It’s not surprising that when interest rates rise and house prices start to cool off, one of the first segments of the market to slow is luxury real estate. Commanding high price tags, this upper echelon housing has a very restricted target market and as was seen recently, becomes harder to move when buyer activity slows.
An article in the Sydney Morning Herald reported that of 11 high-end homes that went under the hammer at the Sydney Opera House on the 8th November, only 2 sold for a total of just $4.1 million, with a couple more expected to sell post-auction according to organisers, The Ray White Group.
Chairman of the real estate group, Brian White said they had hoped to sell at least five of the homes at auction, 10 of which were in New South Wales and five in Sydney. Each house was worth between $2 million and $10 million each, representing a combined estimated value of $30 million.
One of the properties up for grabs was a Harbour-side luxury penthouse apartment in a complex that is home to Russell Crowe. But even this fell short of expectations, with only 2 rural contenders being snapped up on the night, leaving a number of disappointed vendors.
The two properties that made the grade were a $2.55 million river-front development in Birdwood, 400 kilometres north of Sydney, and a $1.56 million country home in Mittagong, in the Southern Highlands of NSW.
Mr White said, “We’ve been a little bit crash-tackled by the interest rate increase last week. The Reserve Bank seemed to give the indication that they were keen to keep the lid on prices, and that’s not what buyers want to hear. That’s a very bearish sentiment.”
Overseas buyers, who are notorious for their interest in Australia’s waterfront property, were targeted in the marketing campaign, but bidders from Singapore, China and Indonesia were notably quiet according to auctioneer Sam Kelso.
He said, “The overseas buyers are more concerned about the Aussie dollar. It (the US dollar) isn’t buying as much as it was six months ago.”
Ray White reports that more sellers are putting prime properties up for sale now than in the first quarter of 2010.
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