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Chinese investment in Australian real estate up 60pc
THE AUSTRALIAN DECEMBER 11, 2014 12:00AM

Kylar Loussikian

Journalist
Sydney
AUSTRALIA has seen the strongest growth in Chinese real estate investment of all major markets with a 60 per cent increase in the past 12 months.

The figures, compiled by Knight Frank, show Chinese overseas investment hit $US15 billion ($18bn) in the past 12 months, up from $US600 million five years ago.

The next “wave” of Chinese ­investment would most likely consist of wealthy individuals, smaller and mid-sized state-owned enterprises and private developers, according to Neil Brookes, Knight Frank’s Asia-­Pacific head of capital ­markets.

“The key factors for Chinese investors are the policy push from the Chinese government to diversify into other countries, a softening domestic market and the pull from higher returns achievable in overseas markets,” he said.

Capital outflows to Australia, the US and Britain had increased fivefold, with expectations the next year would match or exceed those volumes, Mr Brookes said.

The majority of outflows to Australia have been through large state-owned or private developers, including Greenland Group and China Poly Group.

Poly recently paid $110m to acquire a 8314sq m development site at Epping in Sydney’s northwest.

But a number of major developers have not yet followed their peers in investing overseas, while seven of the top 20 Chinese ­insurance companies have expressed an interest in overseas property investments but have yet to do so.

Only four of the top 20 Chinese insurance companies have made significant offshore investment plays.

Matt Whitby, Knight Frank’s director of research in Australia, said Chinese groups were now open to looking at non-­traditional investment destinations, including Brisbane and the Gold Coast. “All these hot spots presented investors with higher yields than traditional overseas investment locations like Sydney, Melbourne, London or New York,” Mr Whitby said.

A stronger yuan was also encouraging Chinese investors to expand into real estate markets overseas, although there was a risk of a policy reversal that would lead to a lower currency and make Australian acquisitions more expensive, Mr Whitby said.

A breakdown provided by ­Chicago-based DTZ found Sydney’s industrial, office and retail markets were also attractive to overseas investors, compared with other cities in the region .

Mortgage delinquencies down as prices rise and rates fall
THE AUSTRALIAN DECEMBER 12, 2014 12:00AM

Kylar Loussikian

Journalist
Sydney
Home prices.
Home prices. Source: TheAustralian

MORTGAGE delinquencies have fallen to their lowest level since late 2007 as a year of strong property price growth fuels competitive lending practices.

The buoyant housing market was also benefiting mortgagees with loans more than three months in arrears, making it easier to clear debt by selling property, according to the Fitch Ratings Dinkum residential mortgage-backed security index, which dropped to 0.96, from 1.07 for the corresponding period last year.

But rising unemployment could mean that the figure would increase, Fitch senior director Natasha Vojvodic said.

“Unemployment is the key driver in arrears so if we continue to see unemployment increase that would affect the service­ability of buyers, and we’d expect to see arrears increase,” she said.

Unemployment has risen to a 12-year high of 6.3 per cent, according to Australian Bureau of Statistics figures released yesterday.

Part-time work dominated new job creation, with 40,800 part-time jobs and 1800 full-time jobs added to the economy last month.

Ms Vojvodic said record low rates had meant borrowers were able to meet their repayments more easily, although any increases could be a shock, particularly in lower-arrears brackets.

Despite economists previously forecasting an interest-rate increase in the last quarter of 2015, more recent expectations are for rate cuts within the first half of next year. Earlier this week National Australia Bank said it expected two 25-basis-point cuts next year, with the official cash rate to reach 2 per cent.

But Fitch analysts said an ­affordability floor had been reached.

“Even if interest rates went lower, if there is a slowdown in the housing market people who are more economically disadvantaged will still be more vulnerable to extraordinary expenses and the arrears numbers aren’t likely to improve at the same extent,” Ms Vojvodic said.

The Fitch report also cautioned that growth in property prices “is unsustainable”, and suggested the decrease in loans more than 90 days in arrears had largely been due to high house prices allowing borrowers to sell and clear arrears.

Investor lending had also increased, accounting for 41 per cent of total finance commitments, a record high.

A slowdown in house price growth would make clearing long-dated arrears more difficult, Ms Vojvodic said.

The index for more risky low-doc home loans in arrears also dropped, declining to 4.77 for the third quarter of 2014, compared to 5.17 for the previous quarter and 5.16 for the corresponding quarter in 2013.

Low-documentation loans only made up 3.2 per cent of mortgages included in the Dinkum index.

A significant fall in the volume of low-doc loans since 2009 was increasing the volatility of the index, Fitch said.

Fitch expects arrears will remain stable in the first half of next year with competitive lending and low, stable unemployment and interest rates continuing to support mortgage performance.

Why Australia needs Chinese property investors
BUSINESS SPECTATOR DECEMBER 12, 2014 7:55AM

Robert Gottliebsen

Business Spectator Columnist
Melbourne
AS OIL prices suffered more sickening blows this week, and iron ore and coal languish, only one force stands between Australia and a serious recession — Chinese investment in our residential property market.

And in time that investment will move more heavily into other areas, particularly agriculture and tourism.

I’ve already looked at some of the local and global side effects of the oil slump, so today it’s appropriate to note that the Chinese boost to investment in real estate is a global phenomenon.

Whether it be London, New York, Melbourne or Sydney, housing markets have never seen anything like the current rash of Chinese and Asian buying.

In cities such as London and New York the buying melds into the total scene, but in Australia’s two largest cities, Chinese investment has come to dominate the market.

In Australia, the construction activity that comes with that Chinese investment could not be coming at a better time, given the mining investment recession. If we take a broad definition, the construction industry is close to the country’s biggest non-government employer.

We may once again be the lucky country.

As I understand it, some 20 to 30 per cent of new mortgages come from resident or overseas Chinese, though it’s often hard to determine whether the transactions are for locals or overseas residents.

The bank handling most of the overseas Chinese investment is Westpac because it appears to have a better handle on the credit ratings of overseas Chinese than the other banks.

But when they purchase apartments and other dwellings, the Chinese are not usually following Australians and borrowing at, say, 90 per cent of the purchase price. Most of the loans are for around 60 per cent of purchase price and the Chinese repayments are faultless. The biggest problem for the lenders is that the Chinese like to repay the loans faster than required.

An enormous portion of the Chinese investment comes via new developments and the Chinese developers behind the big Sydney and Melbourne apartment projects appear to be working on an expected return of about half that required by their Australian counterparts. Accordingly, many Australian developers sell the land and approvals to the Chinese and let them go to the next stage.

That’s why Chinese are dominating new developments, particularly in Melbourne where there is a high likelihood of major oversupply of one or and two bedroom apartments.

Many of the Chinese who are investing in Australia see Melbourne and Sydney as the new Hong Kong. And this view has multiplied in intensity given the efforts by China to tighten control over Hong Kong.

At the moment, some of the Chinese investors are planning a slowdown for the early months of 2015 but this will be temporary and they will be back with force.

Clearly, one of the motivations behind David Murray’s recommendation that banks lift their equity backing for housing loans is inspired by the fear that the Chinese might one day exit and send property values spiralling down.

The Chinese tell us that this is highly unlikely. One possible course is that Australia will curb overseas house buying and dwelling investment and make visas much harder to gain — a path taken by Canada.

But that too is unlikely. To put it simply, during the middle of the mining investment boom we did not need Chinese investment, but now we do.

http://www.news.com.au/finance/real-esta...id=5046069

Housing affordability: Are foreign investors to blame for Australia’s high property prices?
• 1 HOUR AGO DECEMBER 13, 2014 9:57AM

Our views on housing affordability

AUSTRALIANS are finding it increasingly difficult to fulfil the Great Australian Dream: To buy their own home.
Residential property prices have gone through the roof over the past three decades, particularly in our capital cities. Prices are so expensive that everyday Aussies, especially first home buyers, are being pushed out of the property market in their droves.
One theory consistently put forward to explain the high prices is that the market has been flooded with foreign investors. They fly in with packed wallets and are willing to pay top dollar, locking out the locals.
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The federal government launched a parliamentary inquiry to look into this theory and its findings may come as a surprise.
So, are overseas buyers really to blame for Australia’s astronomically high house prices?
WHAT DID THE INQUIRY FIND?

Buying a first home can be a struggle for younger Australians. Source: News Corp Australia
For starters, the inquiry agreed that house prices were getting out of control.
Combined capital city home values have increased 13.2 per cent in the 21 months to January 2014, according to real estate data company RP Data. Meanwhile, an International Monetary Fund report from last month found that the ratio of housing prices to average incomes is 31.6 per cent above the historical average in Australia.
The inquiry heard evidence from a range of sources, including members of the general public and industry experts, to explain the price hike.
Most of the concern about foreign investment came from personal submissions, while industry stakeholders tended to argue that the general population overstated the impact of overseas buyers.
Ultimately, the report concludes that there is no solid evidence to support the idea that foreign investors are driving up prices.
It acknowledges that reliable data on the issue is scarce but finds that, overall, foreign investment is good for Australia.
The report states that overseas buyers actually help to make housing more affordable because their investment boosts the economy, provides jobs and — crucially — encourages new homes to be built, increasing housing supply.
“The evidence points to a continuous lack of supply in Australia as a key driver of price increases,” the report states.
“Importantly, foreign investment is regarded by industry experts as vital to increasing this supply.
“Rather than causing price pressures, the evidence suggests that foreign investments may actually help keep prices lower by increasing supply.”

Foreign investors can actually help to drive prices down. Source: News Limited
Some contributions to the inquiry expressed concerns that overseas investors made it especially difficult for first home buyers to break into the market. But industry experts argued that foreign investors tended to buy properties that were out of the price range of local first-time buyers.
The Master Builders of Australia told the inquiry that foreign investors and first home buyers rarely competed for the same properties.
Foreigners tended to preference new, high-density, inner-city properties, often close to universities. And they tended to be valued well above the average national sales price.
Similarly, the Real Estate Industry of Australia said first home buyers favoured established real estate.
“The preference for foreign investors is at the higher end of the market, with a $1 million average for established real estate for temporary residents, and a $647,000 average for individual purchasers of new dwellings … way beyond the reach of an aspiring first home buyer,” spokeswoman Amanda Lynch told a hearing in May.
The Property Council of Australia argues that “there is no evidence that international investment is swamping the residential housing market or influencing prices”.
Exclusive Melbourne agency Nyko Property said the “noise” surrounding overseas investment was “wildly inaccurate”.
“Vision on our television networks of people of Asian appearance bidding at auctions and outbidding other Australians does, in our opinion, simply kindle xenophobia and is anathema to the long-term goal of Australian policymakers to further integrate our economy with Asia — the fastest-growing economic region in the world,” its submission stated.
The inquiry concluded that the industry experts were correct.
“The committee is also satisfied from the evidence received that foreign investment is not causing the market distortions that have been advocated in some quarters, particularly for first home buyers,” the final report states.
“This is because foreign investment levels are not large enough to do so overall because overseas buyers mainly operate at a different price bracket from first home buyers and buy different types of properties.
“The housing supply issues that have been ongoing in Australia would worsen if foreign investment was curtailed.”
HOW DO FOREIGN INVESTMENT RULES WORK?

Auctions for inner-city properties can be fiercely contested. Source: News Limited
● Non-resident foreign investors are not allowed to buy an existing home, but they can buy new homes
● Foreign people living in Australia for no more than 12 months can buy one existing home, but they must live in it and sell it when their visa expires
● All purchases must be screened by the Foreign Investment Review Board
HOW MUCH FOREIGN INVESTMENT IS THERE IN AUSTRALIA?

There is limited data about exactly how much foreign investment there is in Australia. Source: News Corp Australia
Figures are limited, but the Master Builders of Australia estimate that foreign investors account for 5 to 6 per cent of the Australian housing market.
Property developer Meriton said overseas buyers represented closer to 2.5 per cent of annual sales.
Foreign Investment Review Board figures show:
● Between July 2013 and March 2014, $24.8 billion in foreign investment has been approved
● This was 44 per cent higher than the $17.2 billion approved in 2012-13
● Between July 2013 and March 2014, the FIRB approved the purchase of 5755 existing properties
● In 2012-13, this figure was 5101
● Most of the investment is in Sydney and Melbourne
According to the Property Council of Australia, “There is simply not enough foreign investment to skew the residential market as a whole”.
SO, WHAT IS MAKING HOUSES HARD TO AFFORD THEN?

Housing is increasingly becoming out of reach for everyday Australians. Source: ThinkStock
There is no one explanation, but a lack of housing supply is the most commonly cited reason for high property prices.
Other factors that the report notes have a larger impact on prices than foreign investment include:
● Strong population growth and higher per capita incomes
● Australians’ ability to take out larger mortgages due to greater access to cheap credit
● The scarce availability and high cost of land to develop
● Low interest rates
● The strength of the economy
● State and local planning regulations and red tape
● Stamp duty and tax arrangements
Financial adviser SMATS Group said Australia’s population growth had increased demand.
“The general community does not fully appreciate that the main driving force in property price increases is Australia’s growing population, which rose 1.8 per cent to the year 30th September 2013,” the company states in its submission.
“This equates to an additional 405,400 people and places enormous pressure in the property market for homes to accommodate this rising tide.”
The Reserve Bank of Australia argues that our historically low interest rates have increased the attractiveness of investing in “riskier, higher-yielding assets, resulting in strong demand for residential property”.
The Real Estate Institute of Australia argues, “Addressing housing supply would avoid any future questioning about impact of foreign investors in residential real estate”.
The Property Council of Australia said Australians were being priced out of the market by other Australians.
BUT IS THAT THE WHOLE STORY?

The inquiry found that foreign investors can make an impact on the margins of the market. Source: News Limited
The report acknowledges, however, that foreign investors may have an impact in pockets of the market.
“At the margin, foreign purchases may be pushing up prices in particular segments of the market, such as high-quality new apartments in Sydney, Melbourne and the Gold Coast. However, even these markets are dominated by local purchasers,” Meriton states in its submission.
Christopher Kent of Reserve Bank said it was “hard to deny” that foreign investors were having some impact.
“If you imagine an auction on a weekend where you throw in an extra buyer who is willing to pay a little bit more than everyone else there, if that buyer happens to be foreign, maybe as a temporary resident, and they are buying a single play that they are able to get approval for, it is hard to deny that it would not push up the price,” he told a public hearing in June.
While the report concludes that foreign investment is good for Australia, it did find that the rules surrounding overseas buyers were not enforced or policed properly.
It also noted that there was no accurate or timely data that tracks foreign investment.
It recommends introducing a penalty regime to punish those who breach the regulations, including third parties that knowingly help investors to break the rules.
It also recommends setting up a national register to record the citizenship and residency of all home buyers.

Higgins federal Liberal MP Kelly O'Dwyer said foreign investment rules had been poorly enforced. Source: News Limited
Committee chairwoman Kelly O’Dwyer said the foreign investment rules were sufficient but their application was “severely lacking”.
“I regard the current internal processes at the Treasury and FIRB (Foreign Investment Review Board) as a systems failure,” Ms O’Dwyer said.
“Most concerning is that sanctions seem to be virtually non-existent.”
The report found that there had been no prosecutions for breaching foreign investment rules since 2006 and no orders to sell off properties bought by breaking the rules since 2007.
“It defies belief that there has been universal compliance with the foreign investment framework … since 2007,” the report states.
Ms O’Dwyer suggested that there were investors breaking the rules, but that they had slipped through the regulatory cracks.
“Suggestions by officials that (the lack of prosecutions) is due to complete compliance with the rules is simply not credible,” she said.
“Australians must have confidence that the rules, including those that apply to existing homes, are being enforced. Our inquiry revealed that, as it stands today, they could not have that confidence.”

Property investors face soft rental growth in 2015, says quarterly review
AAP JANUARY 08, 2015 4:46PM

INVESTORS have helped fuel Australia’s property boom, but the growth in the rents they charge tenants has hit its lowest annual rate in more than a decade.

Combined capital city rents increased by just 1.8 per cent in 2014.

Rents for houses increased 1.2 per cent, while unit rents increased 2.5 per cent during 2014, a CoreLogic RP Data quarterly rental review shows.

The slowing in rental growth comes as home values continue to increase in Australian cities and advertised rents remain unchanged.

CoreLogic RP Data research analyst Cameron Kusher said the rental market was the most subdued since the mid 2000s, with rental rates across Australian capital cities remaining flat in 2014.

“Given the recent high number of dwelling approvals and commencements coupled with the high level of purchase activity from investors, we would anticipate that the rate of rental growth will remain soft throughout 2015,” he said.

Rents still increased over the year in most cities but Canberra and the resources centres of Perth and Darwin experienced a decline amid a slowdown in the mining sector.

Perth houses fell 2.2 per cent and units fell 2.3 per cent while Darwin houses experienced a 0.8 per cent decline in house rents as unit rents dipped 1.8 per cent over the quarter.

Rents have plummeted in the iron ore mining area of the Pilbara in Western Australia, with unit rents diving 39 per cent in the past year and house rents dropping 25 per cent.

Meanwhile overall advertised rents in Australian capital cities remained unchanged during the final quarter of 2014 at $430 per week for houses and $410 for units.

Over the past 12 months, Perth house rents fell 6.3 per cent and Canberra units fetched 7.3 per cent less.

Sydney units recorded a one per cent quarterly fall and Melbourne units dropped 1.4 per cent over the same period.

Annual house rent changes by capital city

* Sydney: 2.9pc

* Melbourne: 1.3pc

* Brisbane: 2.5pc

* Perth: -6.3pc

* Darwin: -0.8pc

* Adelaide: 2.9pc

* Hobart: 3.8pc

* Canberra: -5.0pc

Source: CoreLogic RP Data

AAP

Housing finance drops in November
DOW JONES NEWSWIRES AND MICHAEL RODDAN JANUARY 12, 2015 1:30PM

Fewer consumers are signing up to a mortgage, as demand for home loans missed expectations in November, official data showed.

According to the Australian Bureau of Statistics, the number of home loans granted in November fell by 0.7 per cent in seasonally adjusted terms to $52.08 billion.

The result missed forecasts by a wide margin, as economists surveyed by Bloomberg had expected the number of housing finance commitments to rise by 1.7 per cent in the month.

Total housing finance by value slipped 1 per cent in November, seasonally adjusted, to $29bn.

The value of investor lending dropped 2.2 per cent in the month to $11.72bn.

“The overall theme is that the housing market is slowing down a little bit from some very high levels,” JP Morgan economist Tom Kennedy said.

“It’s still going in the right direction but things are cooling.”

That will please the Reserve Bank, following recent concerns about the potential for investor-fuelled housing bubbles in the Sydney and Melbourne property markets.

“These monthly numbers are pretty choppy but even so, the dip we have seen in November might help to cool any perceptions, at least for now, of overheating in the housing market,” said National Australia Bank senior economist David de Garis.

But the dip may be temporary, he added, given the pick-up in home prices in December.

Australia’s housing market has been buoyant for several years. Growth has been particularly strong in recent months driven by a rise in investment buying fuelled by cheap available credit.

Interest rates have remained at a record low of 2.5 per cent since August 2013. The sharp growth in home prices has been a worry for the Reserve Bank of Australia, which is eager to prevent the housing market from overheating.

WA leads confidence fall
THE AUSTRALIAN JANUARY 15, 2015 12:00AM
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Kylar Loussikian

Journalist
Sydney

CONFIDENCE in the property industry has slipped in the last twelve months, with a near-quarter drop in sentiment in struggling Western Australia, according to an ANZ Property Council survey.

Sector sentiment fell in all states except Tasmania, sliding 16 per cent and 13 per cent in South Australia and Queensland respectively.

But expectations for work in the next year remain high and most surveyed expected to hire more staff, particularly in NSW, Victoria, Queensland, and ­Tasmania.

Construction was always going to be the first element of the non-mining led recovery, ANZ chief economist Warren Hogan said, although he warned the broadening of the recovery beyond residential construction was taking place “at a glacial pace”.

“The property sector is the main game for the Australian economy this year, it’s the main source of job creation and there is a spin-off for domestic manufacturing, as well as youth unemployment,” he said.

Ken Morrison, chief executive of the peak industry body Property Council of Australia, leapt on the findings to push for tax and planning reforms to allow the sector to grow. “Governments at a national and state level must urgently start putting in place the policies to facilitate further sustained growth in this critical sector,” he said.

“Outside of property, there is no other industry in a position to step up and drive economic growth the way we can and are already. With the right policy settings the industry can be an even bigger source of economic growth as other industry sectors contract.”

While Mr Morrison said he would target the abolishment of “our worst tax” stamp duty, it is understood the Property Council is coming to recognise GST reforms will also need to take place to replace revenues lost if stamp duty is removed.

Mr Morrison said other issues requiring attention were the progress of key pieces of infrastructure and housing affordability.

The survey, of nearly 2000 industry members including developers, institutional investors, property managers, realtors and consultants, found residential construction activity could soften slightly, but more work was expected in the construction or refurbishment of hotels, shopping centres and retirement villages. The expectation of more office construction remained low.

ANZ senior economist David Cannington said the annualised completion of 180,000 dwellings remained below the underlying demand for 195,000 new homes in 2015, although the supply gap had closed. While house values were expected to continue increasing, commercial property was mixed, with office assets fairing worse.

“While there is strong sales ­demand for prime commercial property space, the underlying fundamentals still show that these markets remain quite soft,” Mr Cannington said.

“There is a divergence between sales market expectations and the fairly soft fundamentals, and the good appetite for prime commercial property is supporting expectations of capital growth and (yield) compression, although that’s concentrated in NSW, Queensland and Victoria.

“NSW is really the outperformed , the only state to report yield compression in secondary assets. Part of the story is that this is showing the strength of foreign buyer sales in Sydney.”

Australia: Low interest rates - forecast to be cut again soon - will keep property buoyant in 2015. Cheaper square foot prices make the Gold Coast and Brisbane attractive. Sydney and Melbourne are set to grow at lower levels than 2014. Outlook: POSITIVE
Indonesia: A new president, a new surge in property prices. While rental yields may not be quite as good as they used to, capital gains are looking promising, with gains of over 10% predicted for Jakarta in 2015. Bali is set to continue its 10% per year increase. Outlook: POSITIVE

Housing market sheds its gloss of expectations, according to NAB
THE AUSTRALIAN JANUARY 22, 2015 12:00AM

Sarah Danckert

Property Reporter
Melbourne
Housing sheds gloss of expectations
NAB senior economist Alan Oster said the bank expected house prices to moderate. Source: Supplied
THE gloss appears to have come off the housing market, with a new survey showing expectations for rising house prices over the next one to two years have been pared back as economic growth wanes and foreign buyers slow their run into the local market.

The survey also found that foreign buyers were less active in all states except Victoria, where offshore purchasers make up one in three of all new property sales, ­according to National Australia Bank’s residential property index fourth quarter report.

NAB senior economist Alan Oster said the bank expected house prices to moderate because of rising unemployment, sluggish household income growth, affordability concerns, cost of living pressures and high levels of household debt, although two further interest rates cuts this year should help support house prices more than previously expected.

“We are forecasting average house price growth of around 4 per cent over the year to end-2015 and 2 per cent over the year to end-2016”, said Mr Oster.

Not all in the market were buying the findings of the report.

The billionaire owner of Meriton Group, Harry Triguboff, told The Australian he had seen no pullback in foreign buyers across his business that posted sales of $2 billion last year and has a pipeline of 15,000 apartments.

“There is no decline — it’s still the same number.

“It’s the way they report the numbers so that it looks as though there is less, but really, the number is the same.

“The number of Chinese buyers are still the same. There’s no problem,” he said.

Mr Triguboff also said there was a pull back in prices around Christmas but prices were still going up in Sydney.

He said it was difficult to increase prices in Brisbane because of the number of new apartments being built.

NAB also found that the outlook for rental growth has softened in NSW, South Australia and the Northern Territory, dampening investor sentiment in those states,.

In Victoria and Queensland expectations for rising rents had increased slightly.

Mr Triguboff said he had been happy with the rental growth for apartments in Brisbane as it gave him the “courage” to launch new projects in the city.

The NAB report showed about 70 per cent of all foreign purchases were for properties valued at less than $1 million; 5 per cent were in excess of $5 million.

More than half of all transactions by foreigners are apartments, one-third houses and the balance redevelopment, according to the survey.

Mr Triguboff said this was the result of Australia attracting offshore buyers who were well off but not necessarily the richest people in their home countries.

Price growth in Sydney’s hot residential market to halve
THE AUSTRALIAN JANUARY 22, 2015 12:00AM

Turi Condon

Property Editor
Sydney
Price growth in market to halve
John Mc Grath, from Mc Grath Real Estate. Source: News Corp Australia

THE growth in house prices in Sydney is likely to halve to around 5-8 per cent this year as Australia’s hottest housing market steadies, according to real estate agent John McGrath whose group struck record sales of $2.29 billion in the last two months of 2014.

Sydney’s residential market is set to be overtaken by southeast Queensland where price growth will lift to 10-12 per cent this year, Mr McGrath predicted.

“Queensland will be the best performer for the next year or two,” Mr McGrath said. “That market hasn’t seen the growth Sydney has of 14-15 per cent per annum in last couple of years and southeast Queensland has only just shifted off the bottom.”

Brisbane would lead in terms of price growth followed by the Gold Coast where the housing market was one of the hardest hit in the wake of the financial crisis. Mr McGrath also expected price growth on the Sunshine Coast, and in Toowoomba due to the regional city’s new airport.

Along with southeast Queensland, Mr McGrath expects Sydney’s prestige market to be a strong performer.

“Last year most of the capital growth was in under $3 million (price range). The top end hasn’t seen the same growth.

“The strong growth recorded from our Mosman office (a 167 per cent increase on December 2013 to sales of $60.3m) is in line with our view that the prestige market will perform very well this year after a relatively quiet year in 2014 compared to the rest of the market.”

Researcher CoreLogic RP Data found housing values increased 12.4 per cent in Sydney last year, 7.6 per cent in Melbourne, 4.8 per cent in Brisbane, 4.3 per cent in Adelaide and 2.1 per cent in Perth. The price rises for the capital cities peaked at 11.5 per cent over the 12 months to April 2014, slowing to 7.9 per cent by December.

Mr McGrath noted that Sydney’s last major auction day of 2014, December 13, turned in a 75 per cent clearance rate according to Australian Property Monitors.

“This is a healthy clearance rate and indicates good buyer demand throughout Sydney.

“I believe that the market in 2015 will have a steady growth, but about half of what it was in 2015. Our first auctions will start next month, with February 21 and February 28 already shaping up to be exceptionally busy auction days.”

Among the trends for the year, McGrath said expat buyers had returned thanks to a lower Australian dollar which has fallen to around US81 cents compared with US95 c in July last year. He expects Chinese interest to continue and a rise in Indian investment in Australian housing.