a home through a renovation was low.
'No one knows how much a renovation is going to end up costing because the quotes keep going up so fast,' he said.
'There is also a shortage of houses you can move straight into that tick all the boxes, where you don't need to do a thing, so the competition can be very strong.'
Those buying homes at record prices were usually upsizers in well-paid jobs who had a lot of equity they could draw from their existing properties to pump into their next purchase, Mr Cooley added.
'This kind of buyer often isn't in a rush to move from where they are. The attitude often is they'll only really buy another home if something truly exceptional comes along.
'Then when it does, they will throw everything at it (to secure the home).'
Michael Garofolo, one of the top auctioneers in Western Sydney, said even cheaper suburbs were getting record sales because people's wages had gone up and they had more borrowing capacity.
'Yes, their income may not have risen by as much as many other things, but there a lot of people who do have more money and they will often put it into property,' he said.
Mr Garofolo said recent record sales were usually for houses and were rarely for units.
'Buyers are a lot more hesitant about strata complexes because of the fees,' he said, adding that investors, who historically made up a large share of the buyer pool for a lot of units, was diminished.
'Rental yields (for investors) are not great right now for a lot of unit stock and the prospect of capital growth isn't high either.'
McGrath Strathfield agent Tarun Sethi, who sold multiple homes in the inner west for record prices this year, said some records were simply the result of unusual circumstances.
Some owners of trophy homes were 'moving to the next chapter of their lives' and their incredible homes were finally coming to market, Mr Sethi said: 'As a consequence we are seeing records broken.'
OTHER RECENT RECORDS
ENFIELD
STRATHFIELD SOUTH
CANADA BAY
ALFORDS POINT
BARDEN RIDGE
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