There is “zero chance” of the housing markets falling another 40 per cent, a testament of the strength and depth of Australian residential real estate, says property mogul John McGrath.
Mr McGrath, has weighed in on the idea that a massive value crash in house prices could be imminent.
“I’ve heard the ’40 per cent overvalued’ theory four times in my 35 years in property,” he said in the 2019 McGrath Report issued on Friday.
“It’s like the same groups are chasing the same headline impact every time the market corrects. Not once has this provocative prediction come true or even close to it. It won’t this time, either.
“The fundamentals underpinning property values in Australia remain solid. Rock solid. What we are seeing now is an important part of every major asset cycle, a correction in values after a sustained period of growth.
“Remember, it was only Sydney and Melbourne that had significant growth in recent years. The rest of Australia has had pretty subdued price increases post-GFC.”
While the sun has set on the real estate darlings of Sydney, Melbourne and Brisbane, there are other buying opportunities in other parts of Australia which haven’t yet have any capital growth, he adds.
Hobart and “regional bridesmaid cities” are taking over as the fashionable places to buy homes.
While Sydney and Melbourne house prices have fallen just over 6 per cent and 3 per cent respectively in the year to September according to Corelogic, Hobart’s house prices have risen 9.3 per cent in the same time. Canberra has also done well with a 2 per cent rise.
Improved infrastructure development and growing population in second tier cities such as Geelong and Bendigo in Victoria, the Sunshine Coast and the Gold Coast in Queensland and Newcastle and Port Macquarie in NSW are could lead to rising house prices, Mr McGrath says.
“The golden triangle of Brisbane, Gold Coast/Sunshine Coast and Toowoomba all experienced median house price increases in 2018 and are primed for a major boom as the state economy improves over the next few years,” he said.
Even within the big cities, there are still some suburbs worth keeping an eye on, Mr McGrath says.
He says Sydney’s western suburbs, which is undergoing new infrastructure construction, is on a cusp of a “great renaissance”. Putney, Avalon Beach on the Northern Beaches, Maroubra Beach, Earlwood and Stanmore could be winners for homebuyers looking for future capital growth.
In Victoria, Bonbeach, Thornbury, Box Hill, Wantirna and Cheltenham offer opportunities.
Maroochydore on the Sunshine Coast, set to gain a new CBD, is also growing, as is Pimpama on the Gold Coast.
Brisbane suburbs of Annerley, Grange and Springfield Lakes have been under the radar and could offer some room for growth, Mr McGrath says.
Canberra’s Campbell, Greenway, Kaleen, Mawson and Harrison are worth a look too.