Sydney Morning Herald
Upgraders keep Sydney property market buoyant
Success: Olivia Yinzhu and Peter Patonai paid $1.53 million in Abbotsford. Photo: Janie Barrett
Both cashed-up Chinese and Australian investors have been blamed for pushing up property prices - but experts say it is upgraders who are responsible.
Certainly at the middle sector of the market: McGrath Estate Agents said most of the strength last weekend was in the $750,000 to $1.5 million price range, with 94 per cent of the 50 properties selling at auction.
'They're the upgraders,' McGrath chief executive John McGrath said. Some are the first-home buyers encouraged into the market by government grants that peaked at $14,000 five years ago. With stamp duty discounts, they could save almost $32,000. Many of those first-timers now have children, have outgrown their properties and 'they're now moving up to the next level'.
Today the only first-home buyer incentives are for new homes: a $15,000 grant for property priced up to $650,000, plus stamp duty discounts.
Shane Oliver, chief economist at AMP Capital, said it was Australian demand for our own real estate that was driving the property market.
'The reality is home finance in Australia is up substantially,' Dr Oliver said. 'That's not money being lent to the Chinese, that's money being lent to Australians. The reason Australian property is so expensive is because we don't supply enough of the stuff.'
Examples of the upgrader strength abound, particularly in the inner west.
Peter Patonai paid $1.53 million - $350,000 over reserve - last Saturday for a three-bedroom fibro house at 13 Fitzroy Street, Abbotsford. He and his fiance, Olivia Yinzhu, started looking seriously for a family home last October. 'We came back from an overseas holiday to find that the market had really started to move,' Mr Patonai said.
They had hoped to get the property for less, but there were several other bidders just as keen. 'We plan to knock down and rebuild,' he said.
McGrath agent Shad Hassen said properties such as this were benefiting from the strong market conditions. 'I'm definitely seeing a lot of upgraders in my area,' Mr Hassen said. 'That's creating a fair bit of competition.'
Two auctions held in the same street in St Peters last Saturday showed upgraders have deeper pockets than investors for the right home. First, a three-level, three-bedroom home at 6 Goodsell Street sold for $855,000. It was still well above the reserve, but families had been turned off by the steep stairs and it went to an investor.
Soon after, 38 Goodsell Street, despite having just two bedrooms, was snapped for $957,000, more than $115,000 above reserve, by upgraders from Ashfield. Richardson and Wrench Marrickville principal Aris Dendrinos said 250 groups had inspected the property and there were 22 registered bidders. 'This was hot from day one,' he said. 'When you get this much competition for a property the auction gains a life of its own.'
Belle Property Newtown agent Prue Holcombe sold a four-bedroom home at 51 Neville Street, Marrickville for $1.341 million on February 22. 'The reserve was $1.2 million,' she said. 'It was a really good family home.
'I'm finding that the bigger homes are now far easier to sell because more families want to stay in the area.'
The upgrader buyer, who did not want to be identified, said she and her partner had been looking since auctions started last month.
'We realised the market was becoming stronger … We didn't want to miss out,' she said.
The $5 million significant investor visa has been in the media spotlight lately amid claims that it allows foreigners to push up property prices, but to date only 120 significant investors have been approved and they typically target prestige real estate.
Significant investor visa – how it works
The visa was announced in November 2012 to attract prominent business people and investors to Australia and increase our economic growth and innovation.
It entitles residence to applicants who invest at least $5 million in complying investments, such as Commonwealth, state or territory government bonds, ASIC-regulated managed funds with a mandate for investing in Australia.
The visa can be extended to permanent residency if the investment is maintained for four years.
A property purchase does not qualify as the investment, but temporary residents will often buy their own home here.
To date, the Department of Immigration has approved 120 applications, more than 100 of them in the past three months. Of those applications, 91 per cent have been lodged by Chinese nationals.
A review of the visa program was announced last week by the assistant Minister for Immigration and Border Protection, Senator Michaelia Cash, to allow applicants faster processing and more flexibility and investment choices.
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