In the dynamic world of Australian real estate, we’re witnessing a tale of two markets, according to industry veteran John McGrath.
According to McGrath, the contrast is stark: thriving luxury suburbs versus a more cautious lower-end market, each responding differently to economic forces.
Steady growth at the top
McGrath, the Chief Executive of the real estate group bearing his name, told The Australian that despite economic turbulence, there is a remarkable resilience in property prices across most areas.
The high-end market, particularly in affluent suburbs of Sydney and Melbourne, is not just surviving; it’s thriving.
“The top end of the market is probably as strong as I’ve ever seen it,” McGrath remarks, reflecting on his four-decade career.
A boost for the lower market expected
McGrath anticipates a positive shift for the lower end of the housing market.
This segment has weathered the storm of the Reserve Bank’s unprecedented 13 consecutive rate hikes.
His expectation?
A reduction in interest rates could breathe new life into this sector.
A struggle at the starting line
Contrasting this, first and second-home buyers face a tougher reality according to McGrath.
The barrage of rate increases has dented both their affordability and confidence.
This end of the market, more sensitive to economic pressures, has undoubtedly felt the pinch.
A potential reprieve in sight
Looking ahead, McGrath and many economists foresee a potential rate cut by the Reserve Bank in the latter half of 2024.
Such a move could significantly aid those struggling at the market’s lower end.
In the interim, a stabilization of rates might help the market find its footing at current levels.
Spotlight on specific regions
McGrath highlights Brisbane as an area of particular interest.
With a slew of positive developments on the horizon, Brisbane properties, he notes, offer attractive value, especially for those accustomed to Sydney and Melbourne prices.
Meanwhile, Melbourne, trailing behind Sydney, is poised for a catch-up phase.
Diverse buyer interests
Two groups likely to capitalize on the current market conditions are first-time homebuyers, pushed by soaring rental prices, and baby boomers eyeing investment opportunities.
With rents skyrocketing by 30-40% in many areas, buying becomes an increasingly appealing option.
For cash-rich baby boomers, the period before potential rate reductions presents an opportune moment to invest according to McGrath.
