Ray White Group Chairman Brian White has spent almost half a century at the coalface of the Australian property industry. He reflects on some of the changes affecting Australian real estate during the past 10 years – one of the most turbulent decades in history for Australian property.
The return of optimism to Australian property markets as this decade comes to a close brings a contrast to the same position 10 years earlier when all the talk was ‘how long will this property surge continue?’
Ten years ago the Sydney property market was more buoyant than it had been for a decade. The Sydney Olympics were soon to begin and the question was – with the completion of the Olympic Games, would Sydney still be able to maintain the same level of values as those that had been established as the 20th century came to a close?
It was Sydney that was driving the nation, in sharp contrast to the New South Wales property market of recent times. The 10 year period from the commencement of the 21st century saw some remarkable surges in markets that had always seemed to be relatively secondary in the Australian context.
Sea change became a new word in the property landscape, which opened up vast new areas of Australia’s coastline and gave credibility to the markets which had previously been lacking. Now real estate agents in so many of these centres became to seeing interstate buyers and people from other regions arrive in town keen to purchase. Anything with water views or close to water beach amenities suddenly was being re-rated upwards.
Perhaps the biggest beneficiary of all of this was Queensland with its vast coastline and seemingly endless opportunities for a new lifestyle based upon the philosophy that it was no longer critical to live in the major cities. Other markets to benefit from this included Western Australia and NSW. The strength of these new momentums changed a lot of the relative values. Suddenly, Melbourne was no longer dearer than Brisbane – the situation that always existed before.
Areas in Sydney became lacklustre when compared to the coastal based centres of NSW. As prices in Australia increased at varying rates all of this was to be challenged by the global financial crisis. As always, those markets that surged in value were the first to be repriced and reassessed.
Suddenly members of the community had greater affinity for original locales. The first properties to be sold were the ‘lifestyle’ ones, resulting in a large number of properties coming on the market. Markets such as Adelaide and Melbourne – which had seen relatively little surge during the golden years – came into their own. They became the more successful markets in recent years.
The battered Sydney market received an enormous injection of confidence, particularly from the first home owners grant, and as the first decade of the 21st century ended it was better balanced and more active than it had been for years.
Not only were the first home owner markets in a state of recovery but strength was returning to the more expensive properties bordering Sydney Harbour, which began to have their best results for quite some time.
In addition, new trends emerged. Suddenly it was important for people to be living close to work and other amenities with many examples of families living in apartment buildings, which were previously regarded as ‘non-family’ abodes.
For some, it has become preferable to live in a two bedroom flat at Bondi Beach rather than the big homes that have been built on large blocks in Sydney’s Western suburbs, even though the apartment at Bondi Beach may only comprise two bedrooms for a family of four. (Recent reports suggest that Australians have been building the world’s largest average sized home.)
It’s also clear as this decade comes to an end that Australia has avoided a dramatic downturn in prices that has been experienced in many other parts of developed economies. The current support for the mid to up market properties is quite significant and will form the basis for a strong 2010.
It’s all very well to have a strong first home owners market but at the end of the day it’s the upmarket that will ‘pull through’ in setting levels of confidence that percolate right through market structures.